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Little known Artengo is taking on mega brands Nike and Adidas for a slice of Australia's $4 billion sporting goods retailing market.
Artengo is being worn by world No.71 tennis player Steve Darcis at the Australian Open in Melbourne, as part of the slowly building assault on Australia's market by European sporting goods giant Decathlon.
Decathlon's entry potentially spells long-term strife for ASX-listed Super Retail Group, which runs 161 stores under the Rebel and Amart Sports banners, as Artengo and its fellow private label brand stablemates, which include Kalenji running gear, Nabaiji in swimming and Domyos in fitness wear, start to make inroads.
Decathlon, the biggest sporting goods retailer in Europe, is growing quickly in China where it has 184 stores and has been operating an online business in Australia since April last year. It is hunting for sites for physical stores, with the main focus first on Sydney and Melbourne. Its long-term aim is to open 35 warehouse-style superstores in Australia.
The product model is similar to that of supermarket chain Aldi, which has seriously disrupted the supermarket duopoly of Coles and Woolworths with its cheap prices and unusual collection of private label brands such as Damora snacks, Ombra sunscreen, Mamia baby products and Choceur chocolates.
Brand improvement
Decathlon intends to soon start delivering to New Zealand customers as its local operations in Australia expand. The firm is privately delighted that Darcis has advanced to the third round of the Australian Open in Melbourne, where he next takes on Andreas Seppi, who beat Australia's Nick Kyrgios on Wednesday night.
Darcis in an interview on January 18 on a Decathlon Australia blog said that about 10 years ago the image of Artengo was "OK but not great, low price and low end products". "But now, frankly speaking, in the last few years: whether it is clothes, shoes, racquets, it has nothing to envy about the other 'big brands' and this year it's actually looking even better."
It is the big name traditional brands such as Nike, Adidas and Asics stocked in Rebel, which the chain's parent, Super Retail Group, is counting on to be one of the biggest weapons in defending its turf, along with the large network of stores it operates across Australia.
Super Retail, which runs other non-sport retail brands including Supercheap Auto, and BCF boating, camping and fishing stores, also believes that the big focus on healthy lifestyles in society will mean continued growth across the sporting goods retail sector. It is also expanding the Amart brand in Western Australia and aims for 230 stores across Australia in its two brands within five years, up from 161.
Super Retail chief executive Peter Birtles is regularly peppered with questions by analysts about what Decathlon might do to its business and has maintained a consistent line over many months.
He contends that the "scale and maturity" of the retailer's existing operations, its deep knowledge of the Australian market and its strong relationships with the big global brands should deliver strong growth over time, while the "macro" trends of more focus on fitness will continue to accelerate.
He also said Rebel customers were more aspirational and would keep coming to Rebel because it was the market leader and always on trend.
Private label brands also form a small part of the Super Retail approach to sport. Private label brands, which are more prevalent in Amart than Rebel, make up about 14 per cent of total sales in the sports retailing division, which overall in the 16 weeks ended October 22 generated same-store sales growth of 4.5 per cent.