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Etablissements Economiques de Casino Guichard, Perrachon et Cie, S.C.A., generally called Groupe Casino or simply Casino, is the second largest food retailer in France. The company's network of about 2,325 Petit Casino convenience stores was the largest in France at the end of 1993. The company also owned or operated, by that date, 108 Geant Casino and Geant Rallye hypermarkets (retail stores that are larger than supermarkets and sell nonfood as well as food items), 518 Casino supermarkets, 224 cafeterias, and two production plants. In addition, Casino owned and operated plants that processed meat, bottled wine, and turned out pastries and other confectionery goods. Etablissements Economiques de Casino Guichard, Perrachon et Cie was the holding company for more than 40 subsidiary companies, the majority of which were wholly owned.
The Casino philosophy stressed quality rather than low price. "Casino is perceived as the highest in quality, and the second highest for overall customer satisfaction," according to its chairman and chief executive officer, Antoine Guichard. "We are not in the discount game, we are in the quality game." Recognizing its need to advance technologically, however, Casino forged links with Great Britain's Argyll Group PLC and the Netherlands' Koninklijke Ahold N.V. in what came to be called the European Retail Alliance.
The origins of the company date back to about 1860, when a grocery store was opened in Saint-Etienne, a city about 30 miles south of Lyon. It was named for the nearby Casino Lyrique, which had been closed in 1858 by the city fathers for "licentious spectacles." In 1864 the founder of Casino, a Monsieur Brechard, took as a partner Jean-Claude Perrachon, and the business became a general store. Perrachon's nephew Geoffroy Guichard later became partner of what became the Etablissements Guichard-Perrachon. In 1898 Guichard created the Societe des Magasins du Casino and opened a second store in Veauche, about 12 miles to the south. To stock the stores it was necessary to build a warehouse in Saint-Etienne.
The father of eight children, Guichard was a paternalistic employer, and the company continues to give out scholarships to the descendants of his workers. Guichard also sponsored the city's museum of modern art and its soccer team, traditions the company maintains. In addition, Casino became manager of Saint-Etienne's museum of arts and industry in 1967.
Casino became a joint-stock company in 1900. Armed with an infusion of funds, it grew rapidly from this point. By the outbreak of World War I there were 215 branches, of which 56 were in Saint-Etienne alone. In 1919 a new factory replaced the existing facilities for making chocolate, confectioneries, and preserves. By 1922 warehouses also were located in Clermont-Ferrand, Lyon, Roanne, and Beaucaire, the latter to store wine. A soap factory and oil works were built in Marseille, and a perfume plant was opened in Saint-Etienne in 1922. Two more warehouses, at Chalon-sur-Saone and Avignon, opened in 1923. In 1934 a vast warehouse was established in Marseille to serve the entire southeast of France.
On the eve of World War II Casino was by far the biggest holding company in southeastern France. Yet its greatest period of expansion was not to begin until 1960, when it opened its first supermarket in Grenoble. A warehouse for fresh produce was opened in Rhone a Grigny the following year. Its first cafeteria was introduced in Saint-Etienne in 1967. Casino entered the Paris region in 1970 by creating a subsidiary with the acronym SOMACA to operate the supermarkets of Saint-Denis and Bagneux. In the same year it absorbed a similar business in southwestern France, l'Epargne, into a new subsidiary named SABIM Sable.
Hypermarkets under the name Geant Casino were established during the early 1970s, first in Marseille, then in Saint-Etienne, Frejus, Montpellier, Bordeaux, and Nantes. The one in Saint-Etienne covered 10,842 square meters (116,702 square feet). In the early 1980s it had 45 different departments, 2,000 parking places, and a staff of 470, and was accompanied by an auto service station, a cafeteria, and a gallery of shops. Casino entered a new field in 1977 with the creation of S.A. CARFUEL, a subsidiary for the distribution of petroleum products. Between 1978 and 1980 Casino established SOMABRI, in collaboration with the Belgian group G.B., to operate hobby-and-garden centers. The one opened in Saint-Etienne in 1980 was offering 27,000 products two years later.
By 1981 Casino also had established the restaurant chains SARL, Stefany, and Caf'Casino and had taken a half-interest in another, France Quick. SABIM operated slaughterhouses in Sable and Saint-Maixent. The industrial complex of Pont-de-l'Ane produced chocolates, confectioneries, and preserves, 85 percent for Casino's retail needs. There was a meatpacking plant at Saint-Priest and one for roasting meat at Marseille that not only satisfied Casino's needs but also exported products overseas. Three great bottling plants were located in Beaucaire, Lyon, and Clermont-Ferrand, and Casino began exporting 2 million bottles of wine a year to other European Community countries. SAIC was a building society managing thousands of dwellings. Finally, a fleet of trucks transported goods from Casino's 11 great warehouses.
Groupe Casino's presence in the United States dates from 1975, when it created Casino USA Inc. as a California-based subsidiary. By 1984 it was operating four Petit Casino retail stores and eight Cafe Casino French restaurants. In March 1984 Casino USA bought a controlling interest in Thriftimart Inc., owner of 86 Smart & Final Iris Co. cash-and-carry warehouses, for more than $15 million worth of Class B stock. Casino intended to use Thriftimart outlets to distribute its lines of jelly, jam, and bottled water. At the time of the deal, Smart & Final Iris specialized in discount volume sales of food and hardware for bulk buyers and restaurants. Eventually, the deal had to be sweetened to avoid a lawsuit, so in the end Casino paid $116.7 million to acquire the company's Class A nonvoting shares of common stock as well.
The French parent saw a 10 percent increase in turnover in 1983 to FFr 157.9 million ($17.5 million), but this was accompanied by a decline of 2 percent in consolidated profits. However, Casino continued pursuing an aggressive acquisition program and in 1985 bought an 88 percent share of CEDIS, owner of hypermarkets, supermarkets, and smaller grocery stores. The transaction supplemented Casino's already strong presence in southern France and the Paris metropolitan area with CEDIS's base in eastern France, and added CEDIS's FFr 9 billion (about $977 million) in annual sales to Casino's FFr 23.5 billion (about $2.55 billion). Later in the year Casino entered into a joint venture with a subsidiary of the giant French oil company ELF-Aquitaine to create service stations, supermarkets, and fast-food outlets.
In 1986 Casino expanded further by acquiring a 46 percent interest in Paridoc and Giant supermarkets and a 99 percent interest in Etablissements Deloche, a wholesaler. In that year Groupe Casino was France's third largest food-distribution company, behind Leclerc and Carrefour. Its holdings in France consisted of 42 hypermarkets (16 under the Mammouth name of CEDIS) and 187 supermarkets, under the Casino, Suma, and Ravi names. In addition, there were 92 Smart & Final warehouses in the United States.
The company's activities in 1986 also included processed foods (12 percent of total sales) and restaurants and cafeterias (6 percent). The latter sector consisted of the restaurant chain Hippopotamus and the cafeteria chains O'Kitch and Quick, making Casino the largest food chain in France in number of meals served. Casino then sold Quick in 1993. American operations constituted another 6 percent of the company's volume, with food distribution accounting for the other 76 percent. Food processing declined to only 3 percent of revenues by 1993, while American revenues increased to nearly 8 percent of the total.
Casino's acquisitions were part of the consolidation of the food industry taking place throughout France. The American-style hypermarket first made its appearance in France in 1963. By 1986 there were 645 of these giant stores, accounting for one-fourth of the food dollar. Hypermarkets also saw a 10 percent annual gain in sales volume, compared to 2 percent for the industry as a whole. The big distributors expanded vertically as well as horizontally by absorbing suppliers.
In 1989 Casino stock reached a price level it would not attain again during the next four difficult years. Antoine Guichard announced in July 1990 that company employment would be cut by 1,450 before the end of 1992. Guichard explained that the company was being undercut by independent rivals offering lower prices because of their lower operating costs. He said the company would respond by renovating and remodeling its stores, and reorganizing the hypermarkets, supermarkets, and smaller food stores into separate and autonomous divisions. A new marketing division would be concerned with consumer relations, price, and the purchase and securing of provisions.
To cut its costs Casino sold its 172 service stations in December 1990 to Shell France and Agip France for FFr 660 million (about $131 million). However, Casino would continue to manage the stations under a 30-year contract. This transaction apparently was made to enable Casino to reduce its debt, which had grown to FFr 4.2 billion (about $840 million) after it had acquired La Ruche Meridionale, a supermarket company, earlier in the year.
In May 1989 Casino signed initial cooperation accords with Argyll Group PLC, owner of Safeway food stores in Great Britain, and Koninklijke Ahold N.V. of the Netherlands to form a combine. The accord called for the three food retailers to issue new shares that would give Argyll a 3.8 percent share in Ahold and a 3.4 percent stake in Casino, with Ahold and Casino in turn acquiring 1.5 percent of Argyll. The result was the European Retail Alliance (ERA), on which Antoine Guichard planned to base the company's future growth strategy. Looking toward the European Economic Union of 1993, Casino also bought 39 percent of an important Italian retailer, La Rinascente, in 1989.
In a 1991 interview for Supermarket News, Guichard envisioned a new kind of Casino store, based on an Argyll prototype, that would cover 35,000 to 40,000 square feet--more than three times the size of the typical French supermarket, but smaller than the hypermarkets. "There are about 20 ... cities where we could open about 200 or even 300 superstores," he said. "And these would be more food-oriented than the hypermarket format--maybe 20 percent nonfood, but with no textiles." Guichard said the company was also studying Ahold test-concept stores, equipped with state-of-the-art electronics.
Guichard acknowledged that Casino was "not considered modern by our customers" and said the company would invest heavily to increase productivity. Casino planned to exploit its membership in ERA, through technology sharing, in order to dramatically restructure its distribution system and in-store MIS operations. Guichard added that the largest task would be to overhaul Casino's warehouse network by studying Argyll's more advanced operations in this field. Greater productivity, Guichard indicated, would allow Casino to eliminate about 30 percent of its warehouse space. He also said the entire computer system in warehousing and distribution would be changed to allow computerized price controls and automatic reordering from store to warehouse or from warehouse to vendor.
"The plan is to have the identical system, the same programming, working in all three companies," Guichard continued. "You will see identical computer systems in the stores of all three ERA partners, and you will even see the same cash registers and scanners." The three companies were to increase common purchases of meat, produce, flowers, and other goods. Elements of the training programs of the three companies would be shared, with Casino embarking on a campaign to teach its employees English. Guichard added that the partners were planning to create a joint ERA label to be marketed throughout Europe.
Casino moved into second place among French food distributors by acquiring rival Rallye S.A. in 1992, in exchange for new Casino shares representing more than 30 percent of the new ensemble. In so doing it acquired the 44 hypermarkets and 196 supermarkets of this Breton distributor. As a result sales increased to FFr 61.6 billion ($11.25 billion) in 1992 from FFr 40.6 billion in 1991, but profits fell from FFr 484 million to FFr 438 million ($80 million). Like other retailers, Casino was affected by stagnant consumer spending during a national economic recession that year. Rallye appeared to be a drag on the parent organization, its hypermarket sales falling 6 percent during the first four months of 1994 (while Casino's rose by 4.7 percent) and its supermarket sales dropping by 8 to 9 percent (while Casino's rose by 1 percent).
Through its subsidiary Casino USA, Groupe Casino had majority control of Smart & Final Inc., which operated 136 Smart & Final warehouse stores in the United States at the end of 1993. The number was scheduled to reach 149 by the end of 1994. More than half were leased from Casino Realty, with most of the rest subleased from Casino Realty or Casino USA. Among Smart & Final subsidiaries were Casino Frozen Foods Inc. and Casino American Food Services Inc. Under a joint venture with the Mexican retailer Central Detallista it was also to operate a chain of supermarkets in the southwestern United States and in Tijuana, Mexico, using the name Smart & Final. Two had opened by mid 1994, with a third scheduled for opening by the end of the year.
In order to accumulate money to remodel its French stores, Casino put Smart & Final Inc. up for sale in July 1993. Its Casino USA subsidiary held a 50.3 percent stake in the food chain, with a market value of about $178 million. The parent concern decided later that year not to sell, however, because in the words of Smart & Final's chairman, "Groupe Casino is convinced the long-term value ... is far in excess of the amount it might realize in the current weak market." During the first four months of 1994 Smart & Final's sales rose by 14 percent.
During 1993 Casino turnover rose 2.7 percent to reach FFr 72.52 billion ($12.67 billion). Net profits increased 2.9 percent, to FFr 453.6 million ($79.25 million). These disappointing returns, representing percentage increases lower than the inflation rate, were attributed to stiff competition by "hard-discounters" in a difficult economic climate. Capital spending was scheduled to fall to FFr 1.85 billion ($323 million) from FFr 2.19 billion. To counter price competition, Groupe Casino began experimenting in 1994 with a new discounting concept called l'As des Prix (The Ace of Prices) being tested in the Lyon region. If successful, it would be adopted in 1995 and 1996 by the Super Rallye stores.
Principal Subsidiaries: Casino France; Casino USA Inc.; Unimas; Gem; Paradis; Pribas; Sodipra; Bonmets; Bladen; TPLM; Gelalp; Cogin; Nica; Soreso; Cladevi.
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