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


Komono wants to reach 10 physical stores this year

17/05/2018

Belgian accessory label Komono wants to double its number of physical stores to ten this year. “The stores are important to tell our story”, Anton Janssens and Raf Maes told De Standaard.

Suitsupply suffers losses because of expansion

15/05/2018

Dutch Suitsupply has experienced a decent turnover growth last year, but its net result tumbled below zero because of its huge investments. Nevertheless, that is the only way forward according to its founder, whose focus is still fixed on the United States.

Starting this Friday, Belgium has its own national e-commerce event

15/05/2018

Move over, Black Friday! This week, Belgium launches its own national e-commerce event as Jack & Jones, Kiabi, La Redoute, Sarenza, Tape à l'Oeil and Veritas organise the first Belgian Friday.

H&M is turning to algorithms to boost sales again

14/05/2018

In an effort to reverse the decline in its worldwide sales, H&M is using technology that will help the world’s largest clothing brand stock its stores more efficiently, sell more effectively and adapt more quickly to current consumer trends.

Zalando's profit wiped away in first quarter

08/05/2018

German online retailer Zalando saw its first quarter profit completely wiped away: last year's 5.1 million euro net profit turned into a 15 million euro loss. Turnover grew 22 %, investments being the cause for both.

Strong online growth for Hugo Boss

03/05/2018

German fashion brand Hugo Boss managed growth in every region in the first quarter. Group turnover grew 5 % to 650 million euro, partially thanks to strong web shop sales.