Fnac Case Study

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  • Topic: Hypermarket, PPR, Fnac
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  • Published : March 7, 2011
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Fnac (originally Fédération nationale d’achats des cadres, or National Purchasing Federation of Managers) is an international entertainment retail chain offering cultural and electronic products, founded by André Essel and Max Théret in 1954. It is the largest retailer of its kind in France. Its head office is in Ivry-sur-Seine near Paris.


Fnac (originally Fédération nationale d’achats pour cadres, or National Purchasing Federation for Managers) was founded in 1954 as a members-only discount buyers' club by André Essel and Max Théret. The objective of the company for the two founders would be to serve both the commercial and consumer industries, offering discounted equipment through a magazine titled Contact, and by cutting the standard retail mark-up (as high as 50 percent elsewhere) on its products down to as low as 15 percent, thereby making products more affordable and increasing the purchasing power of the worker. The first shop was opened in a sublet, a second-floor apartment on the rue de Sebastopol in Paris on July 31, 1954.The company differs from its competition with a "unique brand positioning based on the exaltation of pleasure to discover the diversity of cultures and technologies". This unique brand positioning of the company was continued with the training of all sales assistants in their product categories, with purchases being guaranteed for one year. Furthermore, all products were tested in the company's independent test centre before sale. The test centre would check for technical quality, ease of use, price and the "price/quality ratio," and all results were published in the companies free members' magazine Contact, which today can also be found advertised in store. In addition, staff were expected to do more than just sell their products but offer advice to customers and beginning in 1957 blacklist any unsatisfactory products, such as those with technical difficulties. By the end of its first full year of operation the company saw revenues of 50 million old francs. In 1957, it was selling televisions, hi-fis, recording equipment, radios and records.

 growth and expansion

1960s and 1970s

In 1966, the Fnac store was opened to non-members and began to expand, opening its second store, also in Paris on the avenue de Wagram, near the Arc de Triomphe in 1969. By this time, the company had 580 employees. The 1970s saw further expansion for Fnac, as the company began opening shops in the French provinces outside Paris and a third in the city itself that sold books, the newest addition to the product range. The founders of the company sold 40 percent of the company to insurance firm Union des Assurances (AXA) to raise money to fund growth. In turn, the insurance firm sold 16 percent of its shares to investment bank Banque de Paris et des Pays Bas (later known as Banque Paribas), in 1972. During this period, the company's sales were worth an estimated $70 million, generating net profits of $2.2 million, translating to 4 percent of all record sales in the French market, eight percent of sound equipment sales and ten percent of photo equipment sales. In 1974, the company began selling books at 80% of the RRP(Recommended retail price ), which sparked protests from publishers, writers and independent booksellers alike, who could not benefit from the economies of scale. This prompted government action in 1982 with the so-called 'anti-Fnac' law, that was signed to limit discounts on books to a maximum of five percent. In 1975, videos were added to the product range. Towards the late 1970s, Fnac continued to expand by building to 12 stores in Paris and other cities through France. In 1977, the remaining shares of the company's founders were sold to the Société Génerale des Cooperatives de Consommation (SGCC, the financial arm of the Coop retailing group) to raise more capital.

1960s and 1970s
FNAC became a Public limited company on the Paris stock exchange in 1980 when 25 percent of the...
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