Groupe Castorama-Dubois Investissements - Company Profile, Information, Business Description, History, Background Information on Groupe Castorama-Dubois Investissements

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59175 Templemars

Company Perspectives:

Bringing the customer the right product, the right advice, the right service, and the right ideas for carrying out his projects isn't simple. Castorama's mission will always be to offer the customer the best, in every store.

History of Groupe Castorama-Dubois Investissements

Groupe Castorama-Dubois Investissements operates the leading chain of DIY (do-it-yourself) and home improvement materials stores in France and Europe and counts among the top five DIY chains in the world. With 162 retail stores in France, Italy, Germany, Belgium, Poland, and Brazil under the Castorama name and nine retail RĂ©no-DepĂ´t stores in Quebec, Canada, Groupe Castorama has counted double-digit growth for much of its history. Castorama retail stores feature large selling surfaces (ranging from 6,000 to 12,000 square meters), stocking some 50,000-60,000 home improvement and DIY products, as well as related products such as lighting fixtures, space heaters, fans, and satellite television equipment--in short, everything the committed DIY-er needs, to paraphrase an early company slogan.

While the Castorama stores serve the individual consumer, Groupe Castorama also caters to the professional market. Its chain of 18 Brico Dépôt stores--of which nine opened in 1997 alone--is oriented toward providing building supplies for the construction site. The company also operates a network of seven Dubois Matériaux wholesale warehouse centers reserved exclusively for the building and construction professional. Beyond the building market, Groupe Castorama has diversified into animal and pet care products with the acquisition of four Amiland specialty superstores.

More than FFr 18 billion of the company's total sales of FFr 21.1 billion are produced in France. Yet, with new store openings severely restricted in France, Castorama's foreign expansion represents the company's fastest growth opportunity. After focusing on Germany and Italy in the first half of the 1990s, Castorama has begun to look farther afield. In 1997 the company entered three new markets--Canada, Poland, and Brazil--more than tripling its foreign-earned revenues over the previous year.

Groupe Castorama-Dubois Investissements has been led by CEO Jean-Hughes Loyez since 1992. Founder Christian Dubois remains the company's chairman of the board, while Dubois's sons Jean-Luc and Gonzague function as the company's general managers for finance and executive administration. The French distribution giant Carrefour held a major shareholder's position in the company before reducing its participation in 1994. The Dubois family holds 11 percent of the company's stock.

American Inspiration in the 1970s

Christian Dubois began his career in 1951, selling building and construction materials in the city of Lille and the surrounding region at the north of France. After a trip to the United States in the late 1960s, however, Dubois was inspired by a new opportunity: the idea of bringing the so-called "category-killer" warehouse specialty store concept, then emerging in the United States, to France's home improvement and hardware market. In 1969 Dubois opened his first large-format store, called Central-Castor (castor means "beaver" in French) in the Lille suburb of Englos. The store, which boasted 5,000 square meters, was located in a shopping mall anchored by an Auchan hypermarket. Although Auchan would later come under the sway of Castorama's chief French competitor, Leroy-Merlin, the company would continue to seek out such shopping mall placements for many of its later openings.

The name Central-Castor was short-lived, ceding to Castorama at the start of the 1970s. The success of the Castorama concept, however, proved more lasting. By 1974 the company had grown to four stores, serving the Nord region around Lille. By then Castorama was preparing to make a move toward national expansion, opening the first Castorama located outside of the company's Nord home. The new Castorama, in Plaisir, a Parisian suburb, opened in 1975, also marked an important element of the company's growth strategy, that of an orientation toward the country's larger urban areas, with a population dense enough to support the company's large-format stores. That same year saw the birth of a slogan that would become famous among France's booming DIY-ers: "Chez Casto, y'a tout ce qu'il faut!" (Casto's got what it takes).

The Paris opening would be the first in an aggressive expansion that would take Castorama to a 13-store chain just three years later. Expansion had become necessary; by the mid-1970s Castorama was faced with a growing number of competitors equally attracted to the large-store format. After the postwar boom years, the French economy was beginning to sour as the effects of the Arab Oil Crisis began to be felt. With the recession of the early 1980s looming on the horizon, tightening economic conditions gave rise to a new wave of interest in DIY home improvement--indeed, some would dub it the French national hobby. At the same time, the French consumer had become accustomed to the broad product range and discounted prices of the large-format store, as the hypermarket concept swept the country. One of the leading hypermarket chains, Carrefour, would provide Castorama with the capital it needed for its own expansion. In 1978 Carrefour purchased a shareholder position of more than 45 percent in Castorama. In that year Castorama more than doubled in size when it acquired the 19-store Californie chain.

Three more Castorama stores were added over the next year. In 1979, celebrating its tenth anniversary, Castorama had grown to a 35-store chain boasting sales of FFr 1.2 billion per year and more than 2,500 employees. As the chain spread across the country, it adopted a policy of decentralization, opening region headquarters to coordinate development. The company would also be quick to add computerized inventory control to track its growing range of products. Meanwhile, Dubois had not abandoned the building and construction professional, even as the Castorama chain attracted the growing ranks of DIY consumers. Dubois had also begun building a network of building supply wholesale warehouses, under the Dubois Materiaux name.

Growth in the 1980s

At the start of the 1980s Dubois sought fresh capital for expansion. In 1982 Dubois formed a new holding company to group his parallel activities. In that year Castorama-Dubois Investissements entered the over-the-counter market on the Lille stock exchange. Three years later, the company holdings had grown to 74 stores and more than 5,000 employees, with total sales of more than FFr 3 billion (net, after taxes). Over the next ten years, the company would continue to post an impressive growth rate, averaging sales gains of nearly 16 percent per year. The company was also strongly profitable: its net income growth would average nearly 30 percent per year over the following ten-year period. Added fuel for the expansion came in 1986, when Castorama-Dubois joined the Lille exchange's secondary market.

The individual Castorama stores were also undergoing a transformation, as the company worked on refining its store concept. In 1987 the Castorama stores began a transition to a larger format, ranging from 8,000 to 10,000 square meters, while building up their range to some 50,000 products. Among these were the first products bearing the Castorama name--matching the quality of the brand names, while priced at a ten to 15 percent discount. That same year brought another new feature to the Castorama customer: the company's first catalog. At 196 pages, the Castorama catalog would be distributed to 3.5 million customers.

Moving to a full listing on the stock exchange in 1988 provided Castorama-Dubois with the opportunity to increase its holding in Castorama from 52.7 percent to more than 94 percent. The company next took its first store outside of France, opening a Castorama in Milan. At the end of the decade, the company had grown to a chain of 86 Castorama stores and six Dubois Materiaux wholesalers, employing more than 7,500, for total sales (including tax) of nearly FFr 7.5 billion. The company had taken a clear lead in the French home improvement market and numbered among the largest in Europe as well. In 1989 the company took a step toward reinforcing its service commitment to its customers, opening an in-house training school for its employees.

Foreign Expansion for the 1990s

The first signs of a shakeout in the DIY industry began to be seen at the start of the 1990s, as the market consolidated into a two-tier structure: large-format stores serving primarily urban populations and smaller supply stores serving more rural populations. Castorama remained committed to the large-store format, reaching an average store size of 7,400 square meters by 1990. The company was also leading the consolidation of the industry, buying up nine stores from rival Obi, owned by Belgium's GIB, and France's third largest DIY chain at the time. The following year, Castorama bought out another rival chain, Briker, including 17 stores, from another hypermarket leader, Rallye (later Casino). By the end of 1991 Castorama had grown to 111 stores and more than 10,000 employees. Sales that year topped FFr 10 billion for the first time.

The concurrent consolidation of the hypermarket industry also helped Castorama's expansion. In 1992, after Carrefour bought out rival Euromarché, Castorama saw the chance to buy up the seven largest stores of Euromarché's subsidiary Bricorama (another company would acquire the Bricorama name). Consolidation among all large-format retail sectors would shortly become a necessity for expansion: a new law introduced in the early 1990s created several restrictions on new store developments, particularly in urban areas. The law, inspired in part by a desire to protect the threatened existence of the small, independent shop owner, brought such local commercial developments under national oversight. The law was to see a steady tightening over the following years, making the authorization for construction of a new large-format store a rare event.

The new law, in fact, would help solidify Castorama's leadership position in France; it maintained a comfortable leadership, both in store numbers and revenues, over its rivals. Castorama-Dubois took a two-prong approach to further expansion. In France, the company began to diversify, adding a new building materials concept, under the Brico DĂ©pĂ´t name, geared toward supplying professional and, especially, construction site needs. The company also branched out beyond the DIY market: in the early 1990s, it began building a chain of large-format pet care and animal supply stores under the Amiland name. Another company project became garden supplies, under the Dubois Jardin name. Less successful was the company's attempt to enter the automotive supply market, through subsidiary Self Auto. That activity was ended in 1994. On the positive side, in 1994 Castorama-Dubois regained 100 percent control of Castorama S.A., after a stock swap agreement for Carrefour's remaining shares.

Whereas diversification would provide some growth for the company, Castorama looked beyond the French border for its main expansion thrust. After opening its first Italian store in 1988, the company added a second Italian store in Bergame in 1990, two more stores in Bollate and Marcon in 1992, building up its Italian branch to seven stores by the beginning of 1998. Germany formed Castorama's next frontier: the company established its Castorama Deutschland subsidiary in 1990, opening its first German store, in Castrop-Rauxel, near Dortmund, in 1992. Two more German stores were added that same year, followed by a store in 1994 and four Castoramas in 1995. By 1998 Castorama's German branch included seven stores. Facing an intensely competitive market--the largest in Europe--the company continued to absorb losses, despite the growth of its German revenues to more than FFr 800 million. Castorama's fortunes proved better in Italy, where its operations began turning a profit in the mid-1990s. The company planned further expansion in Italy, beginning with two stores in 1998.

Castorama's foreign expansion would serve an additional purpose, that of shielding the company from the potential entry of U.S. giants such as Home Depot into the European market. In 1994 Castorama moved just across the French-Belgian border, opening a store in Kortrijk. By 1996 Castorama began to look farther afield, targeting Poland as a foothold into the Eastern European market. Castorama's first Polish store, featuring its 10,000-square-meter format, opened in Warsaw in 1997, with plans to add three more stores in 1998. In that year, the company crossed the Atlantic, targeting Brazil with an eye toward further expansion into the South American market. The company's first Brazilian Castorama opened in Sao Paulo in 1997. Further north, an acquisition brought a new name into the Castorama-Dubois holdings. In April 1997 the company purchased the nine-store chain (featuring 12,000-square-meter formats) of Reno DĂ©pĂ´t in Quebec. The company stated, however, that its plans for further North American expansion would remain limited to the French-speaking province. Two more Reno DĂ©pĂ´t stores were expected to be added in Canada in 1998.

Throughout much of the 1990s, the French economy, along with much of Europe, suffered through an extended recession. Yet, the difficult economy and growing jobless rates proved to be a boon to Castorama, attracting a new wave of DIY-ers. At the end of 1997 Castorama's holdings had grown to 162 stores, producing sales of more than FFr 21 billion. Between 1993 and 1997 the company had succeeded in winning authorization to open seven new French Castoramas, while also building up the number of Brico DĂ©pĂ´t stores to more than ten; a ninth Dubois Materiaux center was added in 1997. Castorama also began instituting a new 12,000-square-meter format; at the same time, it ended production of its catalog (which had swelled to nearly 700 pages over its ten years) replacing it with a new publication, "Oh! Casto," modeled after consumer magazines. In 1997 Castorama also began offering its own customer fidelity credit card.

Principal Subsidiaries: Reno DĂ©pĂ´t (Canada); Castorama Deutschland GmbH (Germany); Amiland (France); Castorama S.A. (France); Brico DĂ©pĂ´t (France); Dubois Materiaux (France); Dubois Jardin (France; 80%).

Additional Details

Further Reference

Baverel, Philippe, "Quarante Millions de Bricoleurs," Le Monde, December 7, 1993, p. 6."Castorama: une Dimension Internationale Mesurée," Bricomag, May 1995, p. 34.Lupieri, Stéphane, "La Lutte pour l'Espace Vital," Enjeux, October 1996, p. 101.Mason, Sophie, "Castorama Moves into Canada," DIY Week, March 21, 1997, p. 12.Prod'homme, Gilles, "Castorama Performant Malgré l'Allemagne," Points de Vente, March 10, 1997, p. 18.

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