* Sees 2012 as difficult yr for French consumer spending
* Eyes 2012 sales growth of 4-5 pct vs 5 pct in 2011
* Eyes 2012 French inflation of 3-3.5 pct, Leclerc to be at least 1 pct point below
* Eyes French market share of around 20 pct by 2015
By Dominique Vidalon and Pascale Denis
PARIS, Dec 2 (Reuters) - French retailer Les Centres E. Leclerc expects its low-prices and growing Internet presence will help boost sales and domestic market share next year even though the outlook is grim for consumer spending.
Privately-owned Leclerc, which claims it is luring more and more cash-strapped shoppers away from listed rival Carrefour (CARR.PA), vowed to keep prices low in 2012 despite inflation and looming tough negotiations with suppliers.
The retailer has vowed to dethrone Carrefour as France’s No 1 mass-market retailer by 2015.
“I expect 2012 to be a very difficult year for consumer spending in France. Spending should hold up until Christmas...From February we are headed for stagnant consumer spending,” Chief Executive Michel-Edouard Leclerc told Reuters in an interview.
Traditional winter sales should still help demand in January, Leclerc said.
Many European retailers are struggling as austerity measures, rising prices and muted wages squeeze disposable incomes, and a euro zone debt crisis is sapping consumer morale.
“At Leclerc, we are not seeing a slowdown because of our focus on prices...When Leclerc is doing well, it’s an indication that consumption is weakening. When consumers are worried, they turn to the cheapest retailers,” he said.
Les Centres E. Leclerc, a cooperative association of retailers, operates 672 stores, including 555 in France. Hypermarkets make up the bulk of its stores, which are also present in Poland, Italy, Spain and Portugal.
Leclerc sees 2012 sales growth of 4-5 percent and a 0.4 percentage-point market-share gain in France.
This would compare with a market share of 17.5 percent and sales growth of 5 percent this year.
Leclerc, which limited price increases in its stores to 2.1 percent this year, sees French inflation in a range of 3-3.5 percent next year.
“We should be at least one (percentage) point below inflation” he said, predicting tough negotiations with suppliers, who in some sectors like sugar are asking for price hikes of as much as 20-24 percent.
When rivals Carrefour and Casino (CASP.PA) saw their French hypermarket sales decline last year, Leclerc’s sales rose 5.1 percent, excluding petrol, to 28.6 billion euros.
Longer-term Leclerc said it hoped to grab a market share of around 20 percent by 2015.
According to market research provider Kantar Worldpanel, Leclerc had a French market share of 17.5 percent in October, right behind Carrefour’s 21.9 percent and ahead of Intermarche’s 13.2 percent and Casino’s 13 percent.
To achieve that goal, Leclerc willl boost Internet sales and diversify its hypermarkets to offer automobile services, beauty shops, DIY, jewellery, over the counter drugs and travel.
Leclerc is also boosting its “Drive” service allowing shoppers to order online and then collect their purchases at distribution points. It has 100 such locations, a number it aims to boost to 400 by 2015. By then, Leclerc will have doubled to 10 percent the contribution of the Drive service to global revenue.
The E. Leclerc association was established in 1949 by Michel Edouard’s father, Edouard Leclerc, who owned and operated a small grocery store in Landernau, Brittany, and decided to organise like-minded retailers across France.
A centralised buying strategy enables Leclerc to negotiate low prices in bulk with suppliers to keep prices of goods low.
An organisational structure where store managers control their financial resources and all members in the association take part in decision making, also give more flexibility than rivals like Carrefour.
Leclerc claims a 4-5 percent price gap with Carrefour, which has been hit by repeated profit warnings. Some analysts have urged Carrefour to engage in a more aggressive price policy to boost market share. [ID:nL5E7MG1WO]
Leclerc said his stores attracted 590,000 new customers this year, with most coming from Carrefour.
Of Carrefour and its woes, Leclerc said: “The problem is that it follows the short-term financial logic of its shareholders that does not give it time to develop nor flexibility to react quickly.”
“It’s a very good company but I fear that it could face a breakup in the future,” he added.
Carrefour’s management has been criticised for pursuing short-term business strategies favoured by its top shareholders
— France’s richest man Bernard Arnault, and U.S. property group — France’s richest man Bernard Arnault, and U.S. property group Colony Capital. If a current plan to revamp Carrefour’s European hypermarkets fails, some analysts see few alternatives left other than a break up of the group. [ID:nL5E7LK4AC] [ID:nL5E7LD0SP]
Leclerc, 59, a comic book fan, sailing and music enthusiast, has repeatedly said his own group would never become a listed company.
(Reporting by Dominique Vidalon. Editing by Jane Merriman)
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