LECLERC: The responsible distributor

Résumé du document

This report focuses on the Leclerc company, a French distributor which is really a decentralized distribution network. Leclerc is an important company in France, because of its size, standing, and presence (it is the first distribution network in terms of market share in France), because it has a fairly different vision and mission from other the players in the industry, because it was founded by a very charismatic and famous entrepreneur and is still controlled by members of his family, and also because its history is closely meshed with the history of the French transition into the era of mass consumption and giant service companies. Indeed, in many ways, Leclerc is emblematic of the French way of doing things, and to a certain extent, is a forerunner of the socially responsible corporations which the civil society is encouraging today. This is all the more remarkable as Leclerc is strongly capitalizing on this aspect today, especially in France and abroad as well. It follows marketing strategy based on consumer trust and fairness to its stakeholders.

Extraits

[...] In this direction it follows the general trend in management practices which is less into direct control of the value-chain than into concentrating on sales synergies to maximize cashflow. Strategies for growth - diversification Leclerc was rapid to make diversification a master card in its strategic hand. Edouard Leclerc believed from the start that if you could attract people to the store with low prices on the food, you could sell other products to them on the occasion for almost no extra costs. The possibilities of this model are almost unlimited and each decade has brought its fair share of new ventures to the Leclerc outlet. [...]

[...] A store's attractiveness rests on a number of key products, on which Leclerc pledges and achieves very low prices. The margins on these products can be almost negative, and some entire stalls fall well below minimum demanded return on investment. For instance, the fresh produce stalls are less productive than other stalls due to important fixed costs, yet they are given essential attention because they justify a trip to the store for the customer and represent up to 20% of total sales for an average given center. [...]

[...] There are various points of integration in the value-chain, and different systems have different organizations. The following diagram is as general as possible to reflect the way in which the chain is constituted. The Leclerc system is based on this general value-chain, however there are specific items to review, in order to understand the competitive advantage Leclerc possesses in its market. The different elements of the chain can be studied. Leclerc is an integrator in the sense that it consolidates the purchasing unit and the distribution outlets. [...]

[...] As a consequence Leclerc centers have opened in Europe since in Portugal in Poland in Spain and one recently in Slovenia. In June 2002, E.Leclerc announced a strategic alliance with CONAD, the second distributor on the Italian market. This move should provide Leclerc with a logistics platform to push further into the Italian and Spanish markets where CONAD operates. Leclerc reports having prospected on the Chinese market as well. Absent strategies at Leclerc today Leclerc's organization is one of the key limitations at this point in entering foreign market. [...]

[...] The low-level, operational decisions (by low-level is meant a reference to the hierarchy, not the value of the process) are taken in the properly low on-field places, and so the distribution outlets that are the main purveyors of revenue for Leclerc can maximize profit while benefiting from all the advantages of remaining within a large network. The top strategic, marketing, financial and purchasing decisions are left to the corresponding departments in the central organization. In this model, each distribution outlet is empowered to act on a majority of short-term or very local matters. [...]