Press - 2012

CASINO Group Press release

The Casino Group has a market share in Paris which in not higher than 38.5%

According to the competition authority, the CASINO Group’s success in Paris is the result of its strategy and its own merits

• The CASINO Group welcomes and acknowledges the competition authority’s observations, according to which:
  • “The CASINO Group’s success can be attributed to its strategy and its own merits…” The competing groups “have favoured the opening of large stores in the suburbs of large cities.”
  • The Authority’s concern with regard to competition is not based on “potential anti-competitive behaviours”

• The CASINO Group recalls however that:
  • Its market share in Paris, combined with that of Monoprix, is no higher than 38.5% according to three studies.
  • The €3.7 bn market value the competition authority retains is in no way representative of the Parisian food consumption market, for it excludes expenditures at traditional retailers, specialised retailers, food-related e-commerce, food markets and suburban hypermarkets.
  • The Parisian market is an open one, with no barriers to entry, on which there are numerous setting up opportunities

• The CASINO Group offers competitive prices, notably through its own brands, and innovates continuously to satisfy the Parisian consumers’ needs.

Paris, January 11, 2012 – The CASINO Group welcomes and acknowledges the competition authority’s observations, according to which:

• “The CASINO Group’s success can be attributed to its strategy and its own merits…” The competing groups “have favoured the opening of large stores in the suburbs of large cities.”
• The Authority’s concern with regards to competition is not based on “potential anti-competitive behaviours”

However, the CASINO Group reminds that the notification does not take the whole dimension of the Parisian market into account: it is a perfectly competitive market with a large number of players.

I/ The CASINO Group has a market share in Paris which, combined with that of Monoprix, is no higher than 38.5%. Historically, it has pursued an altogether different strategy to that of its competitors, by favouring downtown locations.

Three studies relying on different and independent sources prove that the combined market shares of the CASINO Group and Monoprix banners in Paris range between 33% et 38,5%.

• A Kantar Worldpanel study, conducted on the basis of a representative panel of Parisian consumers taken from its national database, assessed that the CASINO Group banners represent only 38.5% of the Parisians’ food consumption.
• Mapp, an economic studies practice (Professor David Spector) has calculated the area shares as weighted by the population density and found a result of 33%;

At last, based on objective Insee data, the ratio of Casino Group’s and Monoprix’ market share to the overall value of the Parisians’ consumption is of 36.5% (ratio of a €2.3 bn turnover in Paris to the Parisians’ €6.2 bn food consumption¹). The market value in Paris that the Authority retained was only of €3.7 bn . This figure is in no way representative of the Parisian food consumption market, for it excludes expenditures at traditional retailers, specialised retailers, food-related e-commerce, food markets and suburban hypermarkets.

Besides, a client of Franprix carries out only 14.9% of his/her purchases at Franprix in Paris² against 30.8% for Carrefour and 26.5% for Leclerc in the Ile-de-France region. This proves that Franprix gets a small share of the Parisians’ food budget, and confirms the diversity in food consumption behaviours of the urban consumers, who can choose between numerous competitors.

The October 2010 APUR (Atelier Parisien d’Urbanisme) urban study is in no way representative of the Parisian food consumption market and relies on partial calculation based on incomplete hypotheses.

• • By its nature, this urban study analyses Paris, its study and prerogative area, as though it were in a vacuum, totally isolated from the suburbs, and ignores the competition from the suburban hypermarkets and shopping centres. It also overlooks the booming e-commerce sector, as well as all the other types of businesses within Paris.
  • It actually assesses only part of the retail formats, within Paris, whereas the Parisians make only 51% of their food purchases in these stores (source: Kantar survey/ January 2011). Indeed according to this study, 25% of the Parisians’ food purchases from hypermarkets and supermarkets are made outside of Paris, while 24% of their food expenditure are made in formats that the study does not take into account³.
  • Moreover, the APUR overweighs the market share of downtown retailers, to the detriment of large retailers since it does not take into account the fact that the sale density increases according to the size of the store.
  • In average, the sale density of a hypermarket (Auchan, Leclerc) is higher than that of a convenience store (Franprix) by more than 60%⁴.

¹ Source : Insee 2009.
² Source: Kantar
³ (Markets: 5,1%, specialised traditional retailers: 8,1% and other particular channels: 11,3%, except bakeries, confectioneries and caterers).
⁴ Source: Nielsen

The CASINO Group was a pioneer in Paris thanks to its historical strategy favouring downtown areas and services to the consumers

• Since it was founded in 1898, concerned with proximity and services to the consumers, the CASINO Group has always favoured downtown sales areas. This strategy can largely explain the CASINO Group’s current position in Paris and has played a major role in revitalising downtown areas.
• Its competitors, on the other hand, considering these formats were unprofitable, have for a long time consciously chosen not to invest in in-town retail trade, and favoured suburban hypermarkets and shopping centres.
• By investing when many historical independent downtown banners were disappearing (Codec, Félix Potin, Prisunic, Uniprix, etc,)5 the CASINO Group has revitalised the Parisian downtown commercial dynamism, which was in the midst of a crisis at the end of the 1990s, and it has favoured the development of attractive catchment areas enabling the implementation of numerous food retailers.
• The 1998 Franprix-Leader Price buyback operation en 1998 and the 2000 joint takeover of Monoprix were authorised by the competition authorities.

II/ The Parisian market is an open one, with no barriers to entry, on which there are numerous setting up opportunities.

The Parisian market is an open one, with no barriers to entry

The Parisian market is an open market on which there is, each year, an important offer of vacant business premises, and on which transactions are numerous:

• The numerous offers made by real estate agencies, to which all the players in the sector have full access, confirm that the real estate market is totally smoothly-running and offers CASINO’s competitors many opportunities.
• Since January 1, 2010, CASINO has declined offers for more than 200 premises available for food retailing, which amounted to an overall surface of more than 75,000 m² within Paris. Many of them have been taken over by competitors.

Furthermore, along the terms of the 2008 French law on the modernisation of the economy (loi de modernisation de l’économie [LME]), the opening of stores which surface areas is less than 1 000 m² does not require prior authorisation (before the enacting of the law, there was a 300 m² threshold), which gives competitors the opportunity to freely open new retail spaces.

The CASINO Group’s competitors are already significantly growing in Paris :

• Most retail banners are already present on the Parisian market, or are significantly growing: 55 competitor stores have opened within Paris between January 1, 2007 and December 30, 2010 (Auchan Simply Market and « A 2Pas »; Carrefour City and Carrefour Market ; banners affiliated to Francap such as Coccimarket, Diagonal, G20 and Sitis ; U Express ; Picard).
• 17 have opened since January 1, 2011, and at least 12 competing projects should be launched in the first months of 2012, representing a 13,744 m² overall surface.

The CASINO Group banners increasingly find themselves in open competition with numerous formats located within Paris or in its immediate surroundings:

The hypermarkets that are located in the immediate surroundings of the capital city represent a very large part of the Parisian food consumption:

• 14 hypermarkets, all belonging to 4 groups that compete with CASINO, are located in the immediate surroundings of Paris and have a food-related turnover amounting to the equivalent of 265 Franprix (that is to say 82% of Franprix’ turnover in Paris).
• These hypermarkets largely contribute to the 25% of food expenditure made by the Parisians outside of Paris⁶ ; 72% of the Parisian population live in districts adjacent to the suburb (which amounts to 1.583.689 persons) and have an immediate access to those stores located on the outskirts of the city.
• Moreover, delivery from these stores into Paris also constitutes an important source of competition in Paris and makes it clear that the Parisian consumer is not limited to a single catchment area. Indeed, several hypermarkets deliver at home within Paris, free of charge.

Increasingly numerous food markets:

• There are 82 primarily food-markets within Paris, 13 of which are covered. These markets represent 9,000 merchants.

Many food businesses and specialised retailers:

• In Paris, there are 30 groceries, specialised retailers and frozen food retailers for 10,000 inhabitants (against 19 in the rest of France). These retailers allegedly represent from 35 to 40% of the food market, that is to say an important overrepresentation when compared with the rest of France⁷.

A quickly growing food-related e-commerce:

• E-commerce is particularly well-suited to the Parisian way of life and consumption habits; it therefore puts an increasing competitive pressure on the stores.
• In Paris, it already represents a turnover of about 200 million Euros, that is to say 3% of the Parisians’ consumption⁸, and it is experiencing very fast growth.

On this market, which is already wide open to competition, more and more Parisian consumers are adopting a “switching” attitude:

• They shop from different types of formats (hypermarkets, local supermarkets, food markets, food retailers) and scarcely stick with a particular banner.

•  334,000 Parisians work outside of Paris in the major suburban centres where CASINO’s competitors are particularly powerful, and consequently make their purchases there.

⁶ Kantar Worldpanel Studies 2011
⁷ Union du Grand Commerce de Centre-ville
⁸ That is to say as much as the revenues of 60 Franprix or of the Auchan hypermarket in Bagnolet.

On the still growing Parisian market, there are numerous setting up and development opportunities

• Paris is still short of large food retail spaces, and has the lowest density in mainland France (169m² for 1,000 inhabitants in Paris against 338 m² for 1,000 inhabitants in the provinces, according to the 2011 Nielsen Trade Dimensions).
• The Atelier Parisien d’Urbanisme has counted 7900 ground-floor vacant premises⁹. The social landlords and real estate companies that have a partnership with the City of Paris have several thousands of ground-floor vacant premises at their disposal. The City of Paris, which has at its disposal a wide array of ways and means to revitalize even more the setting up of new players if it wishes to do so, could thus offer these premises in order to ease the development of food retail spaces in Paris.
• Furthermore, the development of many downtown stores projects on the Parisian market proves how sharp competition is in Paris:
  • Carrefour continues to expand in Paris and has just announced the opening of a 3,500 m² hypermarket near the Madeleine.
  • Auchan is growing in Paris notably through its Simply Market and A2pas banners.
  • Intermarché has made of Paris a development priority area in France through the Intermarché Express banner.
  • Marks & Spencer is re-establishing itself in Paris by opening a hypermarket in Beaugrenelle, a supermarket on the Champs-Elysées, and convenience stores in Paris.

III/ The CASINO Group offers competitive prices, notably through its own brands, and innovates constantly to satisfy the Parisian consumers’ needs.

The CASINO group offers in Paris prices that are competitive and most often lower than those of its competitors as far as private label products are concerned

• The CASINO Group has included high-quality products at discount prices in its downtown stores and thereby contributes to reducing significantly the amount of the most modest Parisians’ food expenditure.
• The average basket of the Parisian consumers shopping at Franprix is indeed made of 58% of privale label products, including Leader Price, a discount own brand retailer. This confirms and reinforces the observation according to which, given Franprix’ and Leader Price’s uniqueness when compared with their competitors, price comparisons restricted to national brands do not reflect the commercial reality.
• In Leader Price stores, the private label products share is of about 95% in value. Besides, the Nielsen Institute shows10 that, at the national level, the Leader Price banner has the lowest tariff index on the French market, for the private label products (Leader Price brand), which are 10% cheaper than the national average, as well as for the first-price products (Le Prix Gagnant brand), which are 11% cheaper than the national average.

CASINO constantly innovates in order to serve increasingly demanding Parisian consumers, by offering services that meet the urban consumers’ expectations.

• In Paris, 3.3 millions of Parisian consumers11 are considered as “switchers”.
• In order to meet the Parisian consumers’ demands and new ways of life, the Casino group keeps implementing new services.
  • In Paris, Franprix invests constantly in the renovation of its sale points (about 4.5% of its revenues) and has developed a new concept for which it was awarded the 2009 Janus Prize du Commerce (Retail award).
  • Priority to customer servicestomers and their welcomingenabled Franprix to come up 1st large retailer in terms of customers’ welcoming in a ranking made in 2010 by the Human Consulting Group practice.
  • Franprix is constantly offering new services :
    • Timetables have been adapted to the Parisian way of life (since 2007 they moved from 19:30 to 21:00, or even 22:00).
    • New product ranges: development of the thematic and ethnical ranges ; organic products from fair trade and/or sustainable development.
    • Logistics that include a sustainable development ambition (door-to-door delivery in electric carts, silent refrigerated lorries).

⁹ 7,900 vacant premises have been counted by the City of Paris, that is to say 9.4% of the premises (APUR, January 2009, « Le commerce à Paris. Banque de données sur le commerce parisien: recensement 2007 et évolution depuis 2005 ».)
10 Nielsen Institute Survey (June 2011)

Press contacts

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Grégoire LUCAS – Tél. +33 (0)1 53 70 74 94 glucas@image7.fr / Karine ALLOUIS – Tél. +33 (0)1 53 70 74 81 kallouis@image7.fr

CASINO GROUP

Thierry ORSONI – Tél. +33 (01) 53 65 24 78 torsoni@groupe-casino.fr / Frédéric CROCCEL – Tél. +33 (0)1 53 65 24 39 fcroccel@groupe-casino.fr