French supermarkets' price lure

CAMPAIGNERS pressing for Britain to adopt the euro believe the battle will be won at supermarket checkouts. Britons spend 40m days a year between them in continental Europe, where the introduction of the single currency on 1 January will make more obvious the astonishing gap between prices charged by British retailers and their continental peers.

According to pro-euro lobby group Britain in Europe, a pair of Levi's costs £38.06 in France compared with £42.88 in Britain, an identical lipstick is 31% cheaper and a Bosch power drill costs half as much.

Instead of fancy shopfitting, ready meals and flavourless vegetables, French supermarkets offer tasty local produce, big brands at lower prices and big reductions on seasonal goods. But this is nothing to do with the single currency. Rather, it stems from a retail tradition that puts the customer in pride of place, and profits at the periphery.

If any one person can be credited with originating the divergent development of supermarket retailing south of the English Channel it is Edouard Leclerc, who in 1949, at the age of 23, opened a shop in a small town in Brittany and filled it with factory-made biscuits. He quickly moved on to other bulk-bought commodity products and began to franchise the idea across the country.

E Leclerc, run by his son Michel-Edouard, is France's second-biggest retailer after Carrefour, with a market share in excess of 15%. Four features of the Leclerc philosophy - franchised ownership, bulk-buying of manufactured goods, high stock turnover and retailing at wafer-thin margins - have shaped the market. But the most remarkable contrast with the UK is local sourcing which brings fresh meat, fruit, vegetables and preserves to the shelves alongside bulk-bought and imported produce.

The philosophies of local ownership and local sourcing as cornerstones of quality and customer satisfaction find their ultimate exponents in a federation of independent retailers called Les Mousquetaires.

The group was founded in 1969 by franchisees who disagreed with Leclerc's plans for a national distribution system. It certainly cares a lot about its small-business credo, and its relationships with suppliers, many of them small or medium-sized businesses too. And its marketing slogan: 'Always at war with the cost of living,' rings true.

Spurning hypermarkets, Les Mousquetaires has sought to provide the benefits of umbrella brands, advertising and buying power for an extraordinary range of local retail operations. The biggest of these is Intermarche, with 1,651 stores in France and 316 scattered across Portugal, Spain, Belgium, Poland, Italy and Bosnia. Most customers visit these medium-sized supermarkets twice or thee times a week, and the emphasis is on fresh produce.

Alongside these stands a fast-growing 343-strong chain of smaller rural stores, Ecomarche, and 656 village food shops, Les Relais des Mousquetaires. Together, they command about 14% of the French food retail market, and rank third largest behind Leclerc.

Diversifying from its core food offering, it also regroups 456 DIY stores under the Bricomarche brand; 123 clothing sheds called Vetimarche; 156 fast fit car repair centres, Stationmarche; 55 Restaumarche; traditional restaurants and 220 Netto ultra-discount stores.

By the end of last year, these businesses were run by 2,539 owner-managers, who complement local purchasing with supplies delivered from more than 30 regional distribution centres owned by Les Mousquetaires.

About 1.000 of the owner-managers are associates of the Mousquetaires company, of which they own the shares and elect the directors. The company, in turn, owns ITM Entreprises, which, under chairman Pierre Gourgeon, develops and implements the group strategy and which owns, wholly or partly, a host of businesses that service and supply the retail outlets.

Les Mousquetaires' enthusiasm to spread the owner-manager gospel has led it into manufacturing. It part-owns Europe's largest fishing fleet, fish and shellfish farms, slaughterhouses, bacon-smoking plants, petfood factories, water bottling and fruit juice plants and industrial bakeries.

Often, says ITM, it acquired an interest in a supplier when there was a problem such as ownership succession. Being a manufacturer, it says, provides leverage in dealing with suppliers.

'In bottled water, there are only two big suppliers in France, Nestle and Danone,' it says. 'If we didn't do anything we might be obliged to buy at a price they set.'

Combined with the franchised Spar chain in Germany, which it controls, Les Mousquetaires' outlets and service companies together claimed turnover last year of e35.5bn(£21.8bn).

French supermarkets pass much of the benefit of their buying leverage on to consumers. There's food for thought.