September 12, 2013

Rewe ends Coopernic alliance with Leclerc

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French connection: Michel-Édouard Leclerc and Rewe boss Alain Caparros were once big pals
Oh, là là, quelle affaire! Here we have two prominent retailer personalities who have vied to outdo each other in reciprocal praise for years.

In numerous joint photo sessions and interviews the two Frenchmen have sworn personal allegiance and talked male bonding and elective affinities.

But all this chumminess has ended in tears for Michel-Édouard Leclerc, debonair President of French retailer co-operative E. Leclerc, and Alain Caparros, the sultry and flamboyant CEO of Germany's second-largest food retailer Rewe Group.

They have fallen out over Coopernic, the European alliance of independent retailers and the very organisation that brought them together.

The news hit like a bombshell last Friday. Leclerc’s four European partners want to leave Brussels-based buying group Coopernic by the end of the year.

Rewe, Belgian retailer Colruyt, Coop Schweiz (CH) and Italian co-operative Conad intend to create a new joint company in Brussels – without their former buddy Leclerc.

According to a statement from Cologne-based Rewe, the break was due to “insurmountable differences concerning the future form and strategic focus of the group."

Male bonding


This is astonishing language in view of the lovey-dovey stuff with which the media has been spoon-fed since the creation of Coopernic at the end of 2005.

Compare this with the anodyne explanation given by Leclerc: "The two groups of partners have different projects for 2014.2

So what really went wrong at this European buying alliance with the catchy little title Coopérative Européenne de Référencement et de Négoce des Indépendants Commerçants?

Didn't play the game

The French press has indicated that the rift occurred because Leclerc couldn’t stop asking suppliers for extra deals on top of those already negotiated collectively via Coopernic.

This would seem to ring true as similar accusations were made against Leclerc when it left the Markant EMD buying group in 2002. It is also alleged that Leclerc was something of a franc-tireur when it worked with fellow retailer co-operative Système U in the French buying alliance Lucie.

It is also claimed that around 50 to 60 of Leclerc’s more “self-assured” independents kept breaking ranks at Coopernic and wouldn’t keep to collective bargains. Again this sounds plausible. Independents are fierce individualists in any country, but they seem to be even more so in France than in Germany.

One further interpretation is provided by French B2B publication LSA where a person familiar with the dossier claims: "It seems that Caparros wanted to make (Coopernic) a really centralised buying group like Carrefour, which wasn't at all to the taste of Leclerc's independent members."

Whatever really lead to the French divorce, where does this now leave the parties concerned, and how will they scalp (sorry typo!) source multinational suppliers in the future?

Presumably, they will first have to sort out the rather strange 80-per-cent joint stake they have taken in Lithuanian retailer IKI Global.

In splendid isolation

If it is true that Alain Caparros wanted to turn Coopernic into a Carrefour-type buying office, then Rewe will surely try to attempt the same with Coop Schweiz, Colruyt and Conad in the new organisation next year.

But the old-new partners now lack a strong French partner if they want to be a credible European force. As Intermarché already works with Rewe’s German arch-rival Edeka via the buying group Agenor/Alidis, and Système U is a member of AMS Sourcing, there are no structurally relevant options.

Meanwhile, Leclerc is surely now in the more difficult position. Admittedly, with more than 18 per cent of the French food retail market, the company is on a roll at home and could well thrust Carrefour from the top spot as early as this year.

But the leading French retailer co-operative now looks pretty isolated in Europe as the sole remaining member of Coopernic. Leclerc’s 160-odd foreign outlets scattered across six Southern and Eastern European countries would hardly seem to justify pan-European terms & conditions.

And, given the company’s track record on international negotiations, what major European retailer would now wish to jump into bed with them?

However the dice eventually fall, one thing has become increasingly clear over the years as retailers have tried to forge pan-European buying alliances: it’s in their DNA to wheedle rebates out of their suppliers.

Success in doing so has spurred their growth for decades, but this doesn’t make them good team players either nationally or internationally. Voilà les distributeurs!

 
Related article in German: Lebensmittel Zeitung, no. 32, 13.09.2013, by Annette C. Müller, Mike Dawson & Bernd Biehl

 

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