Trade shaken up like never before by the pandemic
Each year, the Top 100 produced by LSA takes the pulse of the trade. But the production of the latest edition, which relates to 2020 revenues, was a very delicate and particular exercise. Because the pandemic led to drastic measures and had unprecedented repercussions from mid-March last year on all trade. What upset at the same time the balance of many distribution chains.
While large (and especially small!) food surfaces were taken by storm, whole sections of the economy, declared non-essential, had no choice but to lower the curtain. Textile, personal care, sport, had to grit their teeth. Then, traders faced the imbroglio of the selective closure of certain so-called non-essential departments within stores that remained essential, leading to misunderstandings and anger. Projecting on purely economic data (while bearing in mind the extreme health and social tension), trade had never been confronted with such a situation, with the possible exception of wars. Sign of the harshness of the past year, companies were much less numerous to answer us than usual. To move on, or perhaps out of a desire not to lift the veil too much on an annus horribilis. According to the information they were kind enough to disclose to us, added to our own estimates and information, the top 100 brands generated an overall turnover, all taxes and fuel included, of 325.5 billion euros. A figure down by 0.3% compared to 2019, but which combines diametrically opposed logics between food and non-food brands, which undoubtedly paid the price for the crisis.
The food sector, which represents two-thirds of sales in this ranking, rose by nearly 1%, to 220 billion euros. Which may seem low, when we compare the sales of FMCG which jumped 8.3% last year according to Kantar, the closure of restaurants and confinements having been powerful levers for the transfer to meals at residence. During the publication of the annual results, modesty was moreover rather on the side of the managers of hypermarkets, supermarkets and convenience stores, no one wanting to appear as a profiteer of the crisis.
But on a like-for-like basis, and excluding fuel, the GSAs had an exceptional year by force of circumstance. And in the figures published here, this increase is largely masked by the fall in fuel sales, linked to the limitation, or even the sudden cessation of travel during confinements and other curfews. Sales that we integrate into the turnover generated by Intermarché, Carrefour and others, and which are far from negligible. Fuel consumption fell by 14.9% last year according to INSEE figures. At Auchan, on a group scale, the shortfall reached 1 billion euros in all countries. An amount to be revised taking into account the weight of France, which is about half of the activity, or just over 500 million euros. At E. Leclerc, fuel generates more than 9 billion euros in turnover. And if we relate it to the overall decline quantified by INSEE, the loss of earnings of the sign on this activity largely exceeds one billion euros. Added to this, as indicated by the brand, is an exceptional decline of around 400 million euros in travel activity, which was almost at a standstill throughout the period.
Beyond this example, French spending has been completely reorganized under duress. According to INSEE data, in 2020, household final consumption expenditure fell by 7.1%, after rising 1.8% in 2019. “An unprecedented drop in the history of French national accounts , established since 1949,” explains the National Institute of Statistics and Economic Studies. At the scale of the Top 100, players outside the food world are down an average of 2.5%, with strong disparities from one universe to another. On the front line, the textile and clothing market, already in structural crisis, thus fell sharply by 17% last year according to figures from the French Fashion Institute. Faced with closed stores, consumers have not put their hands in the wallet to renew their wardrobe. Sport or beauty have also been put on hold for months. Decathlon, usually growing steadily, posted a decline of 5.5% last year. And even 9% on a comparable basis, since 2020 included the Alltricks and Decapro entities, which were not taken into account previously. "But of course you have to keep the context in mind, with three months of closure in the year", indicated the group.
Pharmacy networks in shape
The withdrawal of households to their homes has, on the other hand, had an accelerating effect for interior and decoration work. "Developing and improving one's habitat has become a priority for many French people", summarized Jean-Luc Guéry, president of Inoha (National Union of DIY, gardening and home improvement manufacturers) during the presentation of the market data. Data marked in particular by a surge in sales for DIY (+ 13%), an unprecedented trend which followed a successful 2019 and which had already set a record since 2007. The upturn can be seen in the performance of Bricomarché or Mr Bricolage, with double-digit increases. We should also point out, among the notable events in the 2020 ranking, the very good shape of the pharmacy networks which, in addition to the fact that they kept their character as essential businesses throughout the crisis, can also be explained by the effects of the expansion of park. The department stores were not so lucky and recorded an unprecedented decline in activity, given the long closures and lack of foreign customers.
Between the difficulties of some and the windfall effects of others, the health and commercial crisis has above all acted as an electroshock for e-commerce. In a few weeks, even a few days, many distributors have implemented click & collect or online sales solutions. The drives have also flourished in car parks, well beyond their initial food-oriented vocation. Toys, household appliances, clothing, everyone, or almost, has converted to it. The Fevad (Federation of e-commerce and distance selling) reports that online sales of store brands jumped 53% over the year with peaks of +100% during confinement. “2020 was a unique year. Digital is the big winner. The confinements will have carried consumer goods markets (food, electronics, hygiene, media, home, etc.), as they will have shaken up others (travel, catering, beauty, fashion, etc.). Within each market, the most digital, aggressive and financially strong players have taken advantage of the crisis to gain market share but also to accelerate their transformation,” noted Philippe Nobile, director of the Boston Consulting Group, in our series of forums dedicated to 2021, and entrusted to retail experts.
Thus Carrefour, which since the arrival of Alexandre Bompard has accelerated a lot on digital and drive, was able to pull the chestnuts out of the fire during the digital rush of customers. “E-commerce has resulted in growth of 1.3 million new customers in 2020, increased volumes and increased productivity, which has improved our model. Tomorrow it will be the highest value asset, especially since our omnichannel customers are our best customers,” the CEO said last March. At E. Leclerc, the confinement episodes saved four years on the planned digital objectives, the drive being qualified as “revelation of the year 2020”, with a 42% increase in activity. A huge figure given the lead of the brand in this area. For others, the progression has sometimes reached three figures, with the implementation of express solutions on all formats, such as at Casino. And everywhere, the recruitment of new customers worked at full capacity.
In the non-food sector, digital technology will not have made it possible to compensate for the long store closures, but it will have made it possible to limit damage in many cases. At Decathlon, the increase in online sales reached 32%, digital now weighing 15.6% of sales in France. The general interest being to have a ratchet effect and consumers now converted to digital. With a channel that is successful for pure players, but also for historical brands, provided they have taken the digital shift upstream. For large DIY stores, online sales grew by 111% last year, and for Leroy Merlin, its weight (600 million euros) and its vitality explain a good part of the growth in recent periods.
No tidal wave of bankruptcies
The digital conversion, sometimes at a forced march, has obviously not affected the pure players for whom it has been the model for years. Amazon, the first of them, firmly established in eighth place in our ranking and the leading representative of non-food, has obviously benefited from the pandemic, with an increase in sales that we estimate at 17% in France. The group's official figures are + 38% for Amazon's activity worldwide, which reached 320 billion euros in all branches last year. Which represents, by chance and to within a few billion, the turnover of this Top 100! Veepee (double-digit growth), La Redoute (+8%) also had a very good financial year, with Cdiscount lagging behind its competitors (+3.8%).
The addition of the massive recruitment of new customers via digital and the resurgence of orders placed remotely has boosted the weight of e-commerce in total retail sales in France. According to Fevad, it is now 13.1% (2020 figure), but above all shows a gain of 3.3 points in just one year. All digital is not yet for tomorrow, but 2020 will mark the calendar with a white stone for the transformation of companies. Among the expected consequences of the pandemic, the tidal wave of bankruptcies announced did not take place. Admittedly, difficulties have affected the signs already weakened because of their positioning, difficulties accentuated by the blockages linked to the "yellow vests" which marked the previous years. Thus, in the first half of 2020, André, Orchestra, La Halle, Camaïeu and Naf Naf were placed in receivership. So many brands that were already in turmoil in recent years. And sectors other than fashion were affected, with Alinéa, Parashop, Pacific Pêche, 5 à Sec and Tie Rack, which also suffered the same fate. “The groups entered into the safeguard procedure, or those in receivership are all players who, in the medium term, were destined to exit the market. Because they are generally behind on digital, on services. The crisis is only accelerating the process, ”said Clément Genelot, analyst at Bryan, Garnier & Co, when this cascade of failures was gaining volume day after day.
As for the actors eyeing the premises that the crisis would have made available, hoping for a massive recomposition of the city centers, they will be at their expense, because the commercial vacancy, although high, has not been multiplied by the failures. The safety net offered by state-guaranteed loans and partial unemployment aid has, it seems, limited the damage. After this extraordinary and extraordinary year, in the truest sense of the term, in-store work has resumed, with the deployment of corners and shops-in-the-shop. And the momentum of pedestrian drives and other digital solutions is reinforced by the explosion of orders. The forced Covid break, far from having stopped reflections on the role of the store and the hybridization of commerce, has on the contrary intensified them.The unprecedented repercussions of Covid and containmentA slight decline overallAnnual change in sales of the Top 100 retail chains in FranceSource: LSATop 100 LSA of the main retail chains in France in 2020Key figures for the main retail chains in France classified according to turnover Including tax 2020 (with fuel) Source: LSA Certain changes in scope or adjustments have been made in specific cases, which makes the data not comparable in terms of places gained or lost from one year to the next. LSALidl estimate Still growing insolent, Lidl now caps the Auchan hypermarkets, which remain in difficulty. Boulanger Abused during the confinements, Boulanger's sales exploded when the stores reopened. Household appliances, leisure and office automation have particularly boosted sales. DIY stores took advantage of this.Galeries LafayetteClosure for months, absence of tourists... 2020 was a dark year for department stores.Health LeaderLike its competitors, this large network of pharmacies experienced strong activity during the crisis, and continued its expansion.NocibéThe beauty and perfumery specialist suffered from the confinement, the French no longer placing these pleasure purchases at the heart of their priorities for months.Bureau ValléeThe rapid implementation of telework for many employees was a boon for the office supplies specialist. Primark Accustomed to regular progress since its arrival in France, the brand is in decline, but to a lesser extent, however, than the clothing sector. Top 100 business in 2020 and change in turnover vs 2019, in %The brands in the Top 100 excluding food were generally better bid than supermarkets. But the observation is not valid for the year 2020, which was agitated by commercial upheavals, with devastation for the field of clothing or sports, not to mention the department stores. Source: LSA The integrated in the red Cumulative sales brands by mode of operation in 2020, and change in % versus 2019 Source: LSA Smaller, more agile and rather present in dynamic niches, e-retailers and franchisees weathered the crisis much better than integrated groups as a whole, with, however, the fuel factor which comes into play for food distributors. Unsurprisingly, it was better to be a pharmacist than a department store owner e-commerce achieved a group shot in 2020, their steady growth having benefited from a boost due to the confinement which switched a part of physical purchases to digital tall. On the food side, three brands (Picard, Biocoop and Grand Frais) also benefited from the increased enthusiasm for home-made meals, the increase in meals at home and local shopping. Conversely, beauty and clothing specialists and even department stores saw their model come to a virtual standstill for several months, as the increase in online sales was insufficient to offset the drop in purchases. …and those that recorded the biggest dropsA bonus for the densest networksThe brands that recorded the biggest increases in turnover in 2020 vs 2019, in €m…Food is omnipresent in this ranking, which points to the biggest increases and volume of turnover. On the gain side, supermarket chains, discounters and convenience enjoyed a huge boost in 2020. Restrictions on travel encouraged the French to shop as close as possible. Conversely, the large hypermarkets have declined, but for more cyclical reasons than usual. Located further away from homes, they certainly experienced more erratic attendance but also accumulated the negative effect of the drop in fuel sales. Because gasoline, if it brings in little, remains a loss leader which represents hundreds of millions, even billions, of euros in turnover for these distributors.... and those who have recorded the largest declines Source: LSAE. Leclerc widens the gap a little with the other groups2020 turnover ranking by group*Despite a decline of 400 million in 2020, E. Leclerc did better than Carrefour (-800 million euros overall in France ). Behind these two elbow-to-elbow distributors, two independents have made comfortable gains, in line with recent years. This is the case for Les Mousquetaires, positioned in food and DIY, two sectors in high demand last year. For Système U, the supermarket model did very well, as did the convenience branch. The weight of Casino and Auchan, on the other hand, continues to wane. All hypermarket brands are in decline The year 2020 will not be remembered for hypermarkets, faced with upheavals throughout the year. The peak of March 16, the last day before confinement, will have seen the stores achieve sales worthy of Christmas Eve, before being almost deserted the following weeks. The return of customers was gradual, but activity was disrupted for months, in particular with episodes of shelf closures considered non-essential. In the end, the fall in turnover reached 3.4%, with a park that has not changed (net balance of a closure of all brands). The symbolic bar of 100 billion euros in turnover, which was brushed against last year, will not be for now. Except catch-up in 2021?