Google, Carrefour…The new horizons of Fnac Darty

Fnac Darty has announced on 4 December its new strategic plan, “Confidence+”. Beyond the synergies of 130 million euros for the end of 2018, already announced several months ago, the new Group has the ambition to create a platform omnicanale of reference services in Europe. This will include two pillars: an ecosystem Fnac Darty enriched with new categories of products, new programs, subscriptions, and loyalty) and a platform omnicanale open (expansion of the store network, including franchise, tool to open logistics to partners, etc.). Enrique Martinez, general manager of Fnac Darty since the departure of Alexandre Bompard to Crossroads in July, explained the Challenges the challenges of this plan… and the future of Fnac Darty.

Why have you wanted to create a platform omnicanale services?

We believe in a world where we can be stronger by relying on partners who share the same goals, in contrast to models that are closed in on themselves. We have already done in the past with partners such as Kobo or Deezer. This allows us to go much faster than we could do by ourselves.

Carrefour could it be one of these new partners?

Actually, we have discussions to date, that will lead to the creation of a central purchasing policy for the France. But at this stage we do not confirm. On the other hand, in the news, we connect the after-sales service of the button Darty (editor’s NOTE: that can be recalled instantly via an adviser) to the ecosystem Google Wizard, including the pregnant Google Home. This means that with Google, we have close relationships which will permit us maybe tomorrow to have relationships. We are a legitimate actor to have this kind of agreements.

This plan has been thought out with Alexandre Bompard, before his departure for Carrefour?

Some axes of reflection started at the beginning of the year, but as soon as there has been turbulence around governance, we have put the plan on stand-by. I recovered what had been initiated. And then, since August, there has been a lot of work with the new comex. Many new aspects have been added.

You want to bet more on the services, open your tool logistics partners, enrich the subscription provided to internet users… Fnac Darty isn’t it more a “Me too” to Amazon?

We do not have any complex. We have brand heritage for more than 60 years, who have very strong links with the clients. We do not forbid it not enter into the modern world. Consumers request services, to the trust, to be served everywhere, all the time, all that they wish. It is not necessary to consider that Amazon has invented the fidelity, but it is necessary to assume that others have good ideas.

You want to become a leader in Europe. In the Face of Amazon, is this really possible?

There are many ways to define a leader. You can be a leader in sales, value, innovation…. The goal is to be a leader in our markets, what we are in the most cases. It is necessary to be the leader in innovation, in the ability to put in place a service model. Our penetration on the internet is superior to that of our competitors in Europe.

But Amazon is the king of service! How to fight?

We demonstrate that we have the best proposal for the delivery of the market. We are able to deliver in less than two hours the whole of the catalog store, and in the Ile-de-France we take orders up to midnight to deliver the next day. We can do this because we have a network of stores. Amazon is talking about drones. Me, I’m talking about things that we do every day.

How to figure the investment plan that you are going to dedicate to the digitalization of stores, e-commerce platforms and assets logistics?

We will invest between 120 and 140 million euros of investment per year. Today, the group performs a little less than 100 million euros of investment per year. This represents a net acceleration. The group is in a condition to generate cash significantly to finance its growth.

You advertise being able to achieve an operating margin of 4.5% to 5%. How?

It is a combination of factors. First of all, we expect to generate more growth than the market. In addition, we benefit from synergies related to the integration of Fnac and Darty. Then, we rely heavily on the launch of new services which will create a lot of resources. We will continue to add services with high added value, and therefore high profitability. We can imagine services finance, leasing. And very soon, we are going to propose a platform that will allow, thanks to big data and artificial intelligence, to connect its appliances to better control them.

The plan does not mention any synergy with your new shareholder Ceconomy. Why?

This is a program which is now structured independently. We have not yet had time to discuss with Ceconomy. Is it that tomorrow we can forge an agreement Ceconomy ? Without a doubt. But at this point, the synergies, we have not estimated.

What are the growth levers Fnac-Darty?

The market in which we have the most ambition, it is the big appliance : it is the one on which Darty is the most legitimate, and yet, it is not at the maximum of his potential. Then, on this market, the franchise will play an important role : there are still 400 independent shops household appliance, which could pass under the flag Darty. Finally, we intend to accelerate the segment to the kitchen.

And the international?

There is nothing very new in this context. We intend to continue to expand in our existing country. Are we going to open new countries? We are not against, but this is not the priority, except if we find opportunities in franchise. This has been the case in the Congo, in Côte d’ivoire, ghana, Qatar, Cameroon, the Meeting… The african continent will probably be an axis of development.

Where are you from corners Darty in the stores Fnac?

Twenty have been made, we imagine doing even a lot more. In the long term, I imagine a large majority of Fnac with a corner Darty. In Lille, where we opened in September the first Darty in a Fnac, we are well beyond our objectives.

The plan does not include a social component. Are you going to recruit, or, conversely, remove jobs?

We do not quantify this aspect. There is a very strong Fnac-Darty, these are our 25 000 employees. At this stage, we do not have a new project for the reorganization.

Where are we disposing of the stores promised to the competition authority?

We have sold three, and on the other three, we discuss with the competition authority. It takes a bit of time. We do not necessarily agree but we are trying to find solutions. We have proposed viable solutions, but the competition authority is not in total agreement. The case has been passed at the level of the council of State.

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