The gyrations around alleged discussions about a merger between French supermarkets Casino Group and Carrefour are strange, yet it illustrates how febrile the grocery retailing sector has become.
On Monday, Casino, a French grocery retail group that owns a number of different ‘big box’ brands including ‘Monoprix’ and ‘Geant’, issued a statement that it had “been contacted by Carrefour over the last few days with a view to a possible combination”, and that the “board unanimously reiterated its entire confidence in Casino’s strategy for value” implying that it had rejected Carrefour’s approach.
Carrefour, which is one of the largest grocery retailers in the world, then issued a statement denying that it “solicited Casino and is surprised that Casino’s board of directors would have submitted a merger proposal that does not exist” and demanding that these “inacceptable innuendoes” stop.
Although it is difficult to assess what these communications mean, they take place in a background of fierce competition and consolidation in grocery retailing across the developed world. In the case of Casino and Carrefour, both retailers have faced questions about their strategy. Casino has a considerable debt-load and Carrefour has struggled to manage its huge global presence. However, merging the two would face considerable resistance on competitiveness grounds in France alone, where the combination of the two would have a near dominant position in grocery sales.
Conventional retailing across the developed world is entering a period of consolidation. For example, in Britain grocery chains Sainsbury’s and Asda, which is part-owned by Walmart, are proposing to merge, possibly giving the two a market share of 30%. Much of this is driven by the fear of the effects of the shift to internet retailing, something which is now threatening grocery retailing. The shadow of Amazon hangs over the ‘big box’ retailers.
The implications for conventional logistics service providers are very significant. Traditional ‘trucks & sheds’ operations face a substantial risk of both rationalisation and displacement by e-commerce solution technology companies. Fewer, larger conventional retailers will look to consolidate both transport and warehousing, whilst the demand that shifts into e-commerce will move business to other types of LSP. For example, Casino has agreed a contract with Ocado for the latter’s ‘smart-platform’ e-retailing package.
Bearing in mind what a large segment of the logistics market grocery retailing represents, change in this sector is likely to be a significant threat to many large and medium sized LSPs.
Source: Transport Intelligence, September 25, 2018
Author: Thomas Cullen
