Centrakor Bargains Attractive Amid Purchasing Power Issues

Elegant wood cladding, large windows that let in light, carriages in a southern sea blue… The new Centrakor installed near Toulouse doesn’t have a lot of gloomy shops for some discount brands. However, the shocking argument here is undoubtedly the price. As soon as you enter, the shopkeeper displays his posters intertwined with daisies. A set of 12 champagne flutes for €4.99, a bar table and stools for €49.99, or a stainless steel water bottle for €4.99. “This product is a rocket, we will sell 200,000 in a few days,” said Olivier Rondoloto, head of the network. Passionate, this self-assured act of self-talk can take you on a three-hour visit to discover all the “bombs” his teams have discovered. Before leaving in his beautiful Porsche Cayenne…

The director can brag a little: While brands like Tati or Fly have fallen behind, Centrakor is celebrating its 15th anniversary with great fanfare. Last year, this low-cost home improvement company recorded the strongest growth rate in its history (17%) and reached record sales of 975 million euros. The brand takes full advantage of two powerful trends: the rediscovery of the French’s passion for decor and their growing need for savings. “One third of the population is very concerned about their declining purchasing power,” recalls Gaëlle Le Floch, of Kantar Worldpanel.

In a thriving bazaar market, Centrakor is developing by leaps and bounds: It has opened 140 points of sale in five years, now has 450 points and is expecting about 30 more this year. She called it? Convenient stores – the era of strict cuts is over – selection and low prices.

I think fifteen years ago the brand didn’t even exist. In 2004, when the company was acquired by the current owner of Centrakor, the French home equipment group Cargo, it was just a centralized purchasing structure serving a few soldiers (its name derives elsewhere from the expression “central purchasing”). About forty stores operate the same catalog but do not share a common banner.

It was Olivier Rondoloto, the appointed CEO, who set out to build a real channel. “When members voted for this brand, I had two bad nights, laughing in the forties. Then I made my decision: with him, at least we can sell what we want!” While the sector consists of countless small players, expansion is happening very quickly: in addition to open stores Directly, Centrakor buys a large number of existing networks (Malin Plaisir, Michigan, Fly, etc.) and attracts merchant battalions.

This choice of a flexible model, open to freelancers, is key. First, faced with the Action Steam Controller, capable of aligning millions to unlock Vengeance, the Challenger was able to hook up the area very quickly and inexpensively. “There is a race in this discount market, you have to take up space,” says Frank Rosenthal, Retail Marketing Expert. “This affiliate system also makes it possible to bring high-performing merchants into the network, who know their pool area well.” Thanks to hundreds of stores, the brand is finally benefiting from ten times more purchasing power.

Purchasing is the backbone of the war. It is impossible to make a living by selling products at great prices in a pleasant environment without high performance sources. Unsurprisingly, nearly 90% of referrals come from China. However, at Centrakor, there is no expensive structure built in Asia. In Toulouse, a “task force” of 10 buyers, under orders directly from the president, negotiates with importers unknown to the general public (JJA, C2S, etc.): these brokers produce combinations according to the current trends of all players in the bazaar and thus break prices.

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Delivery is then made directly to the point of sale, just in time, to avoid incurring storage costs for a specialist warehouse – unlike La Foir’Fouille or Gifi. Centrakor teams experience? Negotiate the best prices by promoting their large volumes and identify the most promising items by searching in specialized fairs (Stock Free, Welc’Home, etc.) or Canton Fair. In recent months, they have had a tendency to choose a jug in the form of a wine glass and a lemonade fountain, real cartons.

Skillfully constructed bands. The brand first relies on a combination of loss leaders to entice the customer. Limited series with unbeatable stickers, sold at the entrance to the store, as well as 150 permanent references stamped “at a low price”: their value is written on the packaging, like insurance for the consumer. You can find it on every shelf, from Japanese hanging at €1.49 to the best-selling brand, set of wooden hangers at €3.99. “1 euro less than Ikea!” Olivier Rondoloto announced.

Obviously, on such products, the manager does not get a meager profit margin … But what is important, because once in the aisles, all customers leave themselves tempted by many other profitable items, trinkets that they do not necessarily have? More elegant alternatives to the essentials we want first.

Because, unlike the Action model, which develops its offer around short strokes and ranges, Centrakor relies on wide assortments: in the kitchen department, for example, you will find not only a set of six teaspoons at 1.49 euros, but also a dozen other references of different styles and prices . To amplify the receipt, the network also develops more profitable worlds of small decoration, such as furniture. At less than 300 euros per garden table and armchairs, the offer remains attractive with the average basket of the brand improving significantly, which has risen from 22 to 27 euros in two years.

These deals are the best marketing arguments for the distributor. He allows himself a bit of advertising: he bought the rights to Philippe Catherine’s song “Louxor, j’adore” to knock “Centrakor, j’adore”, but only spent 4.9 million euros on advertising in 2021, compared to 73 million for Gifi and 13.5 million for work. (Source Kantar). The merchant prefers to highlight his stellar products in a good old catalog. Every two weeks, this ten-page newsletter is distributed to all mailboxes about points of sale. Counting more than 120 million copies a year! “In our sector, you do not take digital technology, which justifies Olivier Rondoloto. The catalog is the only medium that brings traffic. “

And do not imagine that it only attracts modest families. In the lobby to the Balma store reserve (Haute-Garonne), a small “customer feedback tree” displays orders or comments made to employees. Among the Post-its, we can read “Accept American Express”! Remember that this prestigious bank card is issued only from 35,000 euros in annual income.

  • The chain plans to open about 30 stores in 2022.
  • 975 million euros of turnover in 2021, ie +17% in one year
  • 40 stores in 2004 compared to 450 stores in 2021
  • €27 of the basket average in 2021 (+23% since 2019)
  • 120 million newsletters are distributed annually
  • The bestseller of the brand: a set of hangers (3.99 euros), the best-selling product in the history of the network, with 2.9 million copies sold.

The sector arouses appetite

This is the bargain fair in the discount bazaar market. While the sector has been progressing slowly but surely since the 1990s, growth is accelerating – Xerfi expects 11% in 2022 – and all the factors needed for a bright future are there: the French are passionate about decoration, and they want to limit their business. Spending, however, supermarkets have given up their position. It is enough to attract investors with hollow noses, because this business, which is still very fragmented, has many brands, often small and domestic, to buy.

In recent weeks, the Zouari family has entered into exclusive negotiations to acquire three independent networks (Stokomani, Maxi Bazar and Dya Shopping). If these war trophies are confirmed, the merchant (owner of Picard) will rise directly to fourth place in the sector, near Centrakor. Unification is underway.

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* 2021 revenue, excluding action: 2020 revenue.

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