The context
Philippe Ginestet, founding president of GiFi, in 1981, wants to sell his brand. If his age – 70 years – plays a part in the story, the difficulties of GiFi also play their role.
The brand, which was flourishing yesterday, is today weakened by successive setbacks: failed takeover of Tati, catastrophic ERP changeover, aging store fleet…
Increased competition has something to do with it too. Action has shaken up the market in ten years and new players, often foreign and with significant impact, are arriving in France.
GiFi is for sale. The prospect has been discussed for years. It has recently accelerated and materialized, the Lazard bank having been mandated to find a buyer. Anything but a surprise. In the absence of family transmission, an option long favored but now ruled out, we must hand it over one day. Philippe Ginestet, founding president of GiFi, is 70 years old, and even if it is not a canonical age, the long-delayed moment is arriving. “The company must survive me in the best conditions”assures the boss, in a note to his employees obtained by the newspaper Southwest.
However, is this a trivial business sale? No. GiFi, with 545 stores in France and 1.3 billion euros in turnover in 2023, weighs heavily on a French market estimated at 10 billion euros by Xerfi. The challenge is to avoid a destabilizing collapse of this discount bazaar sector.
The risk is there, indeed. If this sale is relevant, it is not only because after forty-five years of service, Philippe Ginestet intends to enjoy a deserved retirement… GiFi is less flourishing than it was. Overtaken by Action, which crushes everything with its more than 800 stores in France, for 4.45 billion euros in turnover, GiFi is also overwhelmed – a bit like all the others – by the aggressiveness of Asian brands in online, Temu, Shein or AliExpress.
It's true, it's difficult to compete with Action, the French's favorite brand according to EY-Parthenon. With a fan rate of 45.7%, Action flattens GiFi and its 9.6%. Above all, since 2020, the gap has widened: Action fans have increased by 18.5% while those of GiFi have decreased by 7.9%. The purchasing frequency is also in favor of the Dutch brand with, according to analyzes of banking transactions carried out by Joko, an average of 6.4 transactions in the first half of 2024 for Action, compared to only 2 for GiFi.
Gifi in numbers
1,3 Mrd € : le CA in 2023
542 stores in France (595 in total), approximately 60% under rental management
Source : LSA
Genius ideas elsewhere
It's also difficult to fight against online stars, starting with Temu which, during the third quarter of 2024, became the fourth most visited merchant site in France, with 9 million unique visitors per day (source: Médiametrie//NetRatings and Fevad), behind Amazon, Leboncoin and Booking. “These players are pushing down the perception of prices,” analyse Frédéric Boublil, retail specialist.
And, faced with this, “GiFi is suffering from slow erosion, due to lack of sufficiently rapid questioning. The brand was overtaken by those more aggressive than it, on its own promises. The “genius ideas”, dear to GiFi, are happening today at Action or on the web, underlines Frédéric Boublil. GiFi missed several important turns, both commercial and operational. The brand remained on a strategy focused on promotions when the EDLP [everyday low price, NDLR] imposed itself everywhere. It did not expand its offering when others were opening up to food. It has not renewed its sourcing or, above all, its purchasing methods. »
The bazaar in figures
- €10 billion: lth 2023 turnover in France of the discount bazaar market
2,600 stores for the 7 main brands in the sector, more than twice as much in ten yearsSource: Xerfi
Cédric Ducrocq, president of Diamartabounds: “GiFi has a 100% integrated purchasing center model. This certainly makes it possible to do without intermediaries, but it imposes high storage requirements, therefore a high WCR [besoin en fonds de roulement, NDLR]. This makes the group vulnerable to the slightest shock, such as the Covid crisis or fluctuations in container prices. As a result, GiFi suffered more than others, combining direct import and sourcing from third-party suppliers and importers. »
Add to that the Tati mishap as well as a catastrophic ERP (software system) switchover, and understand that times are tough for GiFi. Tati, bought in 2017, was liquidated in 2021 after 150 million euros injected into the company – more than twice as much as expected. The failed ERP switchover of 2023 harmed the good supply of stores, causing a loss of approximately 9% of annual turnover. This is still more than 100 million euros gone…
“All this has delayed the necessary recovery plan for the brand, which has not sufficiently moved the lines either on its offer, nor on its organizational model, nor on the modernization and rationalization of its fleet,” pointe Yves Marin, consultant at Alexander Hughes. In other words, in stores, everything has remained a bit “in its own juice”, and that’s a handicap. “GiFi suffers from a lack of attractiveness compared to Action. On the one hand, a perfectly rehearsed, powerful and effective concept. On the other hand, a concept that has remained very conservative over time and which, therefore, appears to be aging. analyse Frank Rosenthal, expert in marketing du commerce.
Strong network in a saturated market
Meanwhile, the competition didn't wait. GiFi hardly opened any stores, in any case, when France was covered with points of sale. “The seven main brands on the market have doubled their stores in ten years, with 2,600 stores in 2023 », supports Delphine Davidauthor of a study on bazaar brands at Xerfi, at the beginning of the year. In the lot, many foreign newcomers, in the wake of Action present since 2012.
Normal arrived in 2019, Miniso in 2020, Tedi in 2023, Wibra in 2024, when B&M took advantage of the absorption of Babou, at the end of 2018, to push its pawns. “Action has more than 2,500 stores worldwide, Tedi 3,000, Miniso more than 6,100. Faced with these groups with incomparable purchasing power, the tricolor brands, which have remained very Franco-French, are struggling, and this is the case of GiFi”, explains Delphine David.
“GiFi has a 100% integrated purchasing center model. This certainly makes it possible to do without intermediaries, but it imposes high storage requirements. This makes the group vulnerable to the slightest shock. »
Cédric Ducrocq, president of Diamart
As long as the domestic market offers growth prospects, this holds. But with consumption at half mast and a network still expanding – Action went from 700 stores in France in November 2022 to 800 in January 2024 – things are starting to stall. And this is probably only the beginning. “The growth in average sales per store has already slowed down significantly, from +18% in 2021 to +8% in 2022 and +3.5% in 2023,” indicates Delphine David. The time for the curves to reverse is perhaps not very far away.
“It’s a saturated market, with too many square meters,” thus assures Cédric Ducrocq. It is in these moments that the waves of concentration take place. GiFi is perhaps preparing to open the ball because, among the suitors, Moez-Alexandre Zouari, already owner of Stokomani and Maxi Bazar, could position itself, as could foreign players, such as Tedi for example.
