Auchan management smiled again on Thursday, July 27, when it unveiled the group’s results for the first half of 2023. After years of deteriorating sales, the northern distributor seems to have finally pulled its head above water. . Over the first six months of the year, it saw its turnover increase by an average of 1.6% in the 12 countries where it is present. And if we take out Ukraine and Russia, this figure rises to 6%. France alone, which represents half of its activity, has recovered in the last two semesters. A dynamic that remains to be confirmed. Especially since the profitability, big black point of the brand, continues to decline. With 8.9% market share in France, Auchan finds itself at the same time at the back of the leading pack led by Leclerc, Intermarché, Système U and Carrefour. Even the German soft discounter Lidl gradually picks up points and follows him.
“If you look at the list of the different groups, Auchan is now the weak link. It is the sign that has the most dilapidated stores and the least good profitability”, underlines Olivier Mevel, lecturer in sciences management at the University of Western Brittany. To the point of becoming the target of a future takeover operation? “Already, the cutting up of Auchan is on the table. Faced with suppliers, three very large brands will lead the way, and alongside, Système U will continue to manage its particularity of being independent. A price gap very important risk of widening for Auchan, and I doubt that it can resist it”, continues the specialist.
A whole family to convince
For Frank Rosenthal, retail expert, such a transaction seems unlikely: “Auchan still has an international scope. When you talk to this company, it’s not just with a few people, you have to talk to the whole family. Even if they were sellers and the price offered would be affordable, it seems very complicated to me to set up”. And unlike Casino, whose recovery is about to be completed, Auchan today ensures that it has very little debt.
“Auchan is not listed on the stock exchange, adds Frank Rosenthal. What has precipitated things for Casino is the collapse of its course”. Acquisition of Match and Cora by Carrefour, a hundred Casino stores sold to Intermarché… Another question arises today: would further consolidation be beneficial to the sector? “We are already on a hyperconcentrated distribution model. If I draw a parallel with other French-speaking countries such as Quebec, where this is also the case, a price increase has taken place, linked to inflation, but also because there are fewer players. This can also be a strength against suppliers,” explains Cindy Lombart, professor of marketing at Audencia.
Attempts to restart the machine
To restart the machine, the company owned by the Mulliez family would do well to join forces with a competitor. This is what it had tried to do with Carrefour not so long ago, in 2022. But the distributor with the red bird had come up against the reluctance of major Carrefour shareholders. An aborted marriage that had kept the small business world in suspense for several weeks. Like almost all players in the sector, Auchan had subsequently taken the temperature with Casino. “We have not found the right economic equation. We will obviously be attentive to the evolution of the market and to contribute to its consolidation”, affirmed, during the presentation of the half-yearly accounts, Jean-Baptiste Emin, deputy general manager of ‘Elo, the distributor’s holding company.
In the meantime, the northern group is trying to develop its offer. Arrived in November 2021, the new CEO of Auchan Retail has moved the lines. “They are aware of their difficulties, in particular the state of their aging store network, and are trying to implement solutions. In the supermarket format, they are testing new concepts”, explains Cindy Lombart. Remains a big pebble in the shoes of the distributor: its 119 hypermarkets. A model that has been losing momentum for several years. “Leclerc also relies solely on hyper, but its strength lies in its perennial discourse: prices. It is very credible and legitimate to do so. Auchan has a real problem, it no longer has a promise of sale”, adds she. A subject that cost Casino dearly.