Centrakor bargains are attractive given purchasing power issues

Fine wood paneling, large bay windows that let in the light, South Sea blue carts… The new Centrakor, to be installed near Toulouse, doesn’t have much of the sombre proposition of some discount stores. However, the shocking argument here is undoubtedly the price. As soon as you enter, the shopkeeper displays his labels flush with the daisies. A set of 12 champagne flutes for 4.99 euros, a bar table and its stools for 49.99 euros or a stainless steel water bottle for 4.99 euros. “This product is a rocket, we will sell 200,000 in a few days,” says Olivier Rondolotto, the head of the network. This passionate autodidact with an impressive mouth can take you on a 3-hour visit to discover all the “bombs” unearthed by his teams. Before he drives off in his handsome Porsche Cayenne…

The boss can boast a little: while brands like Tati or Fly have declined, Centrakor is celebrating its 15th anniversary with a bang. Last year, the low-cost do-it-yourselfer recorded the strongest growth in its history (17%) and achieved record sales of 975 million euros. The brand fully benefits from two strong trends: the French’s rediscovered passion for decoration and their increased need to save. “A third of the population is very concerned about the decline in their purchasing power,” recalls Gaëlle Le Floch of Kantar Worldpanel.

In a booming bazaar market, Centrakor is developing at breakneck speed: in five years it has opened 140 outlets, now has 450 and expects around 30 more this year. His prescription? Comfortable shops – the days of strict discounts are over -, choice and low prices.

When you consider that the brand didn’t even exist fifteen years ago. When Centrakor’s current owner, the French household appliance group Cargo, took over the company in 2004, it was just a central purchasing structure serving a few customers (the name derives elsewhere from the expression “central purchasing”). ). About forty shops draw from the same catalogue, but do not have a common banner.

It was Olivier Rondolotto who was appointed CEO who started building a real channel. “When the members voted for this brand name, I had two bad nights,” laughs the forty-something. So I decided: With him we can at least sell what we want!” While the sector consists of countless small players, the expansion is very fast: In addition to the directly opened stores, Centrakor is buying a number of existing networks (Malin Plaisir, Michigan , Fly, etc.) and attracts merchant battalions.

This choice of a flexible model, open to independents, is key. First, given the action steamroller capable of lining up the opening millions with a vengeance, the challenger was able to penetrate territory very quickly and at little cost. “There is a race in this discount market, you have to occupy space,” says Frank Rosenthal, retail marketing expert. This network system also makes it possible to bring powerful retailers into the network who know their catchment area perfectly.” Thanks to hundreds of stores, the brand ultimately benefits from tenfold purchasing power.

And the purchases, at a discount, that’s the nerve of the war. Without powerful sourcing, it is impossible to make a living selling products at cheap prices in a comfortable environment. Not surprisingly, nearly 90% of referrals come from China. However, Centrakor does not have an expensive structure in Asia. In Toulouse, a “task force” of 10 buyers, under the direct direction of the boss, negotiates with importers unknown to the general public (JJA, C2S, etc.): these intermediaries produce collections according to current trends for all the players in the bazaar, thereby breaking the prices.

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The delivery then takes place just in time directly to the point of sale in order to avoid the storage costs of a specialist warehouse – unlike at La Foir’Fouille or Gifi. The know-how of the Centrakor teams? Bargain for the best price by promoting their substantial volumes and identify the most promising items by browsing the trade shows (Stock Free, Welc’Home, etc.) or the Canton show. Over the last few months they have scrupulously selected a decanter in the shape of a wine glass and a lemonade fountain, real cardboard boxes.

The areas are cleverly constructed. The brand initially relies on a cocktail of decoys to entice the customer. Limited series with unbeatable labels sold at the entrance to the store and 150 permanent references stamped “low price”: your amount is on the packaging, like insurance for the consumer. They can be found on every shelf, from the €1.49 Japanese pendant lamp to the brand’s bestselling set of wooden hangers for €3.99. “1 euro less than at Ikea!” trumpeted Olivier Rondolotto.

Obviously, the boss makes little margin on these products… But what does it matter, because once in the aisles, all the customers are tempted by many other more profitable items, trinkets that they don’t necessarily have? smarter alternatives to the basics you want to get started with.

Because unlike the action model, which builds its range around lines and short ranges, Centrakor relies on a wide range: In the kitchen department, for example, you will not only find a set with six teaspoons for 1.49 euros, but a dozen other references in different styles and prices. In order to inflate the receipt, the network also develops more lucrative universes than small decorations, such as furniture. At less than 300 euros per garden table and armchair, the offer remains attractive and significantly improves the brand’s average shopping cart, which has increased from 22 to 27 euros in two years.

These bargains are the distributor’s best marketing arguments. He doesn’t indulge in advertising: he bought the rights to the song “Louxor, j’adore” by Philippe Katerine to hammer “Centrakor, j’adore”, but spent only 4.9 million euros on advertising in 2021, down from 73 million for Gifi and 13.5 million for Action (source Kantar). Retailers prefer to present their star products in a good old catalogue. Every 14 days, this approximately ten-page leaflet is distributed in all mailboxes around the sales outlets. Count more than 120 million copies a year! “Digital is not accepted in our industry,” explains Olivier Rondolotto. The catalog is the only medium that brings traffic.”

And don’t think it only attracts modest households. In the corridor leading to the warehouse in Balma (Haute-Garonne), a small “customer comment tree” shows requests or comments to the staff. Underneath the post-its you can read “Accept American Express”! Remember that this prestigious bank card is only issued from an annual income of 35,000 euros.

  • The chain plans to open around 30 branches in 2022.
  • 975 million euros turnover in 2021, i.e. + 17% in one year
  • 40 stores in 2004 versus 450 in 2021
  • €27 average shopping cart in 2021 (+23% since 2019)
  • 120 million leaflets are distributed each year
  • The brand’s bestseller: a set of hangers (3.99 euros), the best-selling product in the history of the network, with 2.9 million copies sold.

The industry whets the appetite

This is the bargain fair in the discount bazaar market. While the sector has been evolving slowly but surely since the 1990s, growth is accelerating – the Xerfi company expects 11% in 2022 – and all the factors for a bright future are there: the French love decoration, but they want to limit their spending and hypermarkets have given up the niche. Enough to lure hollow-nosed investors, as this still very fragmented business has a variety of brands to buy, often small and local.

In recent weeks, the Zouari family has entered into exclusive negotiations to acquire three independent networks (Stokomani, Maxi Bazar and Dya Shopping). If these war prices are confirmed, the trader (owner of Picard) would rise straight to fourth place in the sector, on Centrakor’s heels. Consolidation is underway.

Sales volume*: 2 billion euros

Number of shops: 650

owner : 3i fund

Sales volume*: 1.5 billion euros

Number of shops: 530

owner : Philippe Ginestet, Founder

Sales volume*: 720 million euros

Number of shops: 250

owner : Ivan Rapoport, President

Sales volume*: 650 million euros

Number of shops: 128

owner : In the sales process

Sales volume*: 550 million euros

Number of shops: 315

owner : Remy Adrion, Founder

Sales volume*: 200 million euros

Number of shops: 57

owner : In the sales process

* Sales 2021, except campaign: sales 2020.

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