nalyst Franprix-Leaderprice: Accelerating expansion J.M. Duhamel

Transcription

1 Franprix-Leaderprice: Accelerating expansion J.M. Duhamel 1

2 A business model based on a dual structure 100% Wholesaling Retailing Integrated stores Franchise stores >50% (1) 0-50% 40% FP/ 50% LP 60% FP/ 50% LP Fully-consolidated (1) Accounted for by the equity method if over 20%-owned 2

3 Outline Franprix Overview Key figures The new concept Expansion Leader Price 3

4 Franprix: The shop around the corner Marché Franprix The shop around the corner for people who shop every d, for all occasions Stores designed to optimise shopping time Flexible opening hours Broad assortment meeting customers everyd shopping needs A process of continuous renewal (innovation, services, etc.) 4

5 Strengths of the Franprix model A model well-aligned with customers needs Prime city-centre locations Deep market coverage, primarily in Paris and its suburbs A redesigned concept aligned with customer expectations A balanced mix of leading national brands and competitively priced Leader Price products An efficient business model High margins for our franchisees: Franprix was ranked N 1 in the most recent Coface/Linéaires 20 survey A system driven by the franchisees entrepreneurial spirit: market development, localised offering, operational responsiveness, etc. 5

6 Franprix : An efficient supply chain organisation Montsoult Deliveries to stores in the Paris region Orly Chelles Tigery Chennevières Two dry goods warehouses: Chennevières: proprietary fleet Chelles: whole pallets only + Béziers (LP warehouse) for delivery to FP stores in Southeastern France Franprix Paris region Deliveries to stores in Southeastern France Montsoult Orly Chennevières 1 FP/LP fresh products warehouse: Montsoult (FP/LP): serving the whole of France 2 FP/LP fruit and vegetable warehouses: Tigery, for Franprix stores in the Paris region Noves, for Franprix stores in Southeastern France Béziers Noves 1 FP/LP frozen foods warehouse in Orly Serving the whole of France Strengths of Franprix s supply chain organisation Few warehouses lower fixed costs Dense store network in the Paris region served by local warehouses lower freight costs (distance, optimised delivery rounds) Control over freight costs thanks to proprietary fleet operating out of Chennevières 6 6

7 Franprix: 20e key figures Banner store base Banner revenue, incl. VAT Average retail area Revenue per sq.m. incl. VAT bn ~440 sq.m. ~ 6,000/sq.m. Integrated stores: 316 (40%) Franchise stores: 471 (60%) 7

8 The new Franprix concept: A concept tailored to customers needs First store: Caulaincourt, Paris end-2008 A bright and open store front, offering a clear view of the entire store A warmer, more contemporary atmosphere A more convenient, welcoming check-out area with basket check-out systems Consistent, simple and informative point-of-sale advertising and signage Revised floorplan More space devoted to fresh products Fruit and vegetables located as customers walk in the door A short-cut between the snack section and the checkout End-of-aisle displs dedicated to promotional offers Specific furniture for certain sections, such as bakery products, wrapped fresh produce and wine 8

9 The new Franprix concept: The contemporary corner shop (1/2) A bright and open store front A spacious entrance area An enhanced fruit and vegetable section 9

10 The new Franprix concept: The contemporary corner shop (2/2) A dedicated snacks section An enhanced traditional fresh product offering Clear, precise messages 10

11 The new Franprix concept : An offer tailored to each type of catchment area Offer concept A balanced mix (50/50) between Leader Price and national brands A common line-up of products available in all stores LP organic products in all catchment areas Offer tailoring Assortment tailored to catchment area and store size Low-income area stores: more affordable prices, more LP products City-centre stores: larger fresh produce and delicatessen sections, more snack products, more products sold individually Residential area stores: more family-oriented products and pack sizes Offer management Regular inclusion of new products: 900 new products in

12 The new Franprix concept: Promising results 15% average increase in sales at renovated stores Positive customer satisfaction surveys, with high scores for: Store design The speed and appeal of the shopping experience Staff friendliness and helpfulness The quality of the fruit and vegetable offer 12

13 Deployment of the new Franprix concept Three drivers of store base modernisation New stores The new concept will be deployed in all new stores Existing stores Comprehensive upgrades By the end of 20, around 50 stores will have been upgraded Alignment with the new banner identity = banner, store window stickers, LCD screens, paintwork in the checkout area, in-store signage, etc. By the end of 20, 70 stores will have been converted to the new banner identity End-2012 TARGET: All stores will at least have been aligned with the new banner identity (420 stores) or upgraded (310 stores) 13

14 Expansion: 2012 targets confirmed Number of Franprix stores , e 2010e Early

15 Priority expansion areas 95% of the store base is currently located in Paris and the Paris region 95% Paris & Paris region Lyon region The priority expansion areas are: Paris and the Paris region Lyon and the Mediterranean coast East Mediterranean Coast 15

16 Faster expansion since 2008 Sustained rate of future store openings Annual store openings [ e] 100 openings/year 16

17 An expansion program supported by master franchisees The franchisees will continue to drive Franprix growth Percentage of franchise stores 60% 61% ~50% 20e store base 20e 2010e Openings 17

18 Outline Franprix Leader Price Overview Key figures Expansion 18

19 The Leader Price concept Neighbourhood discount stores Mainly outside the Paris region Bright stores offering an easy, efficient shopping experience A comprehensive assortment covering a family s d-to-d needs Competitive prices, actively managed Efficient supply chain 19

20 The Leader Price supply chain organisation Etampes Orly Boufféré Montsoult Gretz Tigery Three dry goods warehouses: Gretz, Boufféré and Béziers: full truck-load deliveries Three fresh products warehouses Montsoult (FP/LP) 2 LP warehouses :Etampes and Narbonne Narbonne Noves Béziers Two FP/LP fruit and vegetable warehouses: Tigery and Noves 1 FP/LP frozen foods warehouse at Orly Serving the whole of France Strengths of Leader Price s supply chain organisation Few warehouses lower fixed costs Limited number of SKUs higher volumes High warehouse productivity Order-based approach to keep costs down (full truck-loads for dry goods, complete pallets, etc.) 20

21 The Leader Price concept The three pillars of the Leader Price concept: A concept based on low costs, discount prices and a single brand/banner 21

22 An assortment covering a family s everyd needs A broad assortment: some 4,200 SKUs covering a typical family s everyd needs Specific offers ~3060* ~420 ~200 Other (e.g. restricted brands, fruit & vegetables) ~520 Extended fresh produce and frozen food sections: fruit and vegetables, meat, charcuterie, delicatessen, etc. Selected regional products, based on local demand * Standard Leader Price products including Fine Ligne 22

23 Actively managed pricing and assortment Price repositioning on the most price-sensitive products and cut-backs in the line Assortment regularly adjusted, to pull the least performing items Revamped packaging conveying the quality and contemporary nature of the products and ranges Revived innovation process 23

24 Leader Price: 20e key figures Banner store base Banner revenue, incl. VAT Average retail area Revenue per sq.m. incl. VAT bn 910 sq.m. ~ 5,850/sq.m. Integrated stores : 289 (50%) Franchise stores : 293 (50%) 24

25 20: Decline in purchasing power in particular in lowincome households The purchasing power of French consumers has declined because of the crisis Trends in income, prices and purchasing power in France 6% 5% Income Prices 4% 3% Purchasing power on the rise 2% 1% Purchasing power declining 0% Source: Observatoire Cetelem 20 and low-income households were the first to be affected and the worst hit 25

26 In low-income households, the food budget is the first item to be cut Low-income households are over-represented in Leader Price s customer base 60% of Leader Price s customers are households with low or lower-middle incomes Nearly 40% of Leader Price s customers are households with three or more people, whose budget constraints are greater than others In low-income households, food is the first expense to be reduced They experience a greater percentage decrease in disposable income (due to a greater risk of unemployment, less diversified income base, etc.) Food accounts for a greater proportion of their total budget 26

27 The main w to cut back on food expenses is to buy less Households behaviour regarding food consumption When the lowest-income households (in the first quintile) cut their budgets, 4/5ths comes from buying less versus 1/5th from buying cheaper products change Price effect Volume effect Lower income Source: Insee s family budget surveys Higher income 27

28 Market outlook In this challenging environment, the discount segment should benefit from several favourable factors: An underlying shift in spending towards the discount segment, whose market share in France is still only 14.0% The French LME Act is favourable to the segment, and particularly to discount convenience stores with a retail area of less than 1,000 sq.m 28

29 In this market environment, Leader Price has maintained its market share Leader Price has maintained its market share since 2007 Market share in euros 12 months to 1 Nov. of each year 2.7% 2.7% 2.7% Worldpanel, TNS Products = FMCG + self-service refrigerated foods Scope: GMS = HM + SM + HD + Superettes Probable market share, based on survey data 29

30 and continue to deploy its differentiation strategy A 3 pronged-strategy Increasing shopper appeal Pricing assortments merchandising Marketing action plan, focusing on: Promotions Local marketing initiatives tailored to each store s competitive environment Brand communication : advertising campaign with JP. Coffe Cost savings plan Pooling LP, Casino and Monoprix private label purchases Optimising warehousing costs and freight costs both to the warehouse and from the warehouse to the store Reducing shelf-stacking costs through palletization and shelf-ready packaging Achieving operational excellence, thanks to optimised and aligned store practices (best practices, consistent execution) Accelerating expansion 30 30

31 Expansion: a key success driver for the discount segment In the discount segment in Europe, market share is closely linked to the number of store openings Number of stores Market share 20 The Nielsen Company 31

32 Expansion: 2013 target confirmed Number of Leaderprice stores 1, e 2010e

33 Faster expansion since 2008 Sustained rate of future store openings Annual store openings [ e] ~100 openings / year

34 An expansion supported by the master franchisees Franchisees continue to follow and invest in the Leader Price model Percentage of franchise stores 50% 48% ~50% 20e store base 20e Openings 2010e 34

35 Leader Price: a profitable business model Leader Price remains the second most profitable franchise model, behind Franprix Net margin of independent franchisees in France 2008 Franprix 2.33% Leader Price 1.73% Ecomarché 1.43% Marché Plus 1.% Marché U 1.05% Netto 0.81% Shopi 0.53% Source: Coface/Linéaires 20 35

36 Appendices 36

37 A much talked about communication campaign, JP. Coffe, an effective spokesman JPC fulfils his role of increasing the banners impact and visibility JPC is a man you either love or hate - and most people love him JPC is a recognised food expert who inspires confidence Agree Generally agree Jean-Pierre Coffe gives good advice to how to eat well on a limited budget 18% 51% 69% Jean-Pierre Coffe inspires confidence 18% 41% 59% Thanks to Jean-Pierre Coffe I am confident in the quality of Leader Price products 13% 35% 48% 37

38 , which strengthens Leader Price s image for quality at competitive prices The campaign shows that Leader Price has products for everyone 19% 53% 71% Leader Price has low prices 16% 54% 69%... you can eat well by shopping at Leader Price 15% 53% 69%... Leader Price is a banner you can trust 14% 51% 65% Leader Price has the same commitment to quality as to price 15% 49% 64%... Leader Price offers good quality products 15% 45% 59%... Leader Price is a discount store unlike any other 11% 42% 52%... makes me want to shop at Leader Price 10% 38% 48% 38