The inclusion of a robotic e-commerce distribution centre at Calgary’s new Decathlon store has allowed the retailer to store less stock on the retail floor, allowing it to create more open space and displays. (Courtesy Decathlon)

With the opening of its latest store in Calgary, sporting goods retailer Decathlon Canada may be setting the trend for how future warehouse and fulfillment space will look for other retailers in the country.

The new Decathlon at Southcentre Mall comprises 63,000 square feet, including 7,000 square feet dedicated to an automated warehouse featuring 27 robots. The robots in action can be viewed from two viewing locations in the store.

Jaylone Lee, chief marketing and communications officer of Decathlon Canada, said the automation represents the backbone of a new store concept involving a technology-assisted customer journey within the bricks-and-mortar location itself.

It will also allow the store to serve as the distribution centre to fulfill online orders for Western Canada.

She said the automated warehouse will allow the store to house one-third less inventory on the selling floor versus a traditional store layout – but have 10 times more stock on site. It also frees up retail floor space for more displays and showrooming of select categories of products.

Automation extends to in-store experience

Items requested by customers are available within minutes from the adjacent warehouse area, and available at a designated pickup location within the store. The automation means staff will spend less time on inventory management and stock-related tasks.

“This is novel even for Decathlon,” said Lee. “The automation allows us to really have a density of inventory in that back door. So we can hold 10 times more inventory than a traditional Decathlon store (in the) back store and it’s automated, so there are only six employees who are manning the robots.”

The retailer’s e-commerce orders are currently shipped out of its distribution centre in Montreal. To shorten the lead times for orders in Western Canada, Lee said, those orders will be fulfilled through the automated warehouse at Southcentre.

“It’s a first run for us,” Lee said. “Part of the Decathlon culture is that we like to be really agile. So if this concept works out, for sure it could get rolled out elsewhere.”

Decathlon hybrid might be Canadian first

Jason Bos, general manager of Southcentre Mall, which is part of the Oxford Properties Group, said the new Decathlon store marries the concept of fulfillment and an in-store experience.

“It’s something a lot of landlords have been talking about and we’re happy to be one of the first – if not the first. I can’t think of another retailer or landlord that’s been able to bring something like this to fruition in terms of a full-scale distribution centre merged with a unique retail store,” Bos said.

An in-store Pickup Point at the Calgary Decathlon store links it with the adjacent fulfillment centre. (Courtesy Decathlon)

“This is the way forward. Regional shopping centres, super regional shopping centres, have to find new and creative ways to use space. People still want to go out and try things on and have that easier experience. So from a retailer’s standpoint, why pay for that retail space as well as warehouse space if you can merge the two together?

“To us, this is really the best of both worlds and bringing both together. It’s something that as a landlord we’ve been on the lookout for a long time. We see this as the future. We see this as the tip of the iceberg.”

Gary Newbury, a national expert on the supply chain industry, said Canada had been slow to adopt e-commerce/last mile fulfillment automation to support online sales volumes prior to pandemic. The average retailer didn’t warrant a large-scale investment.

Pandemic creates new problems

However, during the pandemic there have been significant staff shortages, an urgent need to scale online orders efficiently and profitably, and to provide stock accuracy which have all been key to the customer experience.

“These are key drivers of rapid improvements within retailers’ supply chain and fulfillment operations, especially at the sharp end,” said Newbury, who went on on to provide a grocery-based example.

“There are an increasing number of providers entering into the Canadian market, most notably Voila with Ocado; however, this is more about covering a large market (in this case, Montreal and Quebec) from one ‘central’ location with a full end-to-end solution for inducting, storage, selection, routing and delivery.

“For fast-moving and expanding chains, they need to look for something much more local, possibly portable and design this into the store perimeter right from the get-go.

“If retailers get the deployment of micro-fulfillment centres (MFC) right, they can offer a great experience to the customer, not be so reliant on having staff to perform the selection, and they can add extra stock lines into their proposition and effect a quick response to online orders, being close to the porch. This is one trend for mid-sized formats.”

Other roles for micro-fulfillment centres

He said another solution for small format stores, or chains seeking greater penetration into neighbourhoods with smaller formats, will be an MFC that can support multiple stores in a wider range of logistics operations. These functions could include curbside, home delivery, daily store restocking and repositioning of inventory to maximize sales.

Bruce Winder, author of RETAIL Before, During & After COVID-19 and president of Bruce Winder Retail, said the use of stores as fulfillment centres has grown during the pandemic and will continue to grow with e-commerce, while urban warehouse space has become difficult to obtain.

“This store allows Decathlon to supply the Western market efficiently while creating a focal retail footprint in one of Canada’s largest cities. With the decline of department stores such as Sears, large spaces that have sat empty can now be used to offer regional fulfilment which makes good sense for both mall and retailer,” Winder said.

Michael Kehoe, an Alberta-based retail specialist and broker/owner of Fairfield Commercial Real Estate in Calgary, said the warehouse and fulfillment component of the expansive Southcentre location is a logical feature of committed omni-channel retailers trading across multiple platforms.

“It’s a retailing trend that is gaining momentum, amplifying the importance of physical stores that are the cornerstone of any successful retail strategy,” Kehoe said.

Decathlon housed in former Sears location

The Calgary Decathlon store is helping to fill the space left behind from the departure of retail giant Sears a few years ago. Decathlon is taking up the majority of the space on the second floor of the former Sears box. There is one small area left on that floor for a future restaurant.

The total Sears space was about 230,000 square feet over three floors. To date, about 165,000 square feet has been leased. The entire ground floor is leased with PetSmart, Dollarama and Winners. The next step is to lease out the third-floor space.

As of August, Decathlon had 1,709 stores in 60 countries. The Calgary location is the company’s 10th in Canada. Its first store in Canada opened in Brossard, Que., in 2018.