Their first Belgian store has only just opened, but already French home decoration discounter Centrakor aims for a nationwide expansion. CEO Olivier Rondolotto is already entirely convinced: a dozen stores in the French speaking part of Belgium is only the precursor to a conquest of Flanders.
Walloon expansion plans are ready
The first Belgian store for Centrakor, second only to market leader Gifi in France, opened its doors in Gosselies (near Charleroi) on 10 October. A week after the launch, CEO Rondolotto is already convinced that his chain has potential, with further expansion plans ready to go. “Of course, we are still waiting for the important end of year period, but we are already looking forward to opening more stores. We are ready for Wallonia, and we know there are opportunities here.”
With 400 stores in France, Centrakor is gradually reaching the maximum in its home market. Rondolotto sees the space for 500 to 600 branches, but with a growth rate of 25 openings per year, that limit is already in sight. For the past year, the discounter has been looking for other ways to grow, and Belgium seems to be the obvious place to start. “There is a clear geographical and cultural proximity, especially in terms of the French-speaking part of the country, as well as in terms of lifestyle and consumer behaviour.” Rondolotto expects to open a dozen stores in Wallonia first, before moving on to the Dutch-speaking part.
In the meantime, the discount formula is also establishing real estate contacts in Switzerland, with a view to opening stores there by 2021 at the latest. This is, however, partly dependent on Belgium: “We are happy here at the moment, so in the coming years we will be focusing on this market.”
Franchise or takeover for acceleration
The Belgian expansion is following two routes simultaneously, via franchise and in-house. In France, the chain only has 85 integrated stores, and they hope to get franchisees here as well. “People in Belgium are starting to know our name and we are getting the first property offers. We are also already talking to an initial franchise candidate. It can therefore move quickly, but in the meantime, we continue to open stores where and when we can.”
Acquisitions cannot be ruled out either, since Centrakor in France owes much of its growth to acquisitions. There is currently no takeover case at the moment, but Rondolotto is “open to everything”. “If they have stores that are the right size, we are definitely interested. The sector is changing and there are companies that are struggling to transform. It can be interesting to mix competences. We have learned a lot about Belgium, but it is always valuable to have a local partner.”
Transport costs higher than product price
As far as a digital transformation is concerned, Centrakor is still looking for a solution. The discounter has an online shop in France, but Rondolotto makes no secret of the fact that the online business earns nothing at all and that the turnover is still very limited: “The transport costs are often higher than the product price.” However, he sees online sales as an investment into discovering how the sector is evolving: the CEO has already seen that many people search online, but then come to buy from the physical stores. As a communication channel, it is therefore important. That is why Centrakor consciously focuses on social media and online product presentation.
“We want to do click&collect. Our shops have to make do with impulse purchases: people come to have a look and then treat or indulge themselves. You see that online players also open physical shops, which only strengthens my conviction that human and physical sales are incredibly important. At one point, people seemed to want less help and contact with employees, but now customers are very keen to be helped once more. This is why we mainly concentrate on the customer relationship. Our focus is on welcoming them: when the weather is hot, for example, we offer a drink.”
Price breaker, no hard discounter
Proof that the strategy works? Despite the challenges in the sector, the stores have not lost any revenue in the past four years; there is even comparable growth. “Thanks to our franchisees, we remain agile – they keep us sharp and awake. This is certainly true if new, young entrepreneurs join us every year. They also have a better understanding of younger consumers.”
Staying ‘with it’, however, requires a lot of investment, the CEO admits. It is therefore a major pitfall for older companies that struggle to cope with change. “As soon as you see something change, you have to react, while you still have the means to do so.” It sounds as if some of Centrakor’s competitors had problems accepting that their glory years were behind them, and over the past decades, they have not actually made any fundamental changes.
New, specialised players are now coming to have their share of the pie. Centrakor is one of them, but Rondolotto also notes the rapid rise of Action in particular. It is not, however, a direct competitor. Quite the opposite: in Gosselies, Centrakor is right next to Action, and that brings the French brand quite a few visitors. “They often have larger stores with a different selection of very short ranges. We have these ones that take off as well, but we also have a very wide range. There are few competitors who do the same: we are a price breaker, but they are hard discounters. So no, I am not worried.”
