Monoprix S.A.

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Monoprix S.A.

Tour Vendome 204 Rond Point du Pont de Sevres
Boulogne Billancourt, F-92516
France
Telephone: (33 01) 55 20 70 00
Fax: (33 01) 55 20 74 66
Web site: http://www.monoprix.fr

Private Company
Incorporated: 1992 as Magasins Monoprix SA
Employees: 18,000
Sales: EUR 3.3 billion ($5 billion) (2005)
NAIC: 452111 Department Stores (Except Discount Department Stores)

Monoprix S.A. is one of the oldest names in French retailing, and it remains a leader in the country’s city center retail sector. The company operates more than 300 stores throughout France, covering more than 85 percent of all cities with a population greater than 50,000. The company’s flagship remains its Monoprix department stores, which feature a mix of food, clothing, and variety items. These stores are positioned toward the high-end, high-quality bracket in order to differentiate them from the discount retail market; however, Monoprix’s heavy emphasis on its own brand named goods enables it to remain competitive, with prices averaging only 3 to 6 percent higher than its discount rivals. Approximately 64 percent of the Monoprix store chain’s sales come from food items. Monoprix, which took over its main rival Prisunic in the late 1990s, has rolled out a number of new specialty store formats at the dawn of the 21st century. These include convenience store formats Daily Monop’, launched in 2003, and Monop’, launched in 2005; and Beauty Monop’, specialized in cosmetics, skin care and perfumes, launched in 2006. Monoprix S.A. is jointly owned by founding department store group Galeries Lafayette and supermarket giant SAS Casino Guichard Perrachon. Monoprix posted revenues of EUR 3.3 billion ($5 billion) in 2005.

FRENCH ANSWER TO WOOLWORTH’S IN 1932

By the end of the 1920s, Galeries Lafayette, founded in the 1890s by Alfred Kahn and his cousin Theophile Bader, had grown into France’s second largest department store chain, beating out perennial rival Printemps. In addition to the flagship Parisian store, which was to remain a city landmark into the 21st century, Galeries Lafayette had launched its expansion into other major French markets, opening stores in Lyon, Nantes, Montpellier, and elsewhere. Galeries Lafayette had also built a strong presence in the mail order market, building up a national network of sales agencies. By then, Bader had become the head of the company, assisted by sons-in-law Raoul Meyer and Max Heilbronn.

Yet into the beginning of the 1930s, and amid the devastated Depression era economy, Galeries Lafayette found itself playing catch-up to its rivals. At the end of the 1920s, Nouvelles Galeries became the first French company to introduce the discount variety store retail format developed by Frank Woolworth in the United States in the later part of the 19th century. The first Uniprix store opened in 1929. Printemps quickly followed this precedent, creating its own discount department store, dubbed Prisunic, in 1931. As the store names indicated, the new store type adapted the “five-and-dime” model of limited price ranges popularized in the United States, while providing a large assortment of food, clothing, and other items targeted especially to its city center customers’ needs. At the same time, the urban market had undergone a population explosion, as large portions of France’s rural population moved into its cities to take up jobs in the booming industrial sector. The economic context of this growing working class played a major role in the changing face of French retailing.

Galeries Lafayette became determined not to be left behind. In 1931, the company created a new subsidiary, La Nouvelle Maison, and opened its first two variety stores in Paris. By 1932, Nouvelle Maison, led by Max Heilbronn, had opened its first provincial stores. The initial stores were called “Lanoma” (as a contraction of La NOuvelle MAison). However, by the end of 1932 and with the opening of a store in Rouen, the company had adapted a new and more evocative name— Monoprix. That name also became the name of the subsidiary overseeing development of Galeries Lafayette’s city center variety stores. Monoprix was supported by the creation of a new central purchasing subsidiary, Société Central d’Achats (SCA), created in 1932.

Despite the appeal of its low-priced strategy, the new store chain struggled amid the disastrous economic climate of the early 1930s. For the first years of its existence, Monoprix remained a consistent money loser. Yet Heilbronn worked hard at refining the stores, including making frequent trips to London to study the operations of such retailing legends as Woolworth and Marks & Spencer. Heilbronn, still in his late 20s, also received assistance directly from retailing legend Simon Marks himself.

By the middle of the decade, Heilbronn appeared to have found the formula to success. The Monoprix at last became profitable—and then entered a new period of rapid growth. The company began opening new stores throughout the country, targeting the larger urban markets, raising its number to 12 stores by the late 1930s. In 1938, however, new legislation was enacted that limited the number of five-and-dime type stores that could be opened in the country’s city centers. While the new laws severely limited Monoprix’s own growth prospects, it brought in new growth elsewhere. In response to limited on their own growth, a growing number of discount retailers joined Monoprix’s SCA network. The influx of new affiliated stores enabled Monoprix to expand its network to 38 stores by the end of 1938, and to more than 55 stores by 1940.

POSTWAR CITY CENTER GIANT

The French capitulation to the German army and the Nazi occupation of the country brought disaster to both Galeries Lafayette and Monoprix. Anti-Jewish legislation allowed French collaborators to take control of both retail operations. While Raoul Meyer went into hiding, Max Heilbronn entered the Resistance, becoming a leading figure in that effort before he was captured, beaten, and then sent to the Buchenwald concentration camp. Heilbronn survived the camp, however, thanks to help from Étienne Moulin, who became Heilbronn’s son-in-law and joined the company following the war.

With control of both Galeries Lafayette and Monoprix returned to Meyer and Heilbronn, the brothers-in-law, assisted by Moulin, set out to rebuild the operation. While Galeries Lafayette, and especially its Paris store, remained the group’s flagship, Monoprix was earmarked as the vehicle for the group’s larger expansion. By 1950, Monoprix had succeeded in rebuilding its store network, then boosting its total number to 60 stores, with half of these directly owned by the company.

COMPANY PERSPECTIVES

Monoprix’s mission is to improve the daily lives of its clients by inventing, selectioning and distributing the products and services for everyday life. Monoprix, Monop’, Beauty Monop: three brands at the center of towns and their neighborhood whose ambition is to respond to and to anticipate the desires of their clients.

A major boost in Monoprix’s network came in 1952, when Galeries Lafayette acquired a stake in rival Nouvelle Galeries. As part of that transaction, Nouvelle Galeries agreed to place its Uniprix store chain within SCA’s operations. Through that decade, Monoprix continued opening new stores, while adding other retailers and retail groups to its broader network. By 1960, the company’s network had climbed to more than 200 stores, and by the middle of that decade neared 300 stores. Aiding Monoprix’s growth was its early adoption of its own in-house brands during the 1950s. These included Montjoly and Beaument, for food products, the textile brand Florine, cleaning products under the Sipratic brand, and Kilt for variety goods items.

Monoprix became the home for another Galeries Lafayette venture in 1971. In 1960, the parent company had formed a partnership with Belgium’s Innovation S.A. department store group. Called Inno-France, the joint venture set out to develop a new chain of city center supermarket-department stores, modeled after the growing popularity of hypermarkets just then being introduced in the country’s edge-of-town commercial areas. The partnership quickly opened six stores—and as quickly lost money. By 1965, Galeries Lafayette had bought out majority control of the joint venture, and transferred the operation of its stores to Monoprix. Nonetheless, it took the company another four years to raise these stores into profitability. Monoprix took full control of Inno-France in 1971.

By then, Monoprix had engaged in its own ultimately futile effort to enter the supermarket trade. The rise of the hypermarket, the development of edge-of-town commercial zones, and the beginning exodus of both the working class and the middle class to suburban regions had begun to place a serious drain on the Monoprix’s city center locations. In 1968, Monoprix attempted to develop a hypermarket format, dubbed Super M. At the same time, the company, using the clout of its SCA buying network, sought to pressure manufacturers into refusing to supply the hypermarket groups. Both strategies failed, however, as the hypermarket groups—such as Carrefour, Casino/Geant, Auchan, and Le Clerc—quickly gained control of the French distribution market. At the same time, Monoprix’s background of retailing only a limited assortment of goods made it difficult for the company to adjust to the extended offerings of the hypermarket sector. Ultimately, Monoprix was forced to abandon that market, selling off most of its hypermarkets, and converting other locations to the Monoprix format.

NEW FORMATS FOR THE NEW CENTURY

With crushing competition from the new wave of fast-growing retail giants, and continued declines of its traditional working-class and lower-middle-class clientele, Monoprix was forced to adapt. Hope came for the company in the 1980s as people returned to the country’s cities. The company, led by CEO Philippe Houzé since 1982, adopted a new store model in order to target this fast-growing and relatively affluent market. The company expanded its stores, which doubled in size and began to emphasize food items, and developed a more high-end product assortment overall. By the beginning of the 1990s, food sales represented 50 percent of the company’s total sales.

The early 1990s presented new challenges for the company, with a new economic slump giving rise to a new breed of deep-discount retailers, such as the Aldi and Lidl supermarket chains. Monoprix responded in part by continuing to extend its private label ranges, such as the launch of the Naturellement line of men’s and women’s cosmetics and toiletries in 1992. In this way, the company was able to keep its prices under control, posting average prices of less than 6 percent more than its discount rivals. Also during the 1990s, Monoprix abandoned its variety store format altogether, launching instead a new Citymarché concept, expanding its business hours, refurbishing its stores, and adapting its product lines to attract a more affluent, urban—and especially feminine—clientele. This effort was also paired with the continued development of the group’s private label line, largely rebranded under the Monoprix name, and extended to include organic foods, equity commerce products, and environmental packaging.

KEY DATES

1932:: Max Heilbronn launches Monoprix variety store format as part of Galeries Lafayette and forms the SCA central purchasing subsidiary.
1952:: Monoprix retail chain tops 60 stores; rival Uniprix joins the SCA network.
1968:: Monoprix attempts entry into hypermarket sector with launch of Super M format.
1971:: Monoprix takes over stores from Inno France joint venture originally formed by Galeries Lafayette.
1982:: Launch of new retail model, doubling store size and emphasizing food items.
1991:: Company takes over the Uniprix store network.
1994:: Creation of Citymarché strategy targeting affluent urban market.
1997:: Company acquires rival Prisunic.
2003:: Launch of the convenience store format Daily Monop’.
2006:: Launch of Beauty Monop’ cosmetics and perfumes format.

Monoprix grew again in the early 1990s when parent company Galeries Lafayette boosted its stake in Nouvelle Galleries, which in turn triggered an automatic takeover offer required by French law. The takeover brought full control of the Uniprix chain, which by then numbered more than 60 stores, which were placed under Monoprix in 1991.

The next major moment for the company came in 1997, when Galeries Lafayette, in partnership with SAS Casino Guichard Perrachon, acquired the Prisunic chain from the Printemps group. That purchase expanded Monoprix’s operations with 140 new stores throughout France, as well as nine stores outside of the country. Through the rest of the decade, the Prisunic stores were rebranded under the Monoprix signage. With 300 stores, Monoprix was the last survivor of the original variety store boom, and had claimed a solid leadership in the city center retail market.

As part of the Prisunic acquisition, Casino had gained a 21.6 percent stake in Monoprix. In 2000, as Galeries Lafayette focused on its new strategy of extending its own department store operations into the international market, the company agreed to take on Casino as a full partner in Monoprix, with each company holding a 50 percent stake.

By the middle of the first decade of the 2000s, Monoprix had succeeded in redeveloping its image as a sophisticated retailer for a high end city center market. The company also began developing new formats for the new decade. In 2003, the company entered the convenience store sector, launching the small-format Daily Monop’ in 2003. This was followed by a second convenience store format, Monop’, added in 2005. By 2006, the booming market for cosmetics, skin care products and perfumes led the company to develop its own format for this retail segment, opening the first Beauty Monop’ that year. After 75 years, Monoprix had built a solid reputation as one of France’s most-admired retailers.

M. L. Cohen

PRINCIPAL DIVISIONS

Monoprix; Allo Monop’; Beauty Monop’; Monop’.

PRINCIPAL COMPETITORS

Carrefour S.A.; ITM Entreprises S.A.; Auchan Group; Pinault Printemps-Redoute; Lecasud; Bazar de l’Hotel de Ville S.A.S; Carcoop France S.A.S.; Le Bon Marche S.A.