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


C&A sells 13 French stores

22/11/2017

Fashion chain C&A will sell thirteen of its 160 French stores. The locations and the staff will all transfer to French fashion chain Chaussea and Stokomani.

Europe and Asia give Guess strong quarter

22/11/2017

American fashion brand Guess’ third quarter turnover grew more than 3 %, mainly thanks to excellent sales in Asia and Europe. It did post a net profit loss however.

Urban Outfitters gets back on track in third quarter

21/11/2017

Following several quarters of negative results, Urban Outfitters’ third quarter was one of growth. Total turnover grew 3.5 % and there was a 1 % like-for-like growth.

Danish fashion platform Miinto is now also available in Belgium

21/11/2017

Danish fashion platform Miinto has launched in Belgium this week. Smaller fashion retailers can sell their products on the platform, combining their strength to withstand larger web shops.

Lubach: “Fair clothing is a matter of priorities”

15/11/2017

Ever since the Rana Plaza disaster, the clothing industry has clamoured for transparency in the clothing manufacturing branch, but Zondag met Lubach’s Arjen Lubach proved on Sunday that there is no actual transparency yet.

Fashion chain Canada Goose opens first European store

14/11/2017

Canadian fashion chain Canada Goose opened its first European store in London. The brand’s clothing has been in Europe for quite some time, but only at multi-brand stores up until now.

Back to top