“I have never seen that in times of crisis, customers sacrifice Christmas,” says the group’s CEO, Cathy Collart.
Inflation will not get the better of the Christmas holidays. Picard, which achieves a quarter of its turnover between November 15 and December 31, does not anticipate a drop in sales at this crucial period, despite the sluggish economic situation. On the contrary: customers flocked to the foie gras, the price of which nevertheless increased by 10%. Bird flu has certainly made this Christmas holiday staple a hard-to-find commodity. With a stock reduced by half compared to last year, Picard waited until the last minute to place it on the shelves. But the appetite of the French for festive products should not be limited to foie gras.
“I have been working in retail for 27 years. And I’ve never seen that in times of crisis, customers sacrifice Christmas“, explains Cathy Collart, CEO of Picard. The distributor has not given up on innovating despite fears about the level of consumption of the French. He launched frozen oysters last year. This year, he is launching his cheese platter to defrost a few hours before serving. “It was the only component of the Christmas meal that we lacked“explains the CEO. Above all, she believes that Picard will have this year “the cheapest offer“. This is the advantage of frozen food, which can buy and receive products ahead of its fresh competitors.
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At Picard, prices have increased by 10% this year. This is less, assures the CEO, than the 15% increase observed on the whole of the frozen food market, particularly affected by the rise in energy prices. Picard needs it to operate its freezers and its cold trucks, well beyond the consumption of a traditional distributor. “80% of the energy we use is not for comfort: it is necessary for our industrial processes, explains Cathy Collart. The energy crisis is now my number one concern“. But Picard’s room for maneuver is much more limited than that of its non-frozen specialist supermarket competitors.
So far, the distributor has played on three levers to cushion the price increase. He first revised some of his recipes, replacing salmon with trout, or foie gras with mushrooms in the stuffed Christmas guinea fowl. He also played on his long-standing relationships with his suppliers. “We have to offer them growing purchasing volumes in the coming years, as we will open around 100 stores, as well as other sales channels.“explains the CEO. Above all, the distributor has reduced its margins. For example, he wanted to keep the price of his entry-level ready meals unchanged, at 2.20 euros.
Energy bill multiplied by three
The challenge will be harder to meet next year. Picard’s energy bill should triple after its renegotiation at the end of this year. And the suppliers are coming back to charge for new increases, of between 10% and 30%. “We will crush our margins next year and reduce our investmentsanticipates Cathy Collart. But it seems crucial to me to maintain our price positioning: when inflation drops, we will have retained our customers. If Picard becomes less affordable, we risk killing our business because lost customers will be extremely difficult to win back.“. In 2023, Picard should remain profitable. It is also pleased to have refinanced its debt (1.7 billion euros) before the rate hike.
It remains to convince the shareholders of the distributor. Moez-Alexandre Zouari, also owner of Stokomani and franchisee of the Casino group, is well placed to know the constraints that rising costs impose on the economic balance of a business. If he wishes to buy back the entire capital of Picard in 2024, he only owns 47% today. And the investment fund Lion Capital, majority shareholder of Picard, expects above all profitability.
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