“It’s the beginning of the end” for the group, says a specialist

Heavily indebted, the distributor Casino opens a conciliation procedure with its creditors. The group intends to sell a hundred supermarkets and hypermarkets to competitor Intermarché.

The distribution, “It’s the law of the jungle. The weak, when times get tough, get eaten by the strong”explained Friday May 26 on franceinfo Olivier Dauvers, journalist specializing in mass distribution and author of the blog The consumer web, while the Casino group, very indebted, intends to sell a hundred stores to Intermarché.

According to him, “it’s a new stage in a process that we can call the beginning of the end” for the retail brand which celebrates its 125th anniversary this year. The latter plans to sell more than a hundred hypermarkets, supermarkets and convenience stores weighing 1.15 billion euros in turnover.

franceinfo: Is this a solution not to put the key under the door?

Olivier Dauvers: This is a new stage in a process that can be called the ‘beginning of the end’, that is to say that the greatness of Casino, which has long been one of the most important groups in the large French distribution, which ironically of history, celebrates this year, its 125 years, and indeed this greatness is behind it. Unfortunately, she will not return because the group is too indebted. He cannot meet his bank maturities and therefore he is selling. He had sold his business in Asia a few years ago. He sold Leader Price in France three years ago, he sold part of his business in Brazil this year. It’s an extra step. When you have debts and you cannot repay them because your activity is not profitable enough, you are obliged to sell the family jewels.

Are these the consequences of the difficulties we are experiencing in this sector?

This is the consequence of the fact that the retail market for ten years is more challenged than it has ever been. On the one hand, because there is more growth in the volumes purchased by consumers. We are a fairly mature society. On the other hand, we have a part of the purchases which switches, from the stores which we will call “the offline” towards the “online” Internet. Mechanically, it weakens the stores, especially the weakest ones. And then we continue to open stores, we continue to enlarge them and that dilutes on a greater number of stores, a volume of business which is not greater. So in the end, the weakest win.

Is it to grow or die?

In this business, one of the key performance factors is the size vis-à-vis suppliers at the time of purchase. When you negotiate with Danone, with Coca-Cola, with Nestlé, if you buy a box or if you buy a whole truck or a full train, you will not get the same price. It’s easy to understand. So the size, the purchase volume, is a criterion that determines performance because it allows you to have lower prices. When we have lower prices, we have more customers, so we can buy more. It is a form of virtuous circle of performance which is based on size and turnover. Above all, it signals the fact that in this profession, when you are weak, you are the prey. Nature is terrible. It’s the law of the jungle, distribution. The weak when times get tough, when there is a shortage, they get eaten up by the strong. Today, we really have a strong man who is eating away at part of a weak one, because the weak one needs it to try to hope, to survive a little longer.

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