Paris, Nov 19 - French retailer Auchan said its large hypermarket model is working well in France and sees no need to cut back on size, unlike listed rivals Carrefour and Casino.
Privately held Auchan, which derives nearly half its sales from France, saw French hypermarket sales rise over 3 percent in October from a year ago, division head Arnaud Mulliez said.
"Unlike some of our rivals, we continue to believe strongly in hypermarkets, even very big ones," Mulliez said in an interview with Reuters.
The holiday season would help revenue in the second half of 2009, after the first half saw a 1.9 percent drop in hypermarket sales on a like-for-like basis, excluding petrol, he added.
Both Carrefour and Casino are overhauling management of their hypermarkets in France after the outlets saw sales drop between 5 and 6 percent in the third quarter, excluding petrol.
Carrefour has cut back on retail space at its Portet-sur-Garonne hypermarket and is considering bringing in outside brands to fill up the space. [ID:nLS43970]
Meanwhile, Auchan has spent 30 million euros ($44.9 million) enlarging its hypermarket at Issy-les-Moulineaux in Paris and will open two more hypermarkets in France next year.
Analysts say Auchan has a more competitive pricing strategy than Carrefour, which is in the early stages of a turnaround plan to save costs, cut prices and gain market share.
They also say Auchan has a better grasp of its real estate portfolio, including shopping centres attached to hypermarkets.
INTERNATIONAL EXPANSION
Mulliez said Auchan's future investment priority lay abroad, particularly in developing markets like Russia and China, rather than mature markets such as France, Spain or Italy.
"In mature markets...our approach is quieter," he said, adding that planned capital expenditure in France had been cut by half this year to 200 million euros and would stay at this level in 2010.
Auchan's international business accounts for more than half of total revenue, and China is its biggest market in terms of the number of hypermarkets including retail partners.
It also benefits from having arrived early in Russia, where it launched in 2001.
Carrefour said it was exiting the Russian market last month, citing a lack of growth opportunities, after only opening its first store in Moscow in June of this year.
Auchan was founded by Mulliez' father, Gerard, and the Mulliez family still owns 87 percent of the company. Its employees own the rest.