Portugal Intermarché Opens First Franchised FNAC in Portugal
Gildas Aitamer (Senior Retail Analyst)
Opinion Strength Through Unity
This development is interesting as both French operators are now extending their home partnership to their overlapping international geographies, Portugal. We are sceptical as to further openings between the two partners in the country. Beyond this one hypermarket, Intermarché operates supermarkets in Portugal but most lack the scale needed to accomodate compact FNAC stores, typically sized between 300 and 1,000 sq m. Even so, this is to us a good illustration of grocery and non-food specialists looking to complement one another as their categories suffer from digitalisation and e-commerce.
FNAC is a cultural goods and consumer electronics specialist headquartered in France, historically centered on large stores in major cities. Under pressure from the aforementioned trends, its former CEO (incidentally now Carrefour's), renewed its strategy and decided to expand beyond its corporate store locations in Tier1 and Tier2 cities with more compact stores in franchise. This was particularly well received by the shopkeeper’s cooperative Intermarché, often located in lower tier cities and semi-rural areas. The main benefit is complementarity with the non-food specialist, ultimately generating traffic.
Faced with the same problems, retailers across Europe have embraced a wide array of different approaches. Rival shopkeepers cooperative E.Leclerc for example, chose to develop its own dedicated banner L'Espace Culturel (Cultural Area) located nearby its stores, with some degree of success as LZ Retailytics data records 221 units operating across France last year. This naturally was one of the drivers pushing Intermarché into the arms of FNAC.
On the other side of the spectrum, some big box retailers are scaling down their stores and generating additional revenue by allocating instore concessions. We can think of Tesco's recent partnership with Dixons Carphone in the UK or with Media Markt in Hungary, among many others. But external partners are not a must-have as some retailers prefer to contemplate internal synergies. For instance, Casino's hypermarket in France recently made the decision to rely on its own online arm for the management of home furnishings and household appliances. Corners and aisles within its stores leveraging its online pureplayer's brand have now become a common sight.
To sum up, there are no universal answers and the decision depends largely on market opportunities. Difficult times calls for retailers to huddle up to one another, which is to us an excellent idea... provided both partners deliver on their respective promises and do not have conflicting agendas.