International analysis: Auchan on course to become €100bn retailer

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Auchan’s sales jumped 5.8% to E46.9bn (£39.9bn) in the year ended December 31, fuelled by expansion and like-for-like performance.

In France Auchan posted a 2.2% sales rise in the year ended December 31

In western Europe, total sales were stable with a small 0.7% decline despite the difficult economic situation in Italy, Spain and Portugal. It is a satisfactory result given the competitive and macroeconomic environment.

In France, the retailer posted a 2.2% sales rise as its Simply supermarket banner and hypermarket format made headway - the latter posted a 0.3% like-for-like sales rise. This is in stark contrast to competitors such as Casino, which suffered a 6.2% decline over the same period. Even so, Auchan is well behind rival Leclerc.

Auchan’s positive price image is likely to have contributed to the good results in France. Instead of direct price competition, Auchan prefers to broaden its ‘under E1’ offer alongside its long-standing Self-Discount area.

The retailer remains confident in its hypermarket format. Several store enlargements and two new hypermarkets are scheduled to open in the already saturated Paris area.

Last year was the year in which Auchan went shopping in central and eastern Europe, propelling itself into the limelight as a big player in the region with the acquisition of Metro Group’s Real hypermarkets in Poland, Romania, Russia and Ukraine for E1.1bn (£937.8m), and the purchase of seven more hypermarkets in Hungary. A major challenge for Auchan will be to harmoniously merge those operations while continuing to strengthen trans-regional synergies before moving ahead.

Nonetheless, Russia and China remain its growth pillars. In China, Auchan is the leading foreign operator and the goal of operating 200 supermarkets and 100 hypermarkets by 2016 seems within reach. The retailer posted solid turnover, up 14.3%, in the country, and more than 100 hypermarkets are already under construction. In its third BRIC country, India, it will be aided by its franchise agreement, seizing the initiative in the market while other international retailers remain undecided.

Auchan aims to become a E100bn (£85.2bn) retailer by 2018 and is giving itself every opportunity to achieve this lofty ambition, as shown by its 2012 investment reaching E1.9bn (£1.6bn), against E1.55bn (£1.32bn) spent by the world’s second-largest retailer, Carrefour.