Carrefour, Conad, Lidl and more: it will certainly be a positive period for some brands and some formats of the large-scale retail trade, but not for all, however, it will be an easy period. The in-depth analysis of Mario Sassi
If we look at the next two or three years, the glass half full I gladly leave it to others. It will certainly be a positive period for some brands and some large-scale retail formats. Not for everyone, however, it will be an easy time. The crisis of some brands, of single points of sale and of some distribution formats will worsen and will lead to further and inevitable closures. It would be enough to look at the income statement of many hypermarkets or points of sale of some subsectors of the large-scale distribution to understand what will happen.
Christophe Rabatel CEO of Carrefour Italia has closed the ranks of his leading team and is preparing to complete, accelerating it, the reorganization process which involves, one by one, the abandonment of the hypermarkets in which the income statement is now compromised and without possibility recovery. I am amazed by those who are surprised.
The Camerano hypermarket in the Marche region will not be the only one. The lockdown certainly does not help the recovery plans. From France they ask for results and the patience in the headquarters is not infinite. The Couche Tard operation, although stopped for electoral issues, is there to demonstrate that reality cannot be swept under the carpet. Results are needed and immediately.
Conad will have the same problem in some situations despite the will to bet everything on the “Spazio Conad” project to relaunch the former Iper Auchan. Contesting commitments made in other geological eras risks leaving the time it finds. Galleries, large surfaces and “remote” locations are likely to lead to the wings of even the most optimistic. 2021 will highlight a general crisis situation of certain formats and some subsectors of large-scale distribution.
Added to this is the lack of local entrepreneurs willing to take over if not under very severe conditions both in terms of employment and economic management. The crisis of the Alco group in Lombardy is another alarm bell. As well as the penetration into the organized underworld sector in some southern realities. An era is closing.
I don’t think the Auchan operation with the results it produced today would be re-proposed in the same terms. Especially on hypermarkets. Fortunately, the seriousness and the commitments put in place by Conad made it possible to save what could be saved. I say this quietly especially for those (fortunately few) who have gradually become heated to judge the acquisition of the French multinational in disarmament with the easy logic of “you could have done better and more” typical of those who have never managed anything demanding in his professional life.
Large-scale distribution, as a whole, emerges more fragile from the pandemic. The results, albeit flattering, of the neighborhood stores, discount stores and supermarkets in general should not be misleading. If we talk about 2021 and a little further on, turnover and margins will remain the prevailing “obsession” for the vast majority of large-scale distribution brands. The innovations, the real ones, will have to wait.
The national employment contracts have all expired for some time. Confcommercio is timidly hinting at a resumption of confrontation with trade unions, however realizing that it risks missteps. Federdistribuzione is out of the way waiting to be able to announce the new President who may have greater powers than those who preceded him. Above all, we will see if it manages to attract the two most important realities of the sector in terms of turnover, which today are located elsewhere (Conad and Coop), in a unitary perspective.
Confcommercio itself is losing appeal for some brands that are migrating elsewhere. Lidl is reported to be closest to Federdistribuzione and this would break a taboo: the formal entry of one of the main discount stores into the trade association.
In the meantime, more and more companies, especially locally and in the south, are replacing the main national sector contracts, which have expired for years, with others that are much lighter on costs. The lack of unity and overall authoritative coordination favors this local dumping. The risk of imitation is around the corner. Also because there is no effective monitoring, especially on franchising.
The race to the bottom that led to three competing contracts plus the cooperation one was not enough. What many are underestimating is that the pandemic is accelerating cost containment processes that were already evident and had among other things contributed to the Auchan debacle. An obsession that, if considered exhaustive of a relaunch strategy, leads companies to a dead end.
Of course, in the background there is the change imposed by technology and logistics, not only in the last mile. There are format innovation, sustainability, private label. There is the pressure of discounters. However, there is no strong idea in large-scale distribution and above all shared at work. On its quality and its recognition not only on its cost. And it’s a lack of vision that won’t last long.
The idea of keeping wages low despite the high availability and flexibility of employees that characterized the phase of growth and consolidation is no longer sufficient. It is not just a problem of managing the availability and engagement shown in the crisis. Post-Fordism also in large-scale distribution requires new tools that accompany the training and professional growth of employees, the evolution of their role, reward systems and involvement in objectives. But also for the management of the inevitable redundancies and the occupational exchange between the formats.
In other words, the enhancement and engagement of collaborators will be increasingly fundamental in business strategies. Some brands (the largest in the sector) are undoubtedly further ahead but the GDO complex is, unfortunately, far behind. Above all as a consequence of the almost zeroing of company bargaining that took place in the past decade.
For this reason, the next renewal of the CCNL can be seen as simply a problem of cost and constraints or as an opportunity to initiate an important change that looks to the future. An intelligent give and take built on the objective needs of companies and workers in a perspective of a new culture of service and the centrality of the work necessary to achieve it.
Large-scale distribution cannot remain stuck at the stake for long. Commercial and supply chain policies, technological innovations and the cultural and professional growth of employees are sides of the same coin and should be managed simultaneously and with greater foresight. The future is not expected. We build it together.
Article taken from Mario Sassi’s Blog, here the full version.
