Auchan, Leroy-Merlin, Decathlon… The Mulliez group very exposed in Russia and Ukraine – BFM Business

From the beginning of the 2000s, the brands of the northern group bet on Russia and Ukraine. Very established in both countries, they are however not very present in the areas affected by the conflict.

The government wants to be reassuring. The consequences of the Russian-Ukrainian crisis will be “contained” because “the French economy is not very exposed”, assured Bruno Le Maire on Wednesday on BFM Business then during a hearing before the Senate Finance Committee.

“France exports less than 7 billion euros per year to Russia, barely more than 1% of French exports, minimized the Minister of the Economy. We import less than 10 billion euros per year from Russia, it is less than 2% of French imports.”

If overall the French economy should not suffer too much according to the government, certain French companies among the 500 present on the territory are however particularly exposed. In particular those of the Mulliez group.

Over the past 20 years, the French retail giant has made Russia – and to a lesser extent Ukraine – a territory for expansion. Starting with the flagship Auchan.

The retail brand opened its first hypermarkets in 2002. At a time when Russians dream of a Western lifestyle without having adequate purchasing power, Auchan opens a hypermarket in the suburbs of Moscow with the slogan “Oudar po tsénam” (“coup sur les prix”) .

Success is there and Auchan multiplies the openings. The northern brand has up to 314 stores and generates more than 5 billion euros in turnover. Before dropping out in the mid-2010s. In 2015, during the previous crisis with Ukraine, the group continued its policy of low prices without promotions and own brands while the average standard of living of Russians increased and the consumer shuns this brand that he associates with hard-discount. Turnover fell by 18% between 2015 and 2018 in a market that nevertheless grew by 11%.

Auchan was growing in Ukraine

After a few difficult years and two management changes, the group is slimming down, selling or selling nearly 80 points of sale and reducing the workforce by 30%. Above all, the group is betting on the booming food e-commerce in Russia by partnering with the Russian specialist SberMarket and succeeding in increasing its sales.

Apart from a hypothetical boycott by Russian consumers of Western brands, Auchan, which supplies mainly locally, has no reason to suffer from the ongoing armed conflict. Unless Western economic sanctions get tougher and have a lasting impact on the Russian economy and purchasing power.

But Auchan is also present in Ukraine and has even strengthened its position in the country in recent years. The brand, which had nine points of sale in the country in 2017, now has 26 and has more than 6,000 employees. If the coming weeks are likely to be difficult for Ukrainians, Auchan is still weakly exposed. Although it is the third retail group in Ukraine, Auchan only has 22 stores there, which represents barely 0.5% of the 4,084 stores worldwide. Above all, he has no outlets in the Donbass, the region in which the conflict is taking place.

The food dispenser is not the only one of the Mulliez group to have bet on Russia. Leroy-Merlin is even relatively more present there. The DIY brand which set up there in 2004 has become the sector leader in the country with a turnover of nearly 5 billion euros in 2020 for around a hundred stores. A success that makes the group very dependent on Russia. With 18.3% of its turnover generated in the country, Leroy-Merlin is the third most exposed foreign company in the world in Russia according to Forbes behind the companies Elko and Japan Tobacco. The brand also has six stores in Ukraine, but mainly around the capital.

Decathlon “stay alert”

Finally, one last Mulliez company is very Russophile: it is Decathlon. The world leader in sport started there in 2006, two years after Leroy-Merlin and four after Auchan. Although the Russian subsidiary has been very successful with around sixty stores opened in 15 years, it is only the sixth in the group after France, China, Spain, Italy and India.

The sporting goods brand has also been present in Ukraine since 2019, where it has five points of sale around Kiev and Odessa. Low exposure therefore, but Decathlon also has a production site there where it employs 500 people to manufacture skis and mountain boots for the French market. The current conflict could have consequences on the supply.

The group ensures “to remain attentive to the situation in the country and to follow the instructions of the French government”.