A new report on "Retailing in France" says that French retailers remain at the forefront of internationalisation. As well as acquiring competitors and diversifying into new sectors at home, they are exploiting growth opportunities in other markets within and beyond Europe.

The report, part of the new "Retailing in Europe" series from Retail Intelligence, also evaluates the defensive moves taken by French retailers as a reaction to France being seen as the next obvious choice for a move by Wal-Mart. Given the recent M&A activity within France and the numerous privately controlled companies, the report concludes that a move into France may be too difficult even for the world's largest retailer.

ATTACK: FRENCH RETAILERS GO GLOBAL…

  • French retailers continue to lead the drive to internationalisation. For a long time they have been the world's most successful retailers outside their own country, and the experience they have gained stands them in good stead for continued international development.
  • The merger of French giants Carrefour and Promodès may be seen as a defensive reaction to Wal-Mart's entry into Europe. However, the formation of the world's second largest retailer has implications well beyond France as the new Carrefour group operates stores around the globe: some 9,500 outlets in 26 countries.
  • Some large-scale retailers focus on expansion at home and are forced to look to mergers and takeovers. We have seen the development of multi-sector conglomerates, such as PPR which operates Redcat mail order, Fnac cultural goods and Printemps department stores among others, and the various operations under Auchan / Mulliez ownership including Auchan hypermarkets, Boulanger electricals stores, Décathlon sports goods stores and a raft of clothing fascias at home and abroad.

  • The report suggests that future business growth will concentrate on further foreign expansion - either organically or by acquisitions - and through the exploitation of new distribution channels, particularly the Internet, although the use of the Internet in France has been inhibited by the continuing popularity of Minitel and cultural resistance due to the initial lack of French language websites. However, there are powerful forces towards consolidation, both within France and on a pan-European scale.
  • The strength of the leading retailers is shown below, both in terms of their size and their dominance within the market. Collectively these large players generated retail sales of FFr1,072.8bn (inclusive of sales tax) in 1999 in their domestic market. In broad terms then the top 20 groups accounted for 48.6% of total French retail sales in 1999 (FFr2,206bn), and the top 10 accounted for a massive 44.8%.

France: Top 20 Retail Groups, 1999

 
Retailer
Operations
No.of Outlets
French sales (FFr bn)
Share of total retail sales (%)
1. New Carrefourb Grocery
3,964
241.0
10.9
2. ITM Intermarché Grocery, mixed, DIY
3,621
165.9ef
7.5
3. Leclercc Grocery, clothing
540
157.9f
7.2
4. Auchan/Mulliezd Grocery, clothing, sport, DIY
1,332
138.0e
6.3
5. Casino Grocery
5,325
89.7e
4.1
6. Système Uc Grocery
773
60.7
2.8
8. PPR Mixed, mail order, durables
435
50.8
2.3
9. Cora Grocery, garden centres
234
47.6e
2.2
10. Galeries Lafayette Department & variety stores
460
36.4e
1.7
11. Castoramag DIY
142
20.8e
0.9
12. KESA (Darty/BUT)g Electricals, furniture
398
15.0e
0.7
13. Groupe André Clothing
1,688
12.8e
0.6
14. Trois Suisses Mail order
-
7.8
0.4
15. Eram Footwear, clothing,
1,779
5.9e
0.3
16. Mr Bricolage DIY
401
5.3e
0.2
17. IKEA Furniture
10
4.9
0.2
18. Relais H Books & newspapers
900
4.4
0.2
19. C&A Clothing
66
4.0
0.2
20. Etam Clothing, footwear
625
3.9e
0.2
Total    
22,693
1,072.8
48.6

a Does not include buying groups without their own fascias. Sales figures include taxes, estimated where necessary.
b Pro-forma figures for Carrefour and Promodès, who agreed to merge in mid-1999.
c Leclerc and Système U formed an alliance in 1999, but will continue to operate as separate companies.
d Auchan, Boulanger, Décathlon, Kiabi, Pimkie, Orsay, Camaïeu Homme and Cannelle. Excludes miscellaneous other holdings.
c Casino and Cora formed an alliance in mid-1999, but will continue to operate as separate companies.
f System-wide sales.
g Castorama and KESA are part of Kingfisher (UK).

Source: Retail Intelligence, 2000.

DEFENSE: WAL-MART INTO FRANCE?

  • The attraction of entry into France is clear: with retail sales in 1999 of €267bn (excluding sales tax) France is the third largest European market behind Germany and the UK and accounts for some 16% of all retail sales in Europe. With an average spend per person of €4,547 French consumers have a significant amount of consumer power.
  • French non-food retailing remains fragmented and vulnerable to foreign entrants.
  • Wal-Mart is undoubtedly looking to increase its presence and to build a pan-European chain of stores, and the obvious target is France.
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