THE discounters are everywhere in Europe and are very successful. Action, Normal, Hema, these stores which sell products of all kinds at low prices are taking over our cities. In France, one in three French households visits this type of store at least once a year. And despite this demand, the pioneer of the sector, Gifi, is in difficulty. State of play of a growing sector that must reinvent itself.
To understand the situation in the sector, all it takes is a classic case study, the case of Gifi, a French company created in 1981. In these stores, which are also called “bazaars”, you can find almost everything you need. almost nothing, whether everyday accessories, decoration or products for the home and garden. The brand has become a reference and has grown. It has 700 stores, employs 6,500 people in seventeen countries, mainly in Europe, but also in Ivory Coast and today generates a turnover of 1.3 billion euros.
It is the development of Gifi which explains its current difficulties. First, in the 2010s, Gifi positioned itself in the upper discount range with prices a little higher than its competitors and, in 2017, it is the takeover of the Tati company in great difficulty which weighed down Gifi's accounts.
Franck Rosenthal, expert in commercial marketing
« The hard discount sector is growing a lot but there are so many players that market shares are decreasing and only some are gaining. »
Franck Rosenthal, expert in commercial marketing
Bug IT and the downward spiral
The final blow for Gifi is at the start of 2024 with a huge bug computer which highlighted the company's difficulties due to a change in inventory management software. This downward spiral led to a loss of turnover and therefore net margins; the parent company had to take on debt of 100 million euros to cope.
Gifi is now in great difficulty and is looking for a buyer, but the competition is there, fierce, and is not giving any favors.
Physical competition, with the Dutch giant Action, an ultra-developed group in France with 800 stores. There are dozens of them opening every month and positioning themselves on discount raw with very low priced products traded with a low margin. This is important, Action spends little on marketing as word of mouth is so effective. Other brands have also appeared such as Normal, Hema, Noz and even BM.
Competition is also on the internet
And it's not just in stores that the big players in the sector are waging a price war, internet is also an ideal playground for the sector. That, the Chinese Temu understood this perfectly, so much so that the website became the fourth merchant site visited in France. On this e-commerce platform, you can find everything at very low prices.
This situation is not just Franco-French. THE discounters Europeans will have to adapt, the market is growing little but the players are more and more numerous. It's like a cake: its size doesn't change, but the pieces get smaller and smaller. It is therefore an entire sector that must reinvent itself, even if it is very buoyant, at a time when inflation has reduced the purchasing power of households and where pleasures are available at low prices.
France
