REWE Group close new allianz with european Partners

Brussels, 16.02.06

Colruyt, CONAD, COOP, E. Leclerc and REWE Group announce the creation of COOPERNIC, the first-ever alliance of independent European distributors

There is a growing trend towards concentration in the consumer goods industry. In the core market segments, three or four major multinationals alone supply 80% of products sold in hypermarkets. At the same time, this concentration is also affecting the retail distribution industry: the past decade has seen an increase in acquisitions, mergers and leveraged buyouts.

Independent retailers are compelled to respond to this move. To provide their members with the means to withstand this competitive challenge, five retail groups Colruyt (Belgium), CONAD (Italy), COOP (Switzerland), E. LECLERC (France) and REWE Group (Germany) have combined forces to create COOPERNIC (COOPérative Européenne de Référencement et de Négoce des Indépendants Commerçants), a European purchasing cooperative of independent retailers and traders.

The aim of the alliance is to allow independent retailers to exchange know-how, reduce supply chain costs, expand their offerings and improve their performance, as well as to pass on to consumer the benefits of better purchasing terms and conditions and easier access to products.

1) Independent retailers driven by a shared vision and offering complementary locations and expertise

The five founding members of COOPERNIC are groups of independent retailers (cooperatives, family businesses or business associates). They operate 17,498 stores in Europe. The founding members are:

Colruyt

• 3rd largest Belgian retailer
• Sales: 4.4 billion euros (21% market share)
• Number of stores: 615
• Grocery retail brands: Colruyt (discount), Bioplanet (supermarkets), Okay and Spar Retail (local grocery stores); non-grocery retail brands: Dreamland (seasonal products), Dreambaby, Web shops

CONAD:

• 2nd largest Italian retail group
• Sales: 8.2 billion euros (12.2% market share)
• Number of outlets: 2,899
• Retail brands: E. Leclerc-Conad (hypermarkets), Conad (supermarkets), Margherita (local grocery stores)

COOP:

• 2nd largest Swiss retail group
• Sales: 9.64 billion euros (15.7% market share)
• Number of outlets: 1,433
• Grocery retail brand: COOP
• Non-grocery retail brands: Brico-Loisirs, Coop City (department stores), Coop Pronto, Interdiscount (consumer electronics), Top Tip (furnishings), Vitality (pharmaceuticals), among others.

E. LECLERC:

• France’s leading hypermarket brand (17.1% market share)
• Sales: 30.1 billion euros (including 28.5 billion in France)
• Number of stores: 596 (including 538 in France)
• Retail brands include: Leclerc Voyages, Espaces Culturels (books and records), Parapharmaceuticals, Opticians, Sport and DIY/Gardening.

REWE Group:

• 2nd largest German retail group
• Sales: 40.8 billion euros (including €29.4 billion in Germany – 16.1% market share).
• Number of stores: 11,665 (including 8,666 in Germany).
• Grocery retail brands: Penny (HD), REWE, MiniMAL, Billa Merkur (supermarkets), toom (hypermarkets), non-grocery retail brands: toom BauMarkt (DIY), ProMarkt (high-tech products), Cash & Carry.

Offering complementary locations across Europe, Colruyt, CONAD, COOP, E. LECLERC and REWE Group are joining forces in order to:

• Provide their members with a pan-European organisation capable of competing with the most powerful integrated retail chains.
• The five founding members of COOPERNIC have combined sales of 96 billion euros, representing 10% of total retail sales in Europe (this percentage should be seen in parallel with the combined sales of the 3 leading European integrated retail brands, which generate 20% of common consumer goods sales in the European Union).

2) Objectives
The five groups intend to cooperate in the grocery and non-grocery segments by jointly negotiating supplies from major international brands, seeking to expand their domestic offerings and reducing supply chain costs.

• COOPERNIC will allow members to negotiate jointly with multinational suppliers, whose products already constitute the lion’s share of their offerings.
  
  COOPERNIC will be tasked with tracking down price discrepancies across Europe and optimising purchasing from the major brands to allow its members to offer customers the lowest prices. The trading cooperative will also negotiate cross-border services such as test market trials, coordinated product launches, a common product repository, and more. These trade agreements have been made possible thanks to the strong growth experienced by all five founding members in their customer catchment areas. In addition, it made sense to unlock these synergies since the groups are not in direct competition
  with each other, and both their current store locations and European expansion strategies are highly complementary.
  
  
• Unlike the central buying offices of the large integrated chains, COOPERNIC does not intend to supplant the marketing strategies of each group. On the contrary, its members are opposed to excessive standardisation of offerings and, aside from the joint trading services vis-à-vis major brands, each member will maintain its independent procurement policy. It is precisely the aim of the alliance to improve domestic offerings by offering consumers the best product selections from other members, including such high-growth segments as fair trade, in which Coop Suisse is the world’s number one player.
  
  Within COOPERNIC, multilateral exchanges of supplier mailing lists will enable many regional producers and SMEs to access the shelves of other members and thus grow their pan-European sales. These benefits are already experienced by the joint suppliers of Coop and REWE and, more recently, of E. Leclerc and Conad.
  
  
• Cooperation between members will also enable substantial supply chain cost reductions within the scope of pan-European sourcing or imports.
  
  European transport policies and the drive for economies of scale have compelled major manufacturing companies to optimise the location of their production plants in order to meet the full spectrum of needs of the expanded marketplace. Against this backdrop, the five members had invested in their own supply tools – without consulting other players and without the means to optimize resources – according to their domestic requirements. Now, thanks to COOPERNIC, the five members can pool their efforts to establish the most efficient supply chain across the whole of Europe. Within the scope of the agreement, each group can delegate these operations to the member of COOPERNIC deemed to be the most proficient in specific markets and areas of expertise (for example, E. Leclerc is today starting to supply fuel from France to Conad petrol stations in Northern Italy). Existing import structures (Eurogroup International for REWE/Coop and Siplec for E. Leclerc/Conad) will work together according to a protocol agreement.
  
  Members’ product lines will also benefit as COOPERNIC will help spread costs and enable substantial reductions, thanks to:
  
  • The definition of joint specifications for national-manufacturer brands and low-cost own labels.
  • Pooling of quality control for these products.
  • An increase in social audits and open access to a common repository of supplier audits in order to monitor the social and ethical aspects of manufacturing conditions outside Europe.

3) COOPERNIC: a lean, cooperative-type structure

For practical reasons but also to emphasise its pan-European identity, it has been decided to locate the COOPERNIC head office in Brussels. In addition, as soon as technically possible, its by-laws stipulate that it will be transformed into a cooperative under European law.

COOPERNIC will remain a lean structure. The brand professionals involved are critical to its development and operational efficiency: they are proactively committed to the alliance and to bolstering activities in their respective countries. This will avoid the risk of fostering an unwieldy, costly and sluggish superstructure.

COOPERNIC is not a financial organisation. The cooperative venture will be run on a not-for-profit basis. Its capital will consist of contributions paid by its constituent members. Any savings, rebates, discounts or benefits shall be allocated or transferred to each of the member groups according to the cooperative principles of complete financial and fiscal transparency.

COOPERNIC will be headed by a board of directors composed of ten members: two from each cooperative company. Members will own equal shares and have equal voting rights: each company will own 20% of the shares and will represent one vote on the board of directors.

A new chairman and deputy chairman will be appointed every two years. Upon its launch and for the first two years, Michel Edouard Leclerc, joint chairman of Association des Centres E. Leclerc, will be appointed COOPERNIC chairman. Dr Achim Egner, chairman of REWE, will be deputy chairman. Commercial operations will be managed by an executive committee.

Contact

REWE GROUP-Corporate Communications
Tel.: 0221 - 149-1050
E-Mail: presse(at)rewe-group.com

Contact