Are Carrefour and Fnac Darty about to be joined in holy matrimony now that Fnac CEO Alexandre Bompard will lead Carrefour? Can a wandering supermarket chain, a culture-focused company bouncing back and a popular electronics retailer make French retail “great again”?
A Brompard-centric romance
It is clear that Carrefour has fallen madly in love with Alexandre Bompard, Fnac Darty’s 44-year old CEO. He was rumoured to be Georges Plassat’s successor for months and who knows how long Carrefour has been trying to reel him in.
The company did not secure his services instantly, because he did not come cheap: he earned 13.8 million euro at Fnac in 2016, compared to Georges Plassat’s 9.7 million euro at Carrefour. However, failure was not an option.
When he said yes in the weekend of 3 June, things picked up speed: the board unanimously approved his appointment on Friday 9 June and he will join Carrefour on 18 July, even though Plassat could have stayed on until 2018.
Carrefour faces Fnac’s challenges
Where does this infatuation come from? It is evident that Carrefour wants Bompard to turn it into an omnichannel-ready company. When he joined Fnac in 2011, the electronics company faced several suffocating issues: online retail pressure, an aging store network and international price competition. If it had to be brought back to one single problem, it would have to be Amazon. Guess which company Carrefour fears most of all?
Bompard managed to turn the tide and is internationally praised for how he turned Fnac into a successful business. When he started, he launched the ambitious Fnac 2015 program, focused on online trade and cost-cutting measures. Fnac’s IPO also turned out to be a success.
He also added another jewel to Fnac’s crown (and his own list of achievements) in 2016: after a long and fierce battle, Fnac secured French electronics and household appliance specialist Darty. The combination turned the company into France’s electronic retail market leader instantly and foreign companies like Amazon now have a much stronger competitor to deal with.
Looking at Carrefour, the company faces similar challenges as to what Fnac faced when Bompard joined. Digital players are increasingly looking towards the grocery market and they have already perturbed the non-food industry, which has caused hypermarkets to bleed market share. The French retailer will need to urgently find solutions to regain a relevant position with consumers.
Not too sure about profit
This all sounds like the ideal working environment for Alexandre Bompard, but it still remains to be seen whether Fnac and Darty are strong enough to go at it alone. The foundations have been strengthened: the retailer is in a safe harbour, has an online marketplace, more in-store experiences, a larger distribution network and a strong partner to help it gain market share. However, Fnac could still use another boost, just like Carrefour could use more support.
Maybe that is why Bompard and Carrefour have joined forces so rapidly? ESM Magazine now suggests Carrefour and Fnac Darty may collaborate in the future. What if that were to happen? They would have an enormous store network to serve as service points, an online marketplace for both food and non-food sales and a scale that would astound many.
If one seeks an omnichannel future, one needs to be strong both online and offline. Both Carrefour and Fnac Darty could still improve in those areas. They do not have the lowest prices just yet and they do not offer the most convenience just yet, nor the best service. If you bring both companies together… they just might be able to pull that off.
Increasing number of surprising retail marriages
The first step could be Fnac shop-in-shops in Carrefour stores that have become too large, according to ESM. Media Markt does something similar with Makro or Auchan and Boulanger, another French collaboration. These two collaborate on purchase level and tackle supplier negotiations together. Maybe their next step might be a merger as well?
In any case, there have already been surprising supermarket combinations before, ESM notes. British supermarket chain Sainsbury’s acquired former catalog seller Argos, Walmart bought online price breaker Jet.com and Tesco obtained wholesale company Booker.
They all had Amazon in mind and wanted to strengthen their own network at the same time. Several giant competitors are calling the shots in the extremely competitive retail industry and that is why collaboration is increasingly becoming the answer to their might.