Large retailers facing economic crisis : Winners and losers, abstract.

Retailing actors are one of the most important tags showing the evolution of the economic crisis on the markets. Indeed, shortly after the start of the crisis, consumers became very careful with their money. In order to avoid temptation, people prefer modifying their way of consumption going to grocers and supermarkets rather than hypermarkets. So, since October 2008, consumption has lost 0.55 %. The volumes of alimentary expends are quite stationary concerning large establishments (thanks to supermarkets) although non alimentary goods (clothes, electronics, books, records…) are in regression.

The great winners are hard discounters and low-prices strategy

Wal-mart, world’s n°1 retailing company, appears to be the great winner. It’s marketing strategy is a succeed, leading the company in the USA to be considered as the one proposing the lowest prices and permitting it to realize a 12% raising of it’s quoted value.

In France, Casino group, with it’s two jewels Franprix and Leader price actually in high development, is quickly growing. Even Carrefour is tempting to use the same way of development: “Carrefour’s project is to sell it’s hard discount division (brands Ed and DIA), recently considered under the shareholder’s pressure, is no more actual”, says a retailing specialist (Study 2007, les échos).

The great losers, the companies who have not developed their own brands.

The great retailing companies who didn’t manage to protect themselves from the crisis are those who didn’t understand that they had to low their prices and to diversify their products too. Those two elements are present in the retailers own brands (ROB).

The ROB, cheaper than national brands, are logically very popular. Carrefour group, in which brand’s development has never be a priority, let go a good opportunity to limit the impact of the economic crisis. Since October, although keeping to be one of the cheapest hypermarkets, Carrefour has strongly limited his promotions.

Abstract

The economic crisis leads in retailing, as in many other sectors, to a major fall of the purchase power of the French. It’s international extension is going to modify the consumer way of buying around the world. He tries to save his money, buying the cheapest goods, mostly those of the retailers own brands.

Gradually some of the hypermarkets stop selling electronic goods. If this low price strategy seems to be the solution to minimize the effects of the crisis, can it be a long term strategy ?