Guyenne et Gascogne - Company Profile, Information, Business Description, History, Background Information on Guyenne et Gascogne

Quai Mousserolles
64100 Bayonne

History of Guyenne et Gascogne

Guyenne et Gascogne is engaged in retail commercial distribution, with a primary focus on food products through the company's hypermarkets, supermarkets, and grocery stores. Based in Bayonne, France, Guyenne et Gascogne concentrates largely on the country's southwest region; through its participation in Pryca, the company is also present throughout much of Spain, as well. In 1996 the company's consolidated sales reached FFr 7 billion, generating net profit of FFr 137.5 million.

The largest portion of Guyenne et Gascogne's sales comes through its 50 percent ownership position in its Sogara S.A. joint venture with Carrefour. The Sogara subsidiary owns and manages 12 hypermarkets under the Carrefour brand name, including three hypermarkets in each of the Bordeaux and Toulouse markets, as well as hypermarket complexes in Niort, La Rochelle, Anglet, Angoulême, Pau, and Limoges. These hypermarkets are positioned as shopping complexes, with a variety of small shops anchored by the Carrefour centerpiece stores--which themselves feature extended product assortments including the standard supermarket categories, but also extensive selections of clothing, audio and computer equipment, automobile and gardening supplies, housewares and appliances, and other consumer goods. Sogara S.A. produced consolidated sales of more than FFr 9.4 billion in 1996; Guyenne et Gascogne's 50 percent share of Sogara's sales, or FFr 4.7 billion, represents more than 60 percent of Guyenne et Gascogne's annual sales and contributed more than FFr 93 million to the company's 1996 net income. Guyenne et Gascogne's position in Sogara also gives it a ten percent interest in the 53-store chain of Pryca.

Guyenne et Gascogne proper exploits six hypermarkets under the Mammouth insignia, 15 supermarkets under the Atac banner, and 78 grocery stores and 28 seasonal groceries under the Guyenne et Gascogne name. The company benefits from its participation in the Paridoc central buying and distribution organization and that group's FFr 100 billion purchasing power. Guyenne et Gascogne's Mammouth hypermarkets are located in Auch, Cahors, Dax, Mont-de-Marson, Saint-Jean de Luz, and Tarnos. The company's Mammouth operations are aided by the chain's central design and marketing activities, as well as its selection of private label brands. The company's stores also offer the Mammouth card, a combination payment, credit, and customer fidelity rewards card. The company's Mammouth hypermarkets, with a total sales surface of 23,400 square meters, contributed nearly FFr 1.5 billion to Guyenne et Gascogne's 1996 sales.

Although hypermarkets (including Carrefour) represents more than 62 percent of Guyenne et Gascogne's sales, the company has also developed a strong network of supermarkets, under the Atac name. As part of a nationwide network of some 350 supermarkets, Guyenne et Gascogne's 15 Atac stores are located almost exclusively in the country's southwest region. The company also continues to operate two supermarkets under its own Squale name; during the 1990s, however, the company has been actively converting its Squale stores to the Atac format. Through the Atac network, the company offers the Atac customer fidelity card. Guyenne et Gascogne's 17 Atac and Squale supermarkets, forming a total sales surface of 18,400 square meters, added FFr 725.7 million to the company's 1996 sales.

With sales of FFr 124.9 million, the company's chain of Guyenne et Gascogne groceries is the smallest but oldest member of the company's retail empire. The 78 permanent stores and 28 seasonal stores (which operate at campsites and vacation parks in the southwest of France) emphasize their proximity to their customers in small villages and urban centers and feature extended store hours, home delivery, and more personal service than that available at the larger supermarkets and hypermarkets. The Guyenne et Gascogne branch stores focus almost entirely on food products, with more than 50 percent of sales generated by fresh foods, particularly regional specialties. Despite a decline in the chain's yearly sales, the Guyenne et Gascogne stores remain profitable and occupy an important--if somewhat symbolic--position as the bearer of the company's name and origins. The small grocery format has also garnered renewed appeal in an era of consumer backlash against the dominance of the French food distribution market achieved by the large hypermarket and supermarket chains.

Founded in 1913

Guyenne et Gascogne started out in the small grocery business in Bayonne, in the far southwest of France, in 1913. The company, called the Société Succursaliste S.A. d'Approvisonnements Guyenne et Gascogne, developed a network of traditional groceries, with emphasis on fresh foods and regional culinary specialties, in the village centers of the region and also established itself as a neighborhood grocer in the area's larger urban centers. While many of the company's stores served a year-round public, Guyenne et Gascogne also began catering to the important vacation trade in its coastal region. The French--and European--summer vacation typically extended over several weeks, and the French vacationer typically returned year after year to a favorite location. Guyenne et Gascogne became a fixture for many such vacationers, opening and extending its branch stores to include seasonal groceries serving local campsites, caravan parks, and other vacation villages during the summer months.

By the mid-1960s, however, Guyenne et Gascogne recognized that its customers' purchasing habits were changing. France was by then in the midst of its so-called "Thirty Glorious Years" of its post-World War Two economic boom. As in much of the western world, the mainstreaming of the automobile was under way, and the newly mobile consumer no longer needed to depend on the proximity of local merchants--including butchers, bakers, grocers--or the area's farmers' markets for their purchases. Developments in food refrigeration and the creation of the frozen food segment appealed to a population rapidly abandoning tradition in favor of convenience. The supermarket (and later the hypermarket variant) with larger selections, frozen and refrigerated foods and other products, and economies of scale providing lower prices, quickly succeeded in taking a growing share of the food distribution industry, and this despite the French consumer, typically more loyal to the small store concept than its counterpart in other countries.

In 1966 Guyenne et Gascogne, while not abandoning its chain of small grocers, nevertheless looked toward the new large surface area format to maintain the company's viability in the changing consumer market. In that year the company joined with Carrefour S.A., which itself grew to become a dominant force in France's retail food distribution industry, to form the 50-50 joint venture Sogara S.A. The joint venture's mission was to build, acquire, and/or manage supermarkets and hypermarkets under the Carrefour name and others. The Sogara joint venture eventually would take Guyenne et Gascogne beyond its southwestern market, but, with stores focusing on larger urban markets, such as Bordeaux and Toulouse, the Sogara hypermarkets complemented, rather than directly competed with, Guyenne et Gascogne's village and neighborhood-based small markets.

The company also would move into hypermarket and supermarket exploitation on its own, with hypermarkets participating in the Mammouth chain, created in 1969, and creating its own "brand name" of supermarkets under the Squale name. In these areas, too, the company reinforced its activities in its home region and, eventually, much of the southern French provinces.

Eyeing further growth in the 1970s, Guyenne et Gascogne went public in 1973, listing on the Bordeaux stock exchange. Four years later the company transferred its listing to the Paris stock exchange. By then the company had acquired a number of new supermarkets and had also expanded its hypermarket category, as a 50 percent partner in the joint venture Grandes Superficies S.A., into the Spanish market. In 1978, through Sogara, the company acquired two new Carrefour hypermarkets, located in Angouleme and La Rochelle, further north, but still close to the country's western coast.

Guyenne et Gascogne began the 1980s by simplifying its name; the company had also made several acquisitions, purchasing majority control of supermarket and hypermarket exploiters Solodis, Société Civile Agricole du Château Puycardin, and Somondex. Guyenne et Gascogne also expanded its regional concentration, opening stores in the Lot and Dordogne departments. During the decade, the company increased its participation in its subsidiaries, eventually controlling nearly 100 percent of Solodis, which became a primary subsidiary under which the company would group and later absorb its other hypermarket and supermarket subsidiaries, generally formed for the management and exploitation of a single hypermarket complex, including Somondex, Soldilial, Sodiso, and Jondis. In 1988, however, the company fully absorbed its Solodis subsidiary, grouping its hypermarket and supermarket activities directly under the parent company.

Growth in the 1990s

By the start of the 1990s Guyenne et Gascogne was posting consolidated sales of more than FFr 5 million. Roughly half of the company's revenues came through its own directly controlled hypermarkets, supermarkets, and small branch grocers, with its participation in Sogara representing a nearly equal percentage of its sales. The company's transformation from a chain of branch stores to an important regional developer and exploiter of large surface format stores was dramatic: by then, the chain of Guyenne et Gascogne grocers, which numbered 83 permanent stores and 26 seasonal stores, accounted only for slightly more than 6.5 percent of the company's total sales. Hypermarkets, excluding the company's participation in the Sogara Carrefour, had become the company's primary revenue generator, with its eight Mammouth hypermarkets (branded within the Paridoc buying central) providing nearly 74 percent of the parent company's annual revenues. Guyenne et Gascogne's Squale supermarkets, which numbered 18 in the company's home region, contributed a further 19 percent of annual sales. In Spain, the company's position was strengthened by the fusion of its 50 percent subsidiary Grandes Superficies with Centros Commerciales Pryca, creating Spain's largest network of hypermarkets, grouped under Sogara. Guyenne et Gascogne's participation in Pryca was fixed at ten percent. Meanwhile, as Sogara expanded, Guyenne et Gascogne's share of the joint venture slipped below 50 percent.

The 1990s would mark difficult economic conditions in France and in much of Europe. The recession that began during the early years of the decade would become a prolonged crisis, reaching into the middle of the decade. Nonetheless, Guyenne et Gascogne had taken a number of steps that enabled it to meet the recession with some success. The modernization of its distribution facilities, including investments in its computerized inventory, warehousing, distribution, and pricing systems helped the company increase its margins while controlling its pricing structure, countering the dropoff in consumer spending. During the 1990s, in addition, the company began shifting its supermarkets from its Squale name to the Paridoc-controlled Atac franchise. At the same time, Guyenne et Gascogne continued to invest in Sogara's expansion, regaining a 50 percent participation in the joint venture.

The sole weak point in Guyenne et Gascogne's position came with its 1993 attempt to counter the incursion of the so-called "hard discounters" into France with a purchase of a 20 percent participation in Europa Discount Sud-Ouest, and that chain of deep discount supermarkets. In 1996 Guyenne et Gascogne sold back its share of Europa Discount, which had grown to 16 stores, and exited the hard discounter market. Meanwhile, the company was also forced to close several of its branch grocers; Guyenne et Gascogne remained committed to the format, however, and in 1997 more than 100 permanent and seasonal grocers continued to bear the company's name and history.

The transformation of the Squale stores into Atac stores would continue into the mid-1990s. The company acquired several new supermarkets, while closing others that did not meet the requirements for the Atac format. By 1997 Guyenne et Gascogne's supermarket activities included 15 Atac stores and only three Squale stores.

The 1990s also would mark the increasing importance of the Sogara joint venture and its growing number of Carrefour hypermarkets, with new sites added in Toulouse, Bordeaux, and Niort bringing the total to 12 stores by 1997. By year-end 1996 the Sogara participation would account for nearly two-thirds of Guyenne et Gascogne's total revenues. Hypermarkets in general continued to provide the motor for the company's growth, with the company's chain of six Mammouth hypermarkets accounting for more than 62 percent of Guyenne et Gascogne's sales excluding its Sogara and Pryca participations. By then, too, the Guyenne et Gascogne branch stores represented only slightly more than five percent of the company's own revenues. Yet the groceries--which had come to play an important role in the commercial life of many villages--continued to add a significant, if symbolic, reminder of Guyenne et Gascogne's more than 80-year history.

Principal Subsidiaries: Sogara S.A. (49.99%).

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