Comptoirs Modernes S.A.

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Comptoirs Modernes S.A.

1, place de Gué de Maulny
72019 Le Mans Cedex
France
(02) 43 86 28 20
Fax: (02) 43 72 32 75

Public Company
Incorporated: 1896 as I’Union Commerciale de Meaux; 1928 as les Comptoirs Modernes
Employees: 23,088
Sales: FFr 30.2 billion (1996)
Stock Exchanges: Paris
SICs: 5411 Grocery Stores

Of the leading independent food retailers in France, Comptoirs Modernes S.A. is one of the smallest. Comptoirs Modernes’ three percent market share distances it from market leaders such as Leclerc (15.3 percent), Intermarché (15.1 percent) and Carrefour (12.9 percent). But as its larger competitors have struggled through the extended French economic crisis of the 1990s, Comptoirs Modernes has been able to show impressive growth, posting a gain of nearly 12 percent on annual sales and 11 percent on net profits in 1996, reaching FFr 30.2 billion and FFr 501 million, respectively.

Long focused exclusively on the French domestic market, Comptoirs Modernes, driven in part by government restrictions on new supermarket openings, has begun to expand internationally. In 1996, the company, which had been operating super-markets in the Catalonia region of Spain through its Comodisa subsidiary, acquired controlling interest in a partnership between Comodisa and Spain’s Maxor supermarket chain. Controlling interest in a second Spanish supermarket partnership, with Supermercats Economics, expanded Comptoirs Modernes’ Spanish holdings to 75 supermarkets, making the company the second-largest food retailer in the Catalonia region and Spain’s 12th-largest independent food retailer. Comptoirs Modernes expected more foreign expansion to fuel company growth. Principal expansion targets include Italy, Poland, and Brazil, and potentially countries in Eastern Europe and Latin America.

In France in the 1990s, Comptoirs Modernes operated three supermarket chains, each exploiting a specific market niche. The company’s flagship is its chain of Stoc supermarkets. With an average selling space of 1,244 square meters, the Stoc stores position themselves between the growing numbers of hard dis-counters in France and the larger hypermarket chains, which reach an average selling space of nearly 9,000 square meters. Unlike the hypermarkets, which sell everything from food to clothing to car parts and appliances, Stoc stores concentrate sales on food, primarily fresh foods, which account for nearly 44 percent of total Stoc sales. Stoc stores appeal to a largely loyal customer base with a limited but complete selection of everyday groceries. The company competed with hard discounters and traditional supermarkets alike by offering a distinct selection along three price points: generic-priced products, mid-priced products under the company’s private-label Stoc brand name, and premium-priced brand name products. In 1996, the Stoc chain of 385 supermarkets, of which 29 were operated as franchises, produced nearly 73 percent of the company’s total sales.

While the majority of the Stoc supermarkets remain company-owned, Comptoirs Modernes has developed a second, largely franchised chain, operating under the Comod name, of smaller supermarkets and even smaller superettes. Comod stores, which range in average size from 292 square meters for the smaller superettes to 414 square meters for the Comod supermarkets, complement the Stoc chain by targeting a sepa-rate marketing niche. Where the Stoc stores operate primarily in the commercial areas located in a city’s periphery, the Comod chain operate within residential areas, using competitive pricing, emphasis on fresh foods, and proximity to draw customers and achieve market leadership in smaller areas. Managers of Comod franchises have been generally community residents with strong relationships with their customers; new Comod stores often have been conversions of Stoc and other supermarkets that do not fulfill that chain’s selling area requirements. Nearly 80 percent of the 266 Comod stores were operated as franchises; of the total number of Comod stores, 93 are super-markets serving rural areas and 173 are superettes serving more urban areas. Comod operations were concentrated almost entirely in the north and northwest of France in the 1990s.

The third branch of the Comptoirs Modernes group is The Marché Plus chain, which totaled 38 stores in 1996, and was being developed as a franchise. Marché Plus stores, with average selling space of 264 square meters, target the long-neglected urban market with a selection of fresh foods at prices comparable to supermarkets, while also offering complementary services such as dry cleaning, video rentals, ticket sales, newstands, and film processing. Another feature of the Marché Plus chain was its extended operating hours, which are seven a.m. to nine p.m. six days per week, including Sunday hours from nine a.m. to one p.m., in a country where stores tradition-ally close by 7:30 p.m. and remain closed on Sundays. Typical Marché Plus customers range from the young, urban shopper to older shoppers who tend to be accustomed to daily shopping in their neighborhoods.

In addition to its Stoc, Comod, and Marché Plus chains, the Comptoirs Modernes group, through its jointly owned subsidiary Sogramo, operated 16 Carrefour hypermarkets, primarily in the company’s northwest base of Le Mans, with average selling space of 8,800 square meters. Carrefour was also the major shareholder in Comptoirs Modernes, with 23 percent of the company’s stock and 32 percent of the voting rights. Comptoirs Modernes’ 50 percent ownership of Sogramo provided the group with approximately 14 percent of the company’s total sales. In Spain, the company operated 50 supermarkets under the Maxor and Maxim names through its 60 percent ownership of the Maxor partnership, and 25 supermarkets under the Supeco and Merca Plus names through its 72 percent ownership of the Supeco partnership.

The Comptoirs Modernes group operated as a decentralized organization operating through six regional operating divisions in the 1990s. Comptoirs Modernes Economiques de Normandie (CMEN) operated 181 Stoc, Comod, and Marché Plus stores in 15 departments in the Pays-de-Loire, Haute and Basse Normandie, Poitou-Charente, and He de France regions, with a base in Le Mans. Comptoirs Modernes-Badin-Defforey (CMBD) operated 79 Stoc stores in 14 departments in the Auvergne, Bourgogne, Franche-Compte, and Rhone-Alpes regions, with a base in Lagnieu. Comptoirs Modernes Economiques de Rennes (CMER) served 11 departments in the Bretagne, Basse-Normandie, and Pays-de-Loire regions with 182 Stoc, Comod, and Marché Plus stores. Comptoirs Modernes-Major Unidis (CMMU), formed by the merger of the two supermarket chains in 1990, served the Auvergne, Bourgogne, Centre, and Limousin regions, with 93 Stoc stores in 10 departments. Comptoirs Modernes-Union Commercial (CMUC), which celebrated its 100th anniversary in 1996, operated in the northern regions of the Ardennes, Centre, Champagne, Haute Normandie, He de France, Nord-Pas-de-Calais, and Picardie, with 151 Stoc, Marché Plus, and Comod stores. The operating division, Stoc Sud Est, formed in 1995, brought the company into the southern Aix-en-Provence region, with three stores operating at the end of 1996 and five new stores planned for 1997. Each operating division was led by its own president; Jean-Claude Plassart served as president and director general of the Comptoirs Modernes group in the 1990s.

Combining a Century of Growth

The first step in the development of the modern-day Comptoirs Modernes group was taken in 1896 with the formation of the Union Commerciale, based in Meaux, in the north of France. The next member of the future supermarket group, the Société Economique de Rennes, was created in 1912 in the northwest region of the country, which was followed by the creation of Etablissements Badin-Defforey in 1929. In that year, Comptoirs Modernes itself was established, in Le Mans, in order to build a network of food stores. Comptoirs Modernes opened its first self-service store in 1948, and its first supermarket, under the Suma name, in 1960. In 1965, Comptoirs Modernes went public, trading on the Paris stock exchange. Two years later, the Badin-Defforey group opened the first Stoc supermarket.

After forming the Sograma joint venture with Carrefour in 1972, which gave the hypermarket operator a 20 percent ownership in Comptoirs Modernes, the company began taking steps toward forming the modern-day organizational structure of the group. In 1977, the Société Economique de Rennes was merged into Comptoirs Modernes; this merger was followed by the mergers of Union Commerciale, in 1978, and of Badin-Defforey in 1979. In 1981, all of the supermarkets in the Comptoirs Modernes group took the Stoc name. The groups smaller, neighborhood-based stores were given the Comod name, under which Comptoirs Modernes had been operating its stores since 1978. The group’s combined operations reached FFr 7.45 billion in 1981; Comptoirs Modernes itself posted FFr 2.1 billion for that year. The combined Comptoirs Modernes operations quickly proved successful; by 1984, the groups consolidated turnover neared FFr 8.5 billion, with the Comptoirs Modernes division’s FFr 2.5 billion continuing to lead the group, followed by the Sograma joint venture’s contribution of FFr 2.4 billion.

In the late 1980s, Comptoirs Modernes added two more divisions to its group. In 1987, the company acquired the three supermarkets and 40 corner stores of former Prirnisteres subsidiary Economiques de Normandie, adding that chain’s FFr 250 million in sales to the group, which had topped FFr 10.1 billion by 1985 and which grew to FFr 14 billion by 1988. Following the Economiques de Normandie acquisition, Comptoirs Modernes reached an agreement with another French supermarket chain, Major Unidis, to merge the two chains. The stock-swap deal, worth FFr 1.45 billion, added Major Unidis’s FFr 2.6 billion in sales and created a chain of 300 supermarkets and 1,000 smaller stores, as well as the group’s 12 Carrefour hyper-markets. By 1992, the final phase of the Major Unidis merger was completed, when all of that division’s Major supermarkets took on the Stoc name.

With consolidated turnover topping FFr 22.5 billion in 1992, Comptoirs Modernes was also expanding its activities. In 1988, the group had opened its first two supermarkets in Spain, under the name Merca Plus, which would grow into an 11-store chain by the mid-1990s. The company also began testing its new Marché Plus store concept in 1990, and began franchising the concept in 1993. By then the economic crisis of the early to mid-1990s had begun to take its toll on the food retailing market. Further exacerbating the difficult conditions for super-market operators was the aggressive expansion of hard discounters, including such German chains as Aldi and Lidl, into the French market. Comptoirs Modernes and its Stoc chain fought back with its own discount pricing policy; that and the group’s high quality standards helped ensure the loyalty of its customers and enabled the company to buck the downward trend in the industry. By 1994, Comptoirs Modernes posted consolidated turnover of nearly FFr 26 billion, for a net income of FFr 450million.

In 1995, the group restructured its Comod operation, converting the neighborhood stores to franchises in order to accelerate growth in the number of stores in the chain. The following year, the group, which had been criticized by stock market analysts as being too focused on the domestic market in a period of increasing globalization, returned to acquisitions for its internal expansion. In January 1996, the company reached an agreement with Spain’s Maxor to merge the Comodisa subsidiary’s 11 Merca Plus supermarkets with 47 Maxor and Maxim super-markets, giving Comptoirs Modernes an enhanced presence around the Barcelona area and throughout the Catalonia region. Three months later, Comptoirs Modernes reached a merger agreement with another Spanish supermarket company, Supermercats Economics, which operated 13 supermarkets under the Supeco name in Catalonia. The two mergers gave Comptoirs Modernes controlling interest in a chain of 71 supermarkets with more than 83,000 square meters of selling space in Catalonia.

Comptoirs Modernes followed this international growth with the creation of a new domestic division, Stoc Sud Est, introducing the Stoc supermarket concept to the south of France. Based in Aix-en-Provence, the division quickly grew to three supermarkets by the end of 1996. By then, the company’s turnover had risen past FFr 30 billion. As the Union Commerciale division of the group celebrated its 100th anniversary, Comptoirs Modernes began looking forward to a new period of growth. In 1997, the company announced its intention to explore expansion possibilities in Poland and Brazil, and in other Eastern European and Latin American countries. On the home front, Comptoirs Modernes revealed plans to open 17 new Stoc supermarkets, nine Comod supermarkets, two Comod superettes, and 20 new Marché Plus stores by the end of 1997.

Principal Divisions

Comptoirs Modernes Economiques de Normandie (CMEN); Comptoires Modernes-Badin-Defforey (CMBD); Comptoirs Modernes Economique de Rennes (CMER); Comptoirs Modernes-Major Unidis (CMMU); Comptoires Modernes-Union Commerciale (CMUC); Stoc Sud Est; Maxor (60%); Supermercats Supeco (70%); Sogramo Carrefour (50%).