Spanish boost for G&G

Related tags Carrefour Hypermarket Supermarket

Guyenne & Gascogne, the French retail group which operates a
number of stores under the Carrefour banner, suffered the same
downturn in sales at its French outlets in 2003 as the larger group
under whose fascia it trades - and also benefited from a strong
performance from their Spanish joint venture.

First quarter sales at G&G were down by 4.9 per cent at €297.4 million, due almost entirely to declining sales in the French market, where consumer spending levels remain depressed amid a climate of high unemployment and low economic growth.

Part of the decline was, however, due to the sale of the group's auto centres in March 2003 - a business which formed part of the Sogara joint venture with Carrefour in France - and to the sharp decline in petrol prices during the quarter. Without this impact, sales would have dropped 3.1 per cent.

But like both Carrefour and the other operator of franchised stores under its banner, Hyparlo, G&G has been concentrating its efforts on reducing prices over the last few months - a move towards an everyday low prices policy rather than one driven by promotions - and this has had an inevitable effect on sales at its French stores.

The Spanish business, however, continues to go from strength to strength, buoyed by a combination of a strong economy and a rapid expansion programme which saw four new hypermarkets and 30 new supermarkets open their doors in 2003. But the group's existing stores also showed excellent growth, with gains of 1.7 per cent and 7.8 per cent respectively for the supermarket and hypermarket operations. Total Spanish sales from the Centros Comerciales Carrefour reached €2 billion, but G&G does not consolidate these results as it has only a minority stake in the unit, majority controlled by Carrefour.

The rising power of the discount sector - which has been the main beneficiary of the fall in consumer purchasing power - has made it imperative for traditional hypermarket operators to cut their prices considerably, but G&G said that the first benefits of this strategy were already being seen, principally through an upswing in customer numbers.

To tie in with this, Carrefour (and its franchisees) has this month rolled out a new customer loyalty card scheme, offering shoppers permanent discounts on a number of products they buy on a regular basis - and which, most importantly, are chosen by the shoppers themselves.

Related topics Market Trends

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