March 21, 2019

With the recent publication of its yearly results, Casino seems about to enter a strong growth phase, after faring well through the rough patch which hit the entire sector in recent years. With alleviated debt and several confirmed growth powerhouses, the French distribution giant is expected to consolidate its position and steam ahead, while competitors still struggle to exit rough seas.

It was the moment of truth for Casino on March 14. In a globally feverish sector, CEO Jean-Charles Naouri presented shareholders with financial results for the Casino group. The figures were expected to serve as a benchmark for success or failure of the plan he initiated in recent years to transform the group, into a more generalized and digital setting. Operational results were outstanding, despite fears that the micro-recession was affecting all brands, and trading profit ranked at 1.2 billion euros, with an overall 18% growth rate. In a press release, Jean-Charles Naouri, Chairman and CEO of Casino Group said: « 2018 marks the successful completion of the Group’s transformation plan launched four years ago. […] Our capital structure has been strengthened with the significant reduction in debt and we are planning further debt reduction this year. Our business model is now well positioned for the profound changes that are taking place in the retail sector. Our strategic leadership will be further enhanced over 2019-2021 with an increased focus on profitable formats, accelerated development of our digitalization programme and E-commerce offering, and the expansion of new businesses which benefit from the Group’s assets and expertise ». With renewed confidence, Casino group can now use the solid advance it has on the competition to pursue its strategic goals and develop the several markets it has started to invest. They range from organic foods to super-calculators and data management.

Digital era

Casino group entered the digital age firmly, 10 years ago, with the acquisition of its online sales platform, Cdiscount. After establishing itself in France and an increasing number of foreign countries, the platform drove the digitization of the group, in order to make sure that profits were not eroded by competing web-based merchants such as Amazon and eBay. Today, Cdiscount leads large part of Casino’s digital strategy. Needs in IT infrastructure have therefore increased dramatically, as online sales develop – to the point of enticing Casino to build its own backbone of data centers. But, instead of simply meeting domestic needs, Casino also intends to position itself as a data storage supplier, as global needs never cease to grow. Increasingly, Casino will therefore be adding BtoB segments to its sales channels, on top of traditional BtoC segments.

Housing data centers will not be a mere new activity, as the strategy is two-tiered. In a recent acquisition, Casino completed its set of skills with ScaleMax, a subsidiary in charge of data center management, as reported directly by the group: “The venture will generate additional revenue for the Casino Group through the rental of available space and the supply of power required to run the data centers, via its GreenYellow subsidiary. There are also plans to reuse the heat from the servers to heat the buildings housing the data centers (i.e., stores and warehouses), which will create savings at a time of rising energy costs. The data centers will be operated by ScaleMax, a company jointly owned by the Casino Group and Qarnot computing.

Jean-Charles Naouri plans for Casino to become a leader in data mining, by combining the existing client portfolio with the capacity to store, extract and analyze data from millions of anonymous accounts, thus reinforcing its impact and presence on online markets. Business Insider Dominique Vidalon reports: “Casino is trying to adapt to the challenges of online shopping and more such stores could be on the cards if the format is successful, said Tina Schuler, who heads its Geant, Leader Price and Casino supermarkets.” In other words, Casino intends to take the highly disruptive commercial crisis induced by online platforms and turn it to its definite advantage.

Data driven businesses

Client data acquisition started long ago, and across the board, as supermarkets started offering discount cards to customers, in order to analyze buying patterns. But such efforts, while productive, never yielded more than coarse levels of information. With the ongoing strategy, which Casino will be pursuing for several years, purchases can be cross-referenced with client information, and online behavioral techniques. Additional services, also integrated within the strategy, will complete the data richness acquired by Casino, as the group has launched a flurry of services in recent years. It now offers banking services, travel packages and home deliveries.

Tamebay Chris Dawson writes: “Closer to home, Cdiscount launched their On-Demand delivery in June 2018 in Paris, which enables customers to select a delivery within a 30-minute slot at any time starting the day after the order. Cdiscount is the only company to offer this scheduled delivery service in France. They also opened a new 80,000 sqm warehouse for small products in Moissy, near Paris, bringing the total DC capacity up to 533,000 sqm at end June 2018.” Each one of those activities reinforces client proximity, yields financial information and personal preferences. Finally, direct access and proximity to clients will be facilitated by the tight network of inner-city small markets, which Casino has been developing in recent years.

Casino has resisted market attacks, and a sizable market shift with the appearance of online sales platform. With debts cleared and good financial results, Casino now has its hands freed to pursue the in-depth managerial reforms it has already undertaken. Within the next few years, the French giant should considerably evolve, shifting from a supermarket behemoth to a leader in sales-related data management, thus reinforcing its own commercial position.

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Daniel Myers