Organic goods, power and big data: Casino group entering several new markets
French Casino group, formerly known for its major distribution outlets, is financing a new development phase, after positive results posted in March left markets confident, despite a gloomy market. Among the development projects, the consolidation of the group’s position on existing trends, and the spearheading of new markets.
Casino group has gotten ahead in the race between large distributors to reinvent themselves, as its financial results, released on Thursday, March 14, have shown. The previous model, which relied simply on attracting the highest numbers of customers, has been pressured with the rise of online sales, leading distributors to search new market segments to invest. So far, the best-working strategy has been Casino’s, as competitors have posted disappointing results and shown their troubles in negotiating the market turn. Among the successful moves, the entrance into the organic foods sector, the digital transformation, service supplying and the broadening of the customer presence.
Casino was one of the first to identify the growth potential of the organic food sector, back in 2008, when it acquired French organic food specialist, Naturalia, despite the organic label not yet being created. Since then, the label has been legally protected, and sales have soared, filling Casino’s sails with the wind which has otherwise gone scarce in the distribution sector. The latest organic food convention issued the statement according to which: “According to the consumer barometer managed by Agence BIO, 74% of French people intend to increase their organic consumption and 85 % consider it important to develop the sector. Additionally, 90% of parents are interested in seeing an organic offering in school catering. This increase in demand and substantial enthusiasm for organic products can be partially attributed to events and initiatives such as Printemps BIO whose aim is to inform the general public and professionals as to the benefits of organic farming and its products.” Operational income has more than doubled in the past 4 years, making Naturalia one of Casino’s flagships, and is expected to grow much further in coming years. It is today the leading distributor in the organic food sector.
Aware that online sales and their soaring development represented a threat to the existing premise-based business model, CEO Jean-Charles Naouri acquired its own sales platform, named Cdiscount, in 2000. Online sales are potentially lucrative but draw their cash flow from the clientele which was initially covered by traditional shopping surfaces - making it a threat. Instead of trying to resist the tide of the “new way of doing business”, Casino took the lead on it, becoming one of the first large distributors to acquire its own online sales channel. Newly-released financial details show a steady increase in sales, and Casino is shouldering the launch into numerous foreign sectors. E-commerce News reports that “Cdiscount Marketplace is busy expanding outside of France. The online marketplace now also delivers some items to Belgium, Germany, Italy and Spain. This means, the 10,000 connected sellers suddenly get access to a new 200 million customer base […] The expansion news follows after Cdiscount revealed it achieved a 15 percent year-on-year growth in net sales, which are now worth 969 million euros. During the second quarter of this year, Cdiscount welcomed 8.7 million active customers who places 5.8 million orders for 11 million items.” As a result, the expansion of the online share of sales has boosted Casino’s bottom line, instead of hurting it - a welcome contribution to the March 2019 financial results. But Casino hasn’t limited its digital transformation to becoming a client of online solutions, it is also now a supplier.
Predicting that its own needs in data management and power supply would quickly grow with the digital revolution, Casino identified that any players in the field who would survive the digital trend would also place increased demands on power and data cables. Subsequently, Casino voluntarily over-sized its own data farms, so as to be able to sell storage and data management, on top of using its own resources for its own operations. Data specialist Andy Patrizio writes: “The average number of data centers managed will increase to 10.2 per organization over the next three years, and over three years, on average, 12.8 data centers per organization will be renovated. More important is the amount of growth. The average number of data centers to be built sits at around 2.2 per organization, which increases to 4.5 over the course of 12 months and 10.3 per organization over the next three years.” In order to structure and reinforce its digital venture, Casino has acquired specialist companies Scalemax and 3W-RevelenC. Alongside the growing need for data storage, will come the increased demand for power, a conundrum which energy experts have been struggling with for several years. Casino has therefore created Green Yellow, an energy start-up specialized in clean energy production, a sub-sector which is rapidly growing.
As part of its broadening strategy, Casino has associated the products it has been selling for over a century with all relevant services, which are now interoperable thanks to the newly-developed app, onto which the entire catalog was transferred. The French distribution operator is now a leading player in banking services, online solutions, travel and energy, which enables it to maintain its stronghold on its historical market: distribution. The renewed business plan is coming to maturity: after having sold it less-profitable assets and cleared its debts, Casino group is able to produce the best financial results of its market.
This was posted in Bdaily's Members' News section by Daniel Brooks .