European retail: Casino's diversification drives growth
Published:20-March-2009
By Datamonitor staff writer
Casino had a buoyant year in 2008, with sales rising 14.9% to E28.7 billion and earnings before interest, taxes, depreciation and amortization up 8.5% to E1.9 billion. Diversification played a fundamental role in this success, allowing the company to cater to changing consumer behavior in France. The group's multi-format, international spread should help it to weather the current economic storm.
French grocery giant Casino enjoys buoyant growth from format and international diversification.
Unlike some of its domestic rivals such as E.Leclerc and Auchan, which rely primarily on larger premises, Casino has developed a diverse, multi-format approach that encompasses today's most buoyant retail formats in France, namely discounters and convenience stores. As more and more consumers defect from hypermarkets to these stores, driven by factors such as price and proximity, Casino has reaped the benefits, with sales at its Leader Price/Franprix stores up 8.8% in 2008.
Furthermore, the group is capitalizing on the rapid growth of the online channel. Sales from its non-food e-commerce platform, CDiscount, were up 19.3% in 2008. A growing customer base and sales of around E800m through its online business have helped to offset declining non-food sales at the company's hypermarket stores.
Casino's extensive private label range, combined with its discount formats, means that the company is well positioned to respond to the increasingly price-sensitive nature of consumers, both in France and globally.
The company has managed to shore up further revenue from its international operations, predominantly in Asia and Latin America. Despite the global financial crisis denting consumer confidence around the world, Casino's international sales were up 43.8% in 2008.
Looking at the year ahead, the group's strongest growth potential in France lies with its discount and convenience formats. Recent amendments to the Loi Raffarin, which raised the maximum floor space of new stores opening in certain areas without official authorization to 1,000 square meters, play right into Casino's hands and will allow it to continue rolling out its smaller formats. While the economic crisis will encourage Casino to focus more on costs and reduce its capital expenditure, Verdict Research believes that the company should continue to invest in further developing its discount and convenience chains. Indeed, there is potential for Casino to extend its Franprix concept from its Parisian stronghold into other large French cities.
