France: Five things to know about Action, the rising discount champion
Discount Variety Retail Chain Action (owned by 3i group and eurofund V) has this effect on many customers: we enter with the idea of buying only what is on the shopping list, we come out with twice as many products, paid between 1 and 2 euros. A real mine of "good business". Because this is the model of the chain store: sell everything, as cheaply as possible.
Founded in 1993 in the Netherlands, in the small town of Enkhuizen, Action has gradually been exported throughout Europe and today operates in ten countries with 2,263 stores. The brand will conquer an eleventh market, Slovakia, from March 2023.
After 10 years of activity in France, Action has established itself as one of the leaders in discount products on non-food products and is multiplying store openings. Recipe of a company that has managed to seduce French and Europeans, and whose model is timely in this period of high inflation on the Old Continent.
1. The France, the largest share market
In 2021, Action already operated 653 stores in France, the first of which opened in 2012. It is the busiest country in Europe. In 2022, two new stores opened every week in France, where the company now employs more than 15,000 people.
Most French shops have opened in rural towns or in commercial areas on the outskirts of large metropolises. Blue and white stores have an almost identical format regardless of the country. They allow a fluid route of customers, with a multiplication of checkouts, automatic or not, to make the purchase journey even more attractive.
The France was the fourth country in Europe invested by Action. If the number of stores exceeds that of its country of origin, the Netherlands, it is mainly because there, the territory is now saturated. The company has been turning more towards southern European countries lately, with the opening of the Italian market in 2021 and the Spanish market this year. Today, it is the fastest growing non-food brand in Europe.
2. A variety of products at discounted prices
Housekeeping, hygiene, decoration, storage, electronics... Action stores sell a wide variety of products, all with a large restocking. Only 35% of the overall range is fixed, out of about 6,000 items sold in a store.
But above all, prices are broken, according to the brand's main selling point. The average cost of items is less than two euros. A "hard discount" model that has seduced Europeans, especially in times of inflation where buying cheap has become a challenge. To display low prices, the company recovers destocked batches from major brands, which allows it to sell them significantly cheaper than in supermarkets.
3. A female clientele with little education
Thanks to a difficult economic situation for European households, hard-discount brands are doing well. Action took advantage of the trend and saw its sales explode in 2022: they took 30%, amounting to 8.9 billion euros.
This interest in low prices is also reflected in the profile of Action en France's clients. The average French consumer is a woman (61% of customers), aged over 50 and generally with little education, implying a low standard of living. It is in France that the proportion of people with few degrees going to Action is the highest.
In the rest of Europe, the clientele is much more diversified. But it remains predominantly female, a sign that households have postponed part of the shopping from home to Action. In total, 12 million customers pass through the doors of the brand every week on the continent.
4. A post-covid rebound
Like the entire retail sector, the health crisis has had a significant impact on Action's results. By 2021, the company's net sales had rebounded by more than 20% as the economy restarted. But the pandemic has also pushed the company to take the turn of e-commerce, with a dedicated mobile application and click & collect points during the health crisis.
Share is valued at ten billion euros in the accounts of its shareholder 3i Capital in 2019. Not far behind the valuations of major French retailers. The sign that the brand has established itself as an essential store in the lives of Europeans. In addition, Action ranks third in the ranking of favorite brands of the French in 2022, after the usual Leroy Merlin and Decathlon, of the Mulliez family empire.
5. Outstanding environmental issues
If Action attracts a clientele with reduced purchasing power thanks to a particularly affordable offer, corresponding to the economic concerns of the moment, the question of the sustainability of the model arises. This mode of consumption is still far from the sustainable commitments increasingly put forward by brands. At Action, more than half of the products are made in China. And the idea of always buying more for less remains the watchword. However, carbon neutrality is a goal, set for 2030.
See here for more: Cinq choses à savoir sur Action, le champion du discount qui monte | Les Echos
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