At a time when supermarket giants are struggling to return to sustainable profitability, one model stands out: supermarkets in urban areas. Here is an analysis by the experts at AURIS Finance, a consultancy specialising in mergers and acquisitions.
Intermarché Express is now ‘the group’s most profitable point-of-sale format’, explains Thierry Cotillard, Chairman of the Les Mousquetaires group. In ten years, this type of outlet has grown from 10 units to 165 across France.
In 2023, these 150 shops generated sales of €1.26 billion. In comparable terms, this represents an increase of 15% over the previous year.
A structural crisis
A level of performance that is enough to make the giants of supermarket distribution swoon. In recent months, the major chains, and in particular the Casino group, have been in considerable difficulty. The group has been dealing with major financial problems, including a large debt, which has resulted in the sale of several shops to competitors such as Intermarché and Auchan in order to stabilise its financial position. The market share of the group’s banners has fallen sharply, from over 8% in 2018 to just 6.3% in 2023. More generally, mass retailing is currently facing a profound crisis. Traditional businesses have faced an influx of new competitors as the global economy has become more digital. In 2020, Auchan announced that it was cutting 500 jobs, while at the same time Amazon announced that it wanted to recruit 500 people over the next three years for its warehouse in the Paris region.
Behemoths versus urban centres
In addition to the arrival of 100% digital competitors, changing consumer habits are having a direct impact on the business models of traditional supermarket chains. Intermarché Express generates sales of €12,000 per square metre, compared with €8,000 for other shop formats in France. With the development of remote working, consumers are increasingly willing to make frequent trips to the supermarket. The inner-city supermarket model allows for multiple uses. In five years, the frequency of shopping in urban supermarkets has increased by 1.7%.
Buying smaller quantities, but shopping more often
Rising inflation is now encouraging consumers to buy smaller quantities, in favour of shorter but more frequent shopping trips. The smaller outlets, which are still very well-stocked (over 15,000 items in Intermarché Express shops), are attracting consumers away from huge supermarkets. The Les Mousquetaires group intends to step up its presence in town centres, and plans to have a network of 300 shops by 2030. This objective will be achieved in particular through the acquisition of former Casino group shops. At the beginning of 2024, Intermarché acquired 294 Casino shops. These are now in the process of being refurbished, with a series of reopenings planned over the coming years.
Our experts at your side
The dismantling of Casino shops in France marks the start of a new era in the retail sector. New models are emerging, driven by changing consumer habits. Retailers located in city centres are strengthening their competitive edge in a rapidly changing market. The coming months could see more mergers and acquisitions. AURIS Finance experts are specialised by sector. They will support you in your search for financing and in your sales and acquisition projects.
