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Retail Trends

Casino Betting on Emerging Markets

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France-based Casino’s strategic decision to invest in a handful of fast-growing markets has proved successful, with net sales having grown 3.8 percent to $10.78 billion during the second quarter. Once again, international operations lifted the grocer’s growth 13.1 percent to $5.11 billion. In Brazil, Casino’s second-largest market, the retailer secured around one-third of its total sales from the official takeover of Grupo Pão de Açúcar (GPA). As with Carrefour, Casino benefits from the strong performance of its cash-and-carry format Assai and its non-food specialist Via Varejo. Casino has a dominant position in Brazil, but it is fair to say that Carrefour will be looking to close the gap. In Colombia, where Casino holds a market share greater than the next three competitors combined, the retailer reported that second quarter sales rose 15.5 percent. Like its parent company, Exito has developed a successful multi-format strategy covering the whole customer spectrum, and operates the e-commerce website Additional cash will likely be used to finance expansion, both domestically in Tier 2 and 3 cities and in the recently-acquired Uruguayan operations. Casino’s multi-banner, multi-format approach has allowed it to maintain its marketshare in France as it invests in emerging markets. Unlike Carrefour, Casino has resisted becoming embroiled in price wars, which so far have benefited Leclerc and its peers. However, there is a case for promoting its private-label ranges more effectively in order to maintain a solid value proposition for shoppers. The dispute between Casino and its partner Galeries Lafayette over the valuation of Monoprix has been resolved. The latter will sell its stakes to Casino for $1.55 billion by October 2013. The high-end supermarket chain’s sales grew a slight 0.2 percent to $621 million. A thorn in Casino’s side remains its Géant hypermarkets, with sales declining 6.2 percent to $1.6 billion, attributable mostly to non-food sales. The retailer announced it is embarking on a three-year project to stabilize its hypermarket division. Non-food ranges continue to be scaled back, beginning with an 8 percent cut in non-food sales areas over the past six months, as it places stronger emphasis on fresh products and specialist counters.

Alternative strategies Casino has been a leader among bricks-and-mortar grocers enthusiastically embracing e-commerce thanks to its flagship site CDiscount, the success of which has gone a long way to counteracting the hypermarkets’ non-food sales declines. As part of the retailer’s cross-channel strategy, CDiscount concessions can be found in hypermarkets, showcasing the best-selling website items, along with a CDiscount kiosk from which shoppers can order additional goods online. Despite French sales declining by 2.9 percent to $451 million in the most recent quarter, Casino will continue to expand via smaller-footprint units. Casino stresses that franchises performed better than integrated stores, the latter needing to be revamped and adapted to ever-changing local needs. Also, the Daily Monop’ banner is being rolled out in train stations and motorway service stations in parallel with standalone drive-in Casino Express. Casino reported mixed results for its Leader Price soft discounter and Franprix chains, with sales declining but trading profit increasing over the first six months. The grocer’s disappointing performance with its small-box division will not impact Casino’s expansion plans for this format, although management will be looking to rectify any operational issues. Internationally, the group will continue increasing its exposure to emerging markets, benefiting from the diversity of its operations both in terms of geography and channel.