Increased Système U - Auchan alliance threatens European retailers | RetailDetail

Increased Système U - Auchan alliance threatens European retailers

Increased Système U - Auchan alliance threatens European retailers

French retailers Auchan and Système U have announced they will collaborate on a deeper level, a move that terrifies its European competitors. Legally speaking, it may not be a merger, but it could practically turn out to have the same effect.

Système U and Auchan enter far-reaching collaboration

The numbers five and six in the French market had already joined forces when purchasing brand products, but will now also do the same for their private labels. Their joint spending power will reach 50 billion euro on a yearly basis. Both groups will also create a joint-steering committee, which will have power to steer both networks if there are unanimous decisions.

 

Both chains will also exchange a large number of stores: 247 Simply Market-branded supermarkets, which belong to Auchan, could transfer to Système U and be re-branded into franchise Super U supermarkets, while 70 Hyper U hypermarkets could possibly be turned into Auchan franchise stores.

 

There are very clear reasons for the collaboration: French retail margins are under pressure, particularly because of E.Leclerc's aggressive price tactics. The French market also faces increased competition from the German discount chains Aldi and Lidl and on top of that, leading to competitors Intermarché and Casino already having joined forces on a purchasing level, as did Carrefour and Cora.

 

No mention of the word 'merger'

Even though both companies will collaborate on many levels, they have made no mention of the word 'merger'. "Système U is a cooperative society and will not accept an acquisition easily", it is said. The chain is owned by some 900 independent members, totaling a billion euro turnover - generated almost entirely in France. On the other hand, Auchan is a family business with 90 % of shares controlled by the late founder's (Gérard Mulliez) family. The remaining 10 % of Auchan's shares belongs to the employees.

 

Even though, legally speaking, it is not a merger, one could consider this a "civil union" with the same consequences as an actual marriage. That is why both groups have had to present their collaboration plan to the European Union's antitrust commission, which in turn may send it on to Paris. The final decision should arrive by early 2016 at the latest.

 

The quick succession of French collaborations have also agitated foreign groups. Aldi and Lidl will now face a strong competition at the western border of their home market, while Belgian retailers have similar issues at their southern border. Perhaps the talks between Ahold and Delhaize can be placed in the same framework and state of mind as what is happening in France.

Questions or comments? Please feel free to contact the editors


Several candidates to take over Men at Work

12/07/2018

There are several takeover candidates for both the Dutch and the Belgian stores of the bankrupt clothing chain Men at work. The curator is confident an agreement should be reached today in Belgium.

Burberry sales increases thanks to new strategy

11/07/2018

The new strategy of the British fashion brand Burberry starts to render: the company had a 3% increase of revenue in their own stores last quarter. In total, Burberry has now a revenue of 479 million pounds (520 million euros).

FNG moves to Brussels stock exchange

06/07/2018

Belgian fashion group FNG has collected 60 million euros by issuing new shares. The new shares will be traded on the Amsterdam Stock Exchange and - for the first time - on the Brussels Stock Exchange as well.

Athleteshop ends its run

02/07/2018

Dutch sports web shop Athleteshop has filed for bankruptcy, after an abysmal year in which strings of complaints led to all sorts of problems. Social media and review sites were flooded with customers complaining about late deliveries.

Alibaba goes Turkish with stake in Trendyol

29/06/2018

Alibaba is the new strategic partner of Trendyol, one of the best-known e-commerce companies in Turkey. With this partnership, the Chinese retailgroup strengthens its presence in Europe.

Profits H&M Group take another hit

28/06/2018

Swedish fashion group Hennes & Mauritz has published a fourth consecutive quarterly turnover that was lower than expectations. The group that owns chains like COS, Monki and &Other Stories saw its profit drop by 21 %, despite a (slightly) higher turnover.