"For the past 40 years hypermarkets haven't focused on and targeted their customers in the way that Auchan is now doing," says Auchan's marketing director Andre Tordjman. He explains how the French hypermarket retailer has managed to pull this off: "In the last two to three years we've adopted a much more added value position when it comes to retailer-manufacturer collaboration."
Elsevier Food International, Vol. 5, Number 2, May 2002
Pacal Kuipers

In a recent interview in the French financial newspaper Les Echos, Christoph Dubrulle - president of the privately owned French retailer Auchan - stated that it was not a lack of cash but rather a lack of suitable managers that limited Auchan's growth. Andre Tordjman has a clear vision of what constitutes good management in all levels of the organisation. "Marketeers should first of all be aware of what's happening in the stores," he says. "They should meet regularly in them, so they have a better understanding of what drives the customer. This leads to better decision making." Being customer focused drives growth and Tordjman leads by example: this interview takes place in the Auchan hypermarket in Leers, a small community near Lille in northern France, where Tordjman is working for a week on the shop floor, at grass-roots level. Academically trained and an experienced consultant, Tordjman joined Auchan in 1999 as director of marketing. In fact he is the incarnation of the 'new' Auchan, as his first task was to define the company's brand mission statement. "A provider of good solutions for better living" is Auchan's statement, and the general management liked it so much that they it into the company mission statement.
The traditionally fairly secretive Auchan is now opening up to the outside world. Tordjman's brand mission statement may have changed Auchan, but Auchan has changed Tordjman too. In the days when he combined a scientific and consulting career, ECR was still in his vocabulary. Since working for Auchan, however, he no longer uses the ECR jargon but gives chapter and verse. "Auchan has a clear vision of what it wants to do and that's no secret to suppliers".

Have hypermarkets become more interesting places to shop since the 1990s, when retailers and manufacturers got involved in ECR?
"The hypermarket is a unique format with a broad selection of food and non food under one roof, but this format is being challenged by supermarkets and hard discounters as far as food is concerned, and by specialists and category killers in non food. Most hypermarkets don't offer an attractive ambiance to customers, who travel all the way to the store and then spend considerable amounts of time there. Visiting a hypermarket is time consuming, so hypermarket retailers should pay more attention to the fact that they must deserve their customers' loyalty. Supermarkets have improved their choice and product quality and they also have the advantage of often being geographically closer the consumer. Hard discounters traditionally have the advantage of low prices. Hypermarkets must distinguish themselves as preferred places to shop."

What should tomorrow's competitive advantage be for hypermarkets?
"First of all, they must refocus on price aggressiveness. The hypermarket format has become too expensive and should give the benefits of its buying power back to the customer."

Where did the money flow to then? Was it invested in all kinds of services instead of in lower prices? Or did it end up in the pockets of shareholders and owners of the business?
"The cost structure of the hypermarket has increased due to the larger number of people employed and the higher level of complexity. Look at all the systems, procedures, know how and expertise needed for a hypermarket operation. A hard discounter knows no such complexity and is more cost efficient.
Secondly - and this holds true for Auchan - we will have the best and broadest choice in food and a good offer of non food categories. In some categories we don't want to cover everything, so categories with too high a number of skus will be reduced. Furthermore we are competitive in seasonal promotions, which attract a lot of customers. All this results in a pleasant and convenient shopping experience that the customers appreciate.
The rules of the game used to be buying at low cost and selling at low price. Buyers were therefore focused on getting the best conditions from manufacturers. In today's hypermarket business, that's not enough. We've basically changed the way we work and buy what the customers are buying from us. That's different to selling what manufacturers are selling to us."

When did this process of change start at Auchan?
"Before I joined Auchan the management was convinced that Auchan needed to be more marketing-oriented. To ensure this a marketing organisation was needed, and that's why I joined the company some three years ago. Coincidentally, shortly after I arrived at Auchan, Carrefour and Promodes merged and this had an impact on my primary task, which was to define the new brand mission statement for Auchan. We were confronted with a much bigger competitor, so it was useless trying to beat them on buying power. Instead we want to be the preferred hypermarket brand. I defined Auchari's brand mission as a provider of good solutions for better living. We don't distribute products, but provide solutions to our customers - not just food solutions, but also ideas for home decoration, for spending their leisure time, and so on. Because we sell products for day-to-day consumption, we can fully integrate the Auchan brand into our customers' daily lives."

The large competitor might well use a similar argument. So in what respects is Auchan doing a better job?
"Our company culture is open and friendly. We are a privately owned family business. Because we are not listed, our decisions are not driven by immediate concern for our stock value. Of course we want to be profitable, but we always do this from our customers' perspective. Auchari's founder, Mr. Mulliez, has always been very customer focused. Auchan's customers should be treated as friends."

But both Carrefour and Promodes also sprang from family businesses. They, too, should have being customer-friendly in their genes.
"Probably, but I don't want to speak about Carrefour or any other large or listed competitor. I focus on Auchan and I am convinced that size does not matter. When you are big you think you can gain advantages due to your size. In systems and operations, everything is aimed at increased efficiency and productivity. Then you run the risk of becoming an overly centralised organisation. At Auchan, however, we want to be close to the customers. We have a philosophy of decentralisation. Only with the customer at the heart of Auchan can we put Auchan at the heart of the customer."

Before you arrived at Auchan in 1999, its marketing was underdeveloped. Why?
"It has to do with events in Auchan's recent history. In 1996 Auchan acquired Docks de France [thereby doubling its size] and this was such a large operation that we spent several years integrating Docks de France into our own systems and operations. This made Auchan too inwardly focused. In general, one can say that companies need several years to fully integrate operations after a large acquisition. Currently Auchan is well positioned. Research shows that we get the highest appreciation from our customers. That's why we have the highest sales per square metre in the industry."

'Auchan as the provider of good solutions for better living'. Is this a global statement? How is 'better living' defined in the different regions worldwide in which Auchan is represented?
"ln every country, local management has the freedom to define the content of our global mission statement according to local consumer preferences. For instance in Poland, where market conditions are very competitive, we focus on price aggressiveness. In France, however, we also pay attention to food safety issues. In general our values are discount, trust, authenticity, innovation, customer relations, convenience and, of course, safety. Per country, different values can be stressed. We have a general framework of knowledge and expertise that can be used on a local level. I focus on France, which still represents the largest share in Auchans total global business. Every month the marketing directors of the different countries in which Auchan is represented meet to share knowledge and experience. This is the reverse of the idea of imposing knowledge and experience in a centralised organisation. There is no such thing as one model that can be applied everywhere."

What will a hypermarket look like ten years from now? Are hypermarkets here to stay?
"It's our challenge and responsibility to ensure that future generations also prefer shopping in hypermarkets. One may think that trends such as the Internet, the ageing population and the increasing numbers of small families are not good for the future prospects of the mass-market hypermarket business. But hypermarkets in general have never been customer-focused in the way in which Auchan is now. We are always aiming to make Auchan hypermarkets the preferred format for selling products in large quantities to many customers and at a low price. This is how, as hypermarket retailers, we were able to democratise products like salmon, computers, TV sets and so on. Food is our core business because it determines the number of store visits. It is the engine for our future development."

The Mulliez family, which owns Auchan, also owns several other retail companies in different markets. Will Auchan use synergies within Mulliez: retail conglomerate?
"The businesses are separated. Moreover, the different retail companies within the Mulliez family are engaged in fierce competition. The company believes that this is a healthy situation because it results in a better bottom line result."

Will retailer-manufacturer relationships change in the future?
"Yes, because retailers will gain more marketing expertise, to the benefit of their customers.
I expect manufacturers and retailers to share their visions on customer expectations in order to optimise customer value. I don't expect manufacturers to determine our marketing. I expect them to offer me what my customers want to buy. Indeed, this implies sharing data and knowledge with suppliers. That's what we do."

And will traditional lowest price purchasers be replaced at Auchan?
"Buyers will change with the implementation of Auchan's brand mission statement, which has become the company mission statement. Price is an important factor but the purchasing priority has become essentially customer focused. Furthermore, buyers are not the only ones who have direct contacts with suppliers. On the marketing level there are direct contacts, too. We have 18 market directors who constantly monitor the market for products Auchan wants to buy. Back in 1990 as a consultant I was involved in one of the first projects involving retailer-manufacturer collaboration in France. It concerned Mars and Casino trying to reduce costs at the level of products, assortments, trading and promotions. I was the middle man in charge of making two teams work together. In these early days it concerned cost cutting and now it has to do with adding value. Today I don't talk about ECR. In the last two to three years we've adopted a much more added value position when it comes to retailer-manufacturer collaboration. Auchan has a clear vision on what we want to do and that's no secret to suppliers. Again, I don't expect manufacturers to do my marketing, but I do want to integrate suppliers into Auchan's strategy on a basis of mutual trust and an exchange of information. That's what ECR is all about.