AUCHAN HYPERMARKETS ARE LOOSING CUSTOMERS AND INCOME

The difficult situation, caused by the pandemic, painfully hit the revenue of the Auchan retail chain in Russia. The customer traffic has fallen dramatically, and the sales have fallen as well.

Compared with 2019, the company lost a quarter of its revenue in April. Indicators for May fell by almost 17%. According to the estimates of specialists of the various network enterprises, the number of visitors decreased from 25% to 66%, but in some regions of the country, the outflow of customers in May amounted only to 2.4%.

Comparison of the activities of the Auchan retail chain with its main competitors looks disappointing.

The experts believe that the cause of failures is underdeveloped e-commerce and the lack of a “store at home” format in the chains of the enterprises.

The hypermarkets were hit the most. If the sales of competitors only grew in April, and some of them (for example, Pyaterochka) even became the leaders in the sale of food products via the Internet, Auchan began suffering from the significant losses.

It is worth noting that in the historical homeland of Auchan in France, as well as in Spain, there was no drop in sales - during the quarantine period, the revenue grew by 3% in these countries. Many analysts attribute the failures in Russia to the opacity of the Auchan’s work and the existence of corrupt schemes in the work of local managers. Aleksey Zharkov, who conducted the audit of the enterprise in the previous two years, is blaming the management of the company for this. He points to a decrease in the Auchan’s revenue that has started a few years before the pandemic, and the reason, in his opinion, is the blackmail of suppliers for the right to obtain a shelf space, information leaks during the tenders and the overpriced rebates.

It is quite understandable that the Russian leadership of the retail chain has been denying Zharkov’s information, but without concealing that the problems with revenue do exist.

While the discussions on whether the Auchan hypermarkets will leave the Russian market or remain are ongoing among the experts, the retail chain is trying to organize the online sales. After joining the leadership of the Russian segment of Auchan was assigned to Johannes Tolai, the company managed to make the agreements with the Sbermarket and iGoods services to ensure delivery. Before this, it was possible to buy only goods of a non-food assortment on the website of Auchan.

Now the representatives of the retailer indicate that these agreements allowed to double the income from the online trading in comparison with the period when the restrictions were introduced. However, it was done with a considerable delay.

Will the network be able to increase the capitalization before the sales begin to decline?

Such a scenario is expected by the analysts by the end of the year, given the general situation with unemployment and the incomes of Russians.

We should recall that Auchan Holding is one of the largest chain retailers, the central office of which is located in France. The company belongs to the Mullet family, which owns more than 70 enterprises and about 20 brands in various market segments. The revenue of the holding amounted to more than € 23.1 billion in 2018.