2023-11-02 05:30:00
This Thursday, October 26, as the presentation of Fnac-Darty’s quarterly results to financial analysts ends, suddenly, Enrique Martinez, the group’s CEO, cracks a small self-promotion page: “Our stores are at your disposal to do your Black Friday and Christmas shopping, so I’m counting on you! » Certainly, the sentence is said in a joking tone. However, at the moment, every customer counts for Fnac-Darty. For two years the company’s turnover has stalled. And this fall, signs of deconsumption are increasing in the non-food retail sector. Clothing, DIY or gardening: all these sectors are showing declining sales.
“This drop is clearly a result of price increases in food,” analyzes Emmanuel Le Roch, general delegate of Procos, the professional federation of specialized trade. Part of the consumer budget is taken up by everyday expenses. The arbitration was final, to the detriment of non-food items. » In September, its federation drew up an alarming assessment: the turnover of specialized trade shows a decline of 4.2% over one year, despite prices inflated by inflation. Twenty months after the start of the purchasing power crisis, and with food prices still rising by more than 20% over two years, the time is no longer for concern for distributors, but for concrete consequences. . Especially since there is “a scissors effect,” says Emmanuel Le Roch. Energy and wages continue to increase while sales are slipping, which weighs heavily on margins.” And the former real estate director of Darty warns of “an impossible equation”.
Frozen purchasing intentions
Indeed, things have been rocking all over the place since the start of the school year. The ready-to-wear chain Naf Naf will have to close 17 stores, following the sad series of Kookaï, Don’t Call Me Jennyfer and Camaïeu. Maisons du Monde stores saw their turnover drop by almost 10% over one year; Teract (InVivo), which owns Gamm vert and Jardiland, has abandoned its financial objectives for 2024-2025; the number two French e-commerce company, Cdiscount – weakened by the difficulties of its parent company Casino – saw its revenue collapse by 25%.
There is no hope of immediate improvement. This month of October, the Society and Consumption Observatory (ObSoCo) unveiled a new edition of its barometer of purchasing power and intentions. “40% of French people limit their spending as much as possible,” underlines its general director, Guénaëlle Gault. They were 26% two years ago. » This big cold spell can also be seen in their savings rate: usually around 15%, in September it came close to 19%. “When things are bad, we tell ourselves that things could get even worse,” deciphers the expert. Consumers have massively equipped themselves during the Covid-19 epidemic and no longer have the heart to make unnecessary purchases when they count every euro to fill their fridge.
So the equipment and people specialists go into survival mode. Including big names, like Leroy Merlin, a major brand of the Mulliez family, with its 37% market share in DIY. Its parent company, Adeo, penalized by rising material costs, has internally announced a competitiveness plan to improve profitability. Code name: Pact One Team. The latter was sent by email to all employees of the company on September 8. “We are accelerating the application of our pricing strategy to optimize our margin by improving price accessibility for strategic families,” we can read in this note that Challenges obtained. Leroy Merlin intends to tighten the screw on expenses, announcing that no external recruitment will take place between now and the end of the year and a reduction in overheads with a target of 20%.
The Ikea model costs money
Social breakdown is looming. Valued at $2.6 billion in 2021, ManoMano, an e-retailer specializing in DIY, presented a reorganization project to staff representatives on September 12, which could result in the elimination of 150 positions in France and 80 in Spain. , on a workforce of 900 employees. The 2,000 employees linked to the Habitat furniture brand are also worried about their future. “We are in a dramatic situation,” warns the central union delegate of the CGT, Ratiba Hamache. Suppliers have not been paid for a year. Neither do the providers. Many stores do not pay their rent. » Currently under safeguard procedure, the group could go into receivership. Its owner, Thierry Le Guénic, is looking for a buyer.
A little corner of blue sky amid the clouds of non-food retail, Ikea could inspire its competitors. Like Leclerc in the food industry, the Swedish furniture giant has reaped the benefits this year of the consistency of a strategy: being the least expensive. “Being affordable is Ikea’s DNA,” underlines Johan Laurell, president of the brand in France for the past year. Result ? An increase in turnover of 16% over one year, driven by the iconic Kallax shelf, from 40 euros, or the Eket modular storage, at just 20 euros. This performance did not escape Maisons du Monde, which “focuses on a triptych: the brand, customer service and prices”, summarizes its reference shareholder, Gabriel Naouri. The brand particularly wants to rethink its price list. “In this period, it is probably more difficult to make the entire range accessible, which is why we have a real interest in making targeted and tactical price reductions which meet significant interest from customers,” underlines its new general director, François-Melchior de Polignac.
Will downscaling be the escape route for non-food in times of inflation? Philippe Moati, co-founder of ObSoCo, warns: “Going into a logic of cutting prices could sacrifice the image of brands in the longer term. » Some players then try to reorganize their stores to stick as closely as possible to customers’ wallets. The discounter Maxi Bazar, owned by the Zouari family, has decided, for example, to develop its hygiene and beauty department. “This is clearly the answer to the problem of purchasing power,” explains the CEO, Jean-Marie Pomarès. In certain stores, these products will replace the textile section, which is in arrears. Likewise, in fashion chains, where bankruptcies are increasing, it is the second-hand offer that crystallizes all the hopes, while in less than ten years, the Vinted bulldozer has become the third e-commerce site. most visited business in France. On September 7, Zara launched its site dedicated to second-hand clothing.
Unlimited repair
It’s not just the stores’ offerings that adapt to inflation; industrialists also take their share. To make its toys more accessible, the Vulli group, manufacturer of Sophie La Girafe and The Magic Tree of Klorofil, has modified the design of some of them, removing one or two functions, without distorting it. Objective: not to exceed 30 euros for a toy like the Croco Family, which changes color on contact with water. Likewise, the specialist in cleaning and hygiene products L’Arbre vert increases the size of some of its items for the same price. “Our dishwasher tablets have gone from 30 to 32 tablets per pack,” explains marketing director Géraldine Séjourné. Family formats are also developing, limiting packaging.
But when sales decline, the solution can also lead to reviewing your business model. In this area, Fnac-Darty is undoubtedly the archetype, with its Darty Max subscription, which offers unlimited repair of household appliances from 12 euros per month. With more than 1 million contracts subscribed, the formula is a success. “At the moment, environmental constraints are joined by financial constraints,” analyzes Guénaëlle Gault. The notion of repairability is on the rise. » According to Fnac-Darty, the improvement in the group’s gross margin rate in the third quarter of 2023, of 70 basis points, is mainly attributable to this offer. Added to this will be the creation of a new branch, via its joint venture with CMA CGM in logistics for e-commerce, announced at the beginning of October, which will also generate margins.
Recycling and second-hand are soaring
Leroy Merlin is also digging into this services trend. Agathe Monpays, its new general director, will launch this Thursday, November 9, the system designed by the DIY brand, My renovation journey: the aim is to connect each individual with the right people involved in their energy work project. “Leroy Merlin is well placed to play this role of coordinator in the need to renovate buildings, it is economically interesting and we are legitimate,” underlines a spokesperson.
All these adaptations are essential, because the inflation crisis is likely to last for many months. “We could see an improvement in discretionary consumption (non-essential products and services) in the second quarter of 2024, but not before,” judges Clément Genelot, distribution and e-commerce analyst at Bryan, Garnier & Co. And nothing indicates that a new inflationary episode will not occur again. “We have entered a regime of constrained consumption,” believes Philippe Moati. The health crisis was the first episode, now we have inflation. With climate change, other episodes could take place. » For the expert, new consumption patterns, from second hand to repair, are a groundswell. Rather than endure them, distributors have every interest in supporting them.
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