Auchan claims success with French hypermarkets
20th November 2009 16:58

The deterioration of the French hypermarket sector is well documented.

Casino and Carrefour have both witnessed falling sales and profitability in their hypermarket businesses.

The trend, which began as sky-rocketing fuel prices prompted consumers to eschew out-of-town hypermarkets for more local supermarkets and convenience stores, continues to deepen as recession and still-rising unemployment forces French consumers to cut back on discretionary spending on non-food.

Nevertheless, both Casino and Carrefour remain dependent on the hypermarket channel, which brings in a significant proportion of their domestic sales.

In a bid to rejuvenate the hypermarket sector, Casino and Carrefour have both looked to reorganise management of their hypermarket businesses.

After posting “weak” third-quarter sales at the unit, Carrefour confirmed that it plans to replace the head of its hypermarket business, Alain Souillard, last month.

In a similar move, earlier this week Casino said it will replace Jean Duboc as head of Géant Casino in a bid to create a single management team to "broaden" relations between its hypermarket and supermarket divisions.

However, a rare interview with Auchan, an arch-rival of Casino and Carrefour, suggests that not everyone is having difficulties with hypermarkets.

Auchan, owned by the publicity-shy Mulliez family, has insisted that its hypermarket business is in good shape.

"Unlike some of our rivals, we continue to believe strongly in hypermarkets, even very big ones," division head Arnaud Mulliez told Reuters.

Indeed, Mulliez said that Auchan's hypermarket business had seen a 3% year-on-year rise in sales during October. And prospects for the Christmas season are bright, he insisted.

Although it is difficult to gauge Auchan's performance against its rivals in France, as the country's second-largest retailer does not publish its financials, if indeed its hypermarket business is going great guns, then this raises some serious questions about what Carrefour and Casino are doing wrong.

In order to regain momentum in their hypermarket businesses, both retailers will need to experiment with store layouts, loyalty schemes, categories and product ranges while also investing in price, promotion and advertising.

And if Mulliez's interview is anything to go by, perhaps they should also take a long, hard look at Auchan's recipe for success.

Katy Humphries, deputy editor

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