Mergers and acquisitions in retailing

From a period of rapid expansion, when stores multiplied abundantly and expanded across the country, retailers have only distant memories. The conditions in which they operate are unfavorable, forcing them to find new sources of growth, such as optimizing their territorial coverage through mergers and acquisitions. Although retail mergers and acquisitions (M&A) are not always profitable for both parties (Kerin et al., 1981), this growth strategy continues to develop in France. In May 2023, the Casino group intented to sell numerous stores to the Intermarché group. More than a hundred hypermarkets, supermarkets and convenience stores were concerned. In July 2023, Carrefour group acquired two retailers in France: Cora and Match implying 60 hypermarkets and 115 supermarkets. Although there is no consensus on the strategic value of M&A in retailing (Filser, 1998; Kerin, 1985; Kumar et al., 1991; Moati, 2005), merging networks offers strategic and tactical advantages, and can even improve financial performance (Kumar et al., 1991; Moati, 2005). M&A can be justified in a number of ways: 1) to reach the critical size in line with Porter's contributions (1982), enabling to maintain a market leader/co-leader position (Chien and Peng, 2005); 2) to achieve synergies (Tsai, 2002) between retailers, enabling each to increase skills and resources (Bengtsson and Kock, 2000); consequently improving innovation in each network; 3) to share knowledge (information), know-how and best practices (about logistics and assortment), leading to a more cost-effective and faster learning curve than for a single company; 4) to increase the territorial coverage, offering greater proximity to customers (Vyt et al., 2020). As a consequence, M&A lead to a risk of price rises as competition decreases. Part of the current inflation could be explained by this phenomenon. It should be pointed out that the "value" axes, i.e. those that build the uniqueness perceived by the consumer, remain owned and protected by each retailer. These include the brand's values and personality, as well as point-of-contact sales (in-store and online). In other words, sources of perceived uniqueness such as the relational and experiential dimensions of retailer positioning are individually conserved.