Groupe Auchan and the Drive: a retail business of the future

In addition to meeting new consumer expectations, the Drive is ideally placed to contribute to growth and employment in the coming months and years, if it continues to benefit from an appropriate regulatory framework.

It was Auchan who invented this concept in 2000: a new retailing channel halfway between e-commerce and traditional shopping, known as Auchan Drive. In 2004, its brother Chronodrive was the first to develop away from shopping malls. Today, both brand names are trading successfully in France and Luxembourg.

The Drive is a modern way of shopping, geared to consumers’ aspirations. it stimulates employment and economic activity, and is ideally placed to contribute to growth and employment in the coming months and years, complementing traditional stores and other forms of e-commerce.

However its development prospects are dependent on this activity benefiting from an appropriate regulatory framework. At the present time, quite logically, Drives are not regarded as traditional retail businesses, as the deed of sale is not executed on the spot. However, the avenues now being followed in the proposals to reform retail planning regulations, which are currently being considered by parliament in France, might result in the imposition of additional constraints calling this framework into question:

- First, the proposals would require Drives to obtain consent from departmental retail planning committees - a prospect that would add cumbersome constraints and administrative impediments to this activity, even though Drives already have to obtain a building permit. Moreover, this measure would only apply to customers’ retail purchases, and not to all storage activities.

- Furthermore, including Drives within the scope of retail planning laws then introduces the possibility that they will be subject to additional taxes such as “Tascom”, even though they not places of sale, and here too, other forms of collection points or warehousing activity would not be subject to this obligation. It should be borne in mind that Groupe Auchan paid 500 million euros in taxes and duties in France in 2012, i.e. approximately 2/3 of its net income before tax.

In the long term, this proposal is likely to hold back the development of Drives, and thereby:

-  reduce the competitiveness of businesses positioned in the retailing industry of the future;

-  oppose additional forms of retailing that meet new consumer expectations;

-  create problems for a sector that is currently creating jobs in a difficult economic climate;

-  deprive the territories in which Drives are located, of their positive dynamics.

It also risks introducing serious distortions of competition, to the benefit of other players whose development will have significant consequences for the French retail landscape.

Some current statistics on Groupe Auchan Drives:

- 81 Auchan Drive establishments in France, 2 in Luxembourg, plus a further 11 scheduled to open by the end of the year,

- 62 Chronodrives in France, plus a further 11 scheduled to open by the end of the year,

- Over 1.4 million customers purchased goods from them between the time the brands began trading and the end of 2012. This figure is projected to rise to almost 2 million by the end of 2013,

- Nearly 10 million orders delivered in 2012. This figure is projected to rise to almost 13 million in 2013,

- Global sales worth 816 million euros in 2012, projected to rise to 1.07 billion by the end of 2013.

- A combined market share of 40% (23% for Auchan Drive and 17% for Chronodrive)

A typical Drive establishment:

- serves 350 customers each day

- sells 12,000 products each day

- covers a built area of approx. 1400 m2 within a land area of 5,000 m2

- has around 40 employees (on employment contracts) on average

- represents an investment of 2.5 million euros per establishment opened