Analysis: REWE and Leclerc cannot live without each other | RetailDetail

Analysis: REWE and Leclerc cannot live without each other

Analysis: REWE and Leclerc cannot live without each other

18 months after German REWE and French Leclerc went their separate ways, they have concluded they cannot live without each other. "because of the emergence of new, large European retail alliances", the press release stated on their decision to purchase together once more.

Pragmatic partner switch

In September 2013, REWE cited "irreconcilable differences in strategic vision" as the reason to cancel its purchase collaboration with Leclerc, but it is remarkable to see those differences are not so irreconcilable as they were 18 months ago. Both retailers will enter a purchase alliance again, just like they had done previously for 7 years in the Coopernic alliance.

 

They will also work together on a project-by project basis, where teams from either retailer will tackle strategic themes like biological product development, travel agencies and collaboration in the field of import, electrical mobility and energy.

 

The announcement of their rekindled collaboration, on 5 June 2015, was an absolute shell shock for everyone else. It does go to show that pragmatism is the main reason why companies exchange one partner for another in the world of international (purchase) alliances. Those left on the side wither away, while those involved tend to switch often to get increasingly better deals. REWE will now join Leclerc once more, while it has left its previous partners (the 3 C's: Colruyt, Italian Conad and Swiss Coop Suisse) behind.

 

A mere 18 months, REWE entered a purchase alliance, Core, with these three companies and was also the main force within the group, with a 51 billion euro turnover in 12 countries. That volume made up more than half of Core's purchase volume and without those numbers, the remaining members of Core are currently stuck in a purchase alliance which is a mere shadow of its former self.

 

Colruyt: it is not about volume, but growth

Colruyt's spokesperson refused to comment on how this move would impact the discounter's purchasing position and Core's future. He simply referred to an article in De Tijd where Colruyt's purchase director and Core's vice president, Christophe Dehandschutter, says he is not worried about Colruyt's competitive position.

 

Dehandschutter says it not only revolves around the joint purchase volume, but also about the expected growth. According to him, manufacturers will be pleased about Colruyt, Conad and Coop Suisse's growth potential and that all three remaining Core members work together exquisitely.

 

The last thing Core's vice president will do, is throw in the towel publicly after Core's president (REWE CEO Alain Caparros) seemingly killed off its own purchase alliance so soon after its inception. Nevertheless, Dehandschutter's points are debatable: Core has been weakened, the remaining members no longer have common added value for their suppliers and no one knows how well the three members currently collaborate. In any case, REWE has not deemed the current situation at Core to be so beneficial to warrant a stay.

 

REWE only has eyes for Leclerc

REWE has refused to comment as to why it has made the switch to Coopernic, which contains Leclerc, Coop Italia and Delhaize. "Everything we wanted to say on the matter, is mentioned in the press release", the spokesperson added. Coop Italia is an interesting partner, but could not have swayed REWE as it even has its own Penny discount stores in Italy to compete with Coop Italia.

 

Delhaize on the other hand has even been sidelined in Coopernic now that is negotiating with Ahold. "In Coopernic and its members' best interests, Dellhaize will no longer be present in negotiations although Coopernic has a mandate to negotiate on Delhaize's behalf", Delhaize spokesperson Nicolas Van Hoecke explained the situation. "Although Delhaize will temporarily not be present at the negotiating table, it does not mean it will no longer be a member of Coopernic or no longer participate in any of its projects."

 

REWE's reason to move back to Coopernic is Leclerc, with its 45 billion euro turnover. The French company, led by the eccentric Michel-Edouard Leclerc, has an international focus and is a much better fit than the three current Core members. Leclerc is also the company that has kick-started the 'drive' revolution, which is how pick-up points for online orders are called in France. One thing missing from Leclerc's point of view is a strong international partner, exactly what REWE is looking for too.

 

Auchan and Metro collaboration triggered alarms

When Auchan and Metro Group presented themselves as worldwide purchase partners in October 2014 and actually started doing so one month later, it may have triggered alarms at REWE and Leclerc. The new French-German purchase alliance represents a 114 billion euro joint turnover and may have forced Leclerc and REWE's hand that much that they set aside their strategic differences. Together, they are able to bring a 96 billion euro turnover to the table, while Coop Italia can also add some turnover to that number.

 

Despite Dehandschutter's claims it is about growth and not volume, large numbers rule in the international purchasing world, especially in the rational and efficient food sector. Many retailers are currently investing heaps of money into an unproven online business model, which means that combined turnover is a tried and tested recipe to cut costs and to get the core activities to flourish. T avoid Metro-Auchan to brush both REWE and Leclerc aside in their home market and abroad, they are forced to work together.

 

That is exactly why REWE has ditched its Core partners and has rejoined Leclerc in Coopernic. The image, part of the recent press release, shows Alain Caparros and Michel-Edouard Leclerc sitting side by side. It shows 2 CEO's next to each other instead of across the table from each other, knowing they cannot live without each other. That is the type of pragmatic behaviour that decides how to act in today's international purchase business.

Questions or comments? Please feel free to contact the editors


Are Chinese prisoners working for H&M and C&A?

20/02/2018

British former journalist Peter Humphrey has accused C&A and H&M of using forced labour. He claims to have seen how Shanghai prisoners were forced to work for Western chains, something the retailers will now investigate.

Chanel acquires stake in online retailer Farfetch

19/02/2018

French fashion label Chanel obtained a minority stake in British Farfetch. It wants to use the online retailer’s expertise to create more digital innovations for its own customers.

Monoprix wants to acquire web shop Sarenza

19/02/2018

Store chain Monoprix, part of French Groupe Casino, entered negotiations to acquire online shoe seller Sarenza, one of France’s prime online brands.

Zalando expands collaboration with German retailers

16/02/2018

Zalando has further expanded its collaboration with physical retailers in Germany. Shoe stores were already able to ship through Zalando and now clothes stores can too.

Kiabi opens largest Belgian store in Westland Shopping Center

15/02/2018

French clothing chain Kiabi will open its fifth Belgian store in the Westland Shopping Center in Anderlecht. This will become its largest Belgian store to date, spread across 1,800 sqm.

H&M warns for difficult 2018

15/02/2018

Swedish fashion group H&M warns that 2018 could be yet another difficult year for the company. It is working to improve online sales, but store turnover will most likely continue to drop.

Back to top