Academic Year : 2008/2009

Creation :August 2008

Diffusion :September 2008

DEPARTMENT Management
PROGRAM / CURSUS Master 1, English
Course Strategic Analysis
Course Leader Sophie Reboud
Faculty Martin Calnan, Jacques Hendieh

Background Information

The recipe for worldwide success:

A brand with salt and pepper.
A case study of the Peugeot mills

This document belongs to Groupe ESC Dijon Bourgogne

1
 BACKGROUND INFORMATION
The recipe for world wide success:
A brand with salt and pepper.
A case study of the Peugeot mills

© CCMP 2008

Authors: Marcel Truche et Sophie Reboud, translation Viviane Clarac

Establishment : Groupe ESC Dijon Bourgogne

2
 Summary

1. The « arts de la table » market........................................................................................................5

1.1. The market ..................................................................................................................................5
1.2. Market segmentation by clientele................................................................................................6
1.3. Breakdown of the market by product category.............................................................................7

2. Consumer behavior..........................................................................................................................8
2.1. Flexibility of meal times................................................................................................................8
2.2. Loss in the importance of the dinner table and development of dinner trays/ TV dinners............8
2.3. Evolution of lifestyles ..................................................................................................................8
2.4. Reasons for purchasing...............................................................................................................9
2.5. Purchasing behaviors..................................................................................................................9

3. Distribution.....................................................................................................................................11
3.1. A fast evolving area under strong competitive pressure............................................................11
3.2. Breakdown of sales by distribution channels.............................................................................13
3.3. Evolving rules of the competitive game......................................................................................14
3.4. The competitive position of the main distributors.......................................................................15
3.5. Impact on distribution of the reasoning behind modern purchasing...........................................16

4. Internationalization of the market and the growth of imports....................................................17

4.1. Evolution of exchanges..............................................................................................................17
4.2. The main French partners..........................................................................................................18

5. The state of the industry................................................................................................................19

5.1. A highly threatened competitiveness ........................................................................................19
5.2. New Strategies..........................................................................................................................19
5.3. Restructuring of the offer...........................................................................................................20
5.4. A vulnerable industry.................................................................................................................20

Illustrations

Figure 1 : Purchasing power of households and home decor/ household goods (“arts de la
maison”) ...............................................................................................................................................5

Figure 2 : Comparative evolution of sales on the French market in %............................................6

Figure 3 : Breakdown of the market by clientele ..............................................................................7

Figure 4 : Breakdown of the market by product category ...............................................................8

Figure 5 : Breakdown of sales by distribution channels ................................................................13

Figure 6 : Product segmentation created by distribution networks..............................................13

Figure 7 : Evolution of retail sales by distribution network 2004-2006 .........................................14

Figure 8 : Strategic groups in distribution of arts de la table.........................................................16

Figure 9 : Job positions by social/professional classification in the “arts de la table” industry

.............................................................................................................................................................21

Table 1 : Breakdown of market categories by clientele ...................................................................7

© CCMP – 2008 – Le cas des Moulins Peugeot – Marcel Truche et Sophie Reboud – Groupe ESC Dijon Bourgogne 3
Table 2 : Compared characteristics of purchasing “arts de la table”. .........................................11

Table 3 : Breakdown of pepper sales in terms of packaging .........................................................13

Table 4 : Management constraints coming from the reasoning behind modern purchasing .....17

Table 5 : Evolution of exchange by product category (in millions of euros). ..............................17

Table 6 : Evolution of exchange by country ....................................................................................18

Table 7 : Progression of importations from China in the sector of household goods.................18

Table 8 : Imports by country of origin..............................................................................................19

Table 9 : Evolution of the expectations of distribution ..................................................................20

© CCMP – 2008 – Le cas des Moulins Peugeot – Marcel Truche et Sophie Reboud – Groupe ESC Dijon Bourgogne 4
1. The « arts de la table » market

1.1. The market

Rare is the data concerning the market of « arts de la table » [as the expression suggests, “arts de la
table” is the French expression for luxury dinnerware]. The quantity and diversity of the products and
the distribution networks make it difficult to follow its statistical evolution.

"One finds dishware, glassware, tableware and table linen. This variety of products is
itself proposed by numerous distribution networks… there is no specific statistical
reference for the manufacturing or the distribution of “arts de la table."1

" « Arts de la table » constitutes the first segment of the home décor and household
goods market as much because of its traditional importance as for its variety of products.
It includes dishware items, common glassware or precious crystal glassware as well as
kitchenware accessories, and kitchen or pantry linens.2"

At the beginning of the preceding decade the home decor and household goods market enjoyed
significant growth which has then slowed down considerably ever since 2001. Estimated at 5 billion
Euros in 20063, the « arts de la table » has shown much the same tendency; its growth being not quite
as high and the slowing of its growth being more marked. The general economic slowdown,
uncertainty linked to the persistence of unemployment, and the decrease in the purchasing power of
consumers are undoubtedly the causes for this economic slump and is particularly felt in the top
market range. The correlation between the variations of sales and those of the purchasing power of
households is illustrated in Figure 1.

Figure 1 : Purchasing power of households and home decor/ household goods (“arts de la
maison”)
(Source: from “Table et cadeaux” n°483 January 20064)

1
Retailers for household goods are listed under NAF 52.4J. Retail businesses in textile furnishings are
under NAF 52.4A. The code NAF 52.4H includes companies whose main activity is the retail selling of
household furniture. Hypermarkets are listed under the code NAF 52.1F. Department stores are listed
under the code 52.1H. Mail order businesses have the code 52.6A.
2
Xerfi, Distribution of « arts de la table », code : 4-DIS-11, July 2004
3
« Comité des arts de la table », structural study of the market of « arts de la table », Synthèse 2007

© CCMP – 2008 – Le cas des Moulins Peugeot – Marcel Truche et Sophie Reboud – Groupe ESC Dijon Bourgogne 5
The trend for « Arts de la Maison » or home decor seems nevertheless to be on the rise. « The
foundations for growth are solid. Founded on an evolution in lifestyles which have created a true social
phenomenon; the French have become infatuated with decoration.5"

Figure 2 : Comparative evolution of sales on the French market in %

(Source: « Arts de la maison », Précepta, Communiqué, Paris February 2006 and « Arts de la table »,
Précepta, Communiqué, Paris, October 2006)

1.2. Market segmentation by clientele

Household consumption represents 78% of the market. Consumption by professionals (organizations,

hotels and restaurants) only represents 22%. Sales to professionals have had a tendency to increase
recently whereas sales to the individual consumer have declined. Since 2004, sales to professionals
have increased 3% whereas individual sales have decreased by 1.5%.

4
Units: growth rate by volume. Household purchasing power (right scale) and turnover of household
equipment retail businesses (left scale).
5
Les arts de la maison:[a market with a high potential] « un marché au fort potentiel, en plein cœur de
l'actualité », Communiqué Paris, 3 February 2006, www.precepta.fr

© CCMP – 2008 – Le cas des Moulins Peugeot – Marcel Truche et Sophie Reboud – Groupe ESC Dijon Bourgogne 6
Figure 3 : Breakdown of the market by clientele

(Source: «Comité des arts de la table», market study of arts de la table in France Synthèse 2007)

Product category Individuals Professionals total

Dishware 19,5% 25,5% 20,5%
Glassware 13,0% 20,5% 14,5%
Tableware 9,0% 18,5% 11,0%
Table linen 6,5% 7,5% 7,0%
Kitchenware 19,0% 15,0% 18,5%
Household appliances 15,0% 1,5% 12,0%
Decoration 18,0% 11,5% 16,5%
100% 100% 100%
Table 1 : Breakdown of market categories by clientele

(Source: «Comité des arts de la table», market study of arts de la table in France Synthèse 2007)

1.3. Breakdown of the market by product category

Dishware represents the biggest category with 20.5% of the market. Tableware comes in second
position with 18.5%. Its part in the make-up of product categories for this market has increased by
0.5% since 2004, whereas dishware, glassware and silverware have lost 1%.

© CCMP – 2008 – Le cas des Moulins Peugeot – Marcel Truche et Sophie Reboud – Groupe ESC Dijon Bourgogne 7
Figure 4 : Breakdown of the market by product category

(Source: «Comité des arts de la table», market study of arts de la table in France Synthèse 2007)

2. Consumer behavior

The « arts de la table » market has evolved under the influence of recent consumer trends.

2.1. Flexibility of meal times

"Dinner time seems to vary each evening, the time being adapted to the individual rather than the
individual being adapted to the time. People want to organize their lives according to their own
individual rhythms. In 2003, 20% of the population did not eat dinner at a fixed hour (with a variation of
at least one hour) whereas this group was only 15% in 1995. This behavior is often found in young
people (23% of the 25-34 age group does not have dinner at a fixed hour) whereas it is fairly rare in
older people who are 75 years old or more (3%)...6"

2.2. Loss in the importance of the dinner table and development of dinner trays/ TV dinners

"One eats elsewhere than at the dinner table, on a tray, in front of the television, in the
living room…the dinner tray or TV dinner has become part of daily life…one household
out of two has this kind of meal at least once a week compared to1/3 in 1995…Dinner
trays/ TV dinners are more frequent with younger people (68% as opposed to 30% of
people over 65), Parisians (36% eat this way at least once a week as opposed to people
in rural areas), single people (on the average, twice as many eat dinner tray/ TV dinners
each day) and finally, single household families also resort more to this way of eating
(75% as opposed to 38% of couples without children)7".

2.3. Evolution of lifestyles

"Nesting» or "slow life" has truly become a sociological phenomenon and is expressed in
the French craze for decoration, « arts de la table », textile furnishings and linens, and
decorative objects. All market segments are part of this growth. One can see this in the
headlines of the “house and garden” magazines and in the exhibitions which are open to
the general public8."

6
CREDOC, « Consommation et modes de vie », No 196 septembre 2006
7
CREDOC, Consommation et modes de vie, No 196 septembre 2006
8
Table & Cadeaux, 483, January 2006

© CCMP – 2008 – Le cas des Moulins Peugeot – Marcel Truche et Sophie Reboud – Groupe ESC Dijon Bourgogne 8
2.4. Reasons for purchasing

Xerfi9 identifies three types of purchases: "equipment, renewal and gift purchases. The first motivation
depends on the evolution of the family’s household (setting up of the household, marriage, or setting
up independent lodging for children who are continuing their studies). According to the socio-economic
category of the households, the first equipment purchased is rather utilitarian with middle of the range
quality or top market items.

The second reason for purchasing concerns renewal. Either it is a question of completing a set of
dinner/kitchenware, or of buying new products which correspond to an evolution in taste. These
purchases concern mainly an older clientele interested in a second set of equipment.

Finally, the “arts de la table” products are appropriate as gift items. They can be offered for special
events (weddings, housewarming parties etc.), for seasonal holiday events (Christmas, mother’s day
etc.) as well as other personal events (birthdays, dinner invitations etc.).

Consequently, the “arts de la table” market has variations which are seasonal (mainly the beginning of
September/October and the end of the year holidays). It remains, however, linked to purchasing over
longer periods of time which involves various motivations for the purchases (evolution of the
household, number of weddings, etc.) and the behavior of French people ( eating habits, wedding
gifts etc.)."

2.5. Purchasing behaviors

a. From goods as an investment to goods as a convenience …

Though the causes of the slow-down in sales are economic and cyclical, they seem to be connected to
profound changes in the attitudes of the consumers. Purchasing "goods as an investment » has given
way to purchasing « goods as a convenience » and « sales of full sets of dinnerware for the long term
are tending to be replaced by more regular purchases of smaller items in smaller quantities at more
reasonable prices. The loss of regular mealtimes and of their formality has won over the sacred aspect
that was once associated with the “arts de la table”. Nevertheless luxury dinnerware is still important;
however, its value no longer comes from the intrinsic value of the goods, but in their capacity to create
a warm and friendly atmosphere. Other changes in French society have done the rest. The sector
concerning wedding gifts, for example, has been seriously affected by the present decrease in the
number of ceremonies, the growing tendency to set up a household before any ceremony or simply
because of competition from other sectors of consumption such as trips or hifi /video equipment."10

b. … personalized goods at a reasonable price

These behaviors are part of deeper changes in purchasing motivations. If the need for “reassurance”,
to take up the concept of R.Rochefort,11 in the messages expected by the consumer is still real, this
need has become part of a more rational approach known as “the entrepreneur model”. The
consumer-entrepreneur is autonomous and responsible and aims to satisfy both professional and
personal needs. This passage from an individual to a person can be understood, in terms of
purchasing behavior, by the search for the personalized satisfaction of a need that has become
exclusive.

In their behavior consumers have known how to integrate the knowledge and the rationale which they
must use in their professional or academic sphere. They especially know how to plan their purchases
in order to obtain the best prices or how to optimize organizing for their supplies according to the
different sales outlets…Consumers have therefore become consumption specialists who apply
elaborate purchasing strategies. They compare and multiply the places where they buy therefore
upsetting the traditional typologies of general consumer behavior. 84 % of those questioned during
the survey said that they indeed compare prices when they buy a product. One third of those

9
Xerfi, La distribution des arts de la table, code étude : 4-DIS-11, July 2004
10
ibidem
11
R. Rochefort, "Le consommateur entrepreneur", 1997

© CCMP – 2008 – Le cas des Moulins Peugeot – Marcel Truche et Sophie Reboud – Groupe ESC Dijon Bourgogne 9
participating in the survey wait for the sales to buy clothes compared to only 14% in 1993 12". These
trends analyzed by the CREDOC in 2000 have recently been confirmed by different studies put forth in
« Les Echos » in their issue of 17 September 2007. 13 The awareness of the decrease of their
purchasing power is the first concern of French people, just ahead of unemployment. Within this
context they are looking for “the right price…encouraging simplicity, searching for balance, looking for
meaning and time for one self." “One is no longer dealing with a fixed cost but rather with a reasoning
in which it is the consumer who is deciding his own idea of the cost. In fact, one is dealing with a
perception of the price which is more and personal, each one becoming free to invest as one chooses
to invest.14” “These consumers associate impulsive buying with being reasonable and are careful in
the daily management of their budget yet don’t hesitate to spend for their pleasure when it is
justified15". A coveted value at a reasonable price.

c. …Purchasing for pleasure, setting the scene, being fashionable

Having analyzed a study done by the CREDOC, Xerfi concludes : "the ‘arts de la table’ are gradually
losing their importance as status symbols as households no longer perceive them as such ( showing
one’s identity via the style and quality of the set of dinnerware used); “arts de la table” have become
linked to moments of consumption. A sign of this evolution is in the fact that the French readily adapt
their dinnerware to their menu rather than to their invited guests. Households have therefore
progressively put an end to the everyday/reception dichotomy which determined how they used their
dinnerware…henceforth the « arts de la table » are approached from three angles of
construction/adaptation: the image of oneself, the interior decoration of the house or apartment and
the desired atmosphere...nowadays, The “arts de la table” have a tendency to be considered no longer
as an investment but as a purchase for pleasure.” As Jean-Claude Kaufman underlines, “the
consumer is going to buy in relationship to a moment that he imagines he will be living. It is a purchase
for a scenario one has created for oneself, to stage a life event or sequence whether it is practical,
financial or luxurious. He is more and more distinguished by his strong emotional and individual
investment which is evolutionary by definition... generally speaking, concerning the full range of “arts
de la table’ products, most of the buying has progressively moved towards buying of less expensive
items over an extended period of time and whose styles evolve with fashionable trends and wishes of
households16".

The « Comité des arts de la table » concludes that « as with wine and jewelry, France is going from
markets structured by tradition to markets based on desire and impulse. The French are daring to go
towards new forms, innovations, and bold materials. 17" "Buy cheaper to change more often to keep up
with the fashion is the new way of living…18

Traditional Buying Modern Buying

Motivation for buying A need Desire, wish

Reason for investment Status Emotional

Nature of the buying action Thought out and decided ahead Spontaneous
of time

12
Credoc, "A nouveaux consommateurs, nouvelles stratégies industrielles", June 2000.
13
TNS Worldpanel, Référenseigne, 12e édition; Fêtes de Gondoles, "Value for money, de l'ère du prix
à l'ère de la valeur".
14
Agnès Chevalier de Carlin International, in les Échos.
15
16 Référenseigne, TNS des
Xerfi, La distribution Worldpanel
arts de laintable,
les Échos.
code étude : 4-DIS-11, July 2004
17
Comité des arts de la table, étude du marché des arts de la table en France Synthèse 2007
18
Sessi, Les arts de la table en chiffres, édition 2007.

© CCMP – 2008 – Le cas des Moulins Peugeot – Marcel Truche et Sophie Reboud – Groupe ESC Dijon Bourgogne 10
Buying frequency Low Regular

Products purchased All decorative household goods Small items, small quantities

Expectations of products Quality guaranteed, long-lasting Originality (design, color)

reasonable price

Importance of the brand strong weak

Table 2 : Compared characteristics of purchasing “arts de la table”.

(Source: Xerfi, La distribution des arts de la table, code étude : 4-DIS-11, July 2004)

3. Distribution

3.1. A fast evolving area under strong competitive pressure

a. An attractive market where the new participants are numerous and the distribution is still
atomized…

"The distribution of « arts de la table » is totally heterogeneous. Next to the many independent shops,
big shopping centers are evolving. There are department stores, chain stores specialized in
household goods and decoration, brand stores for young households like Ikea or Fly as well as
makers of porcelain, glassware, or tableware. These different actors of distribution for “arts de la
table” meet different consumer needs (equipment, wedding gifts, impulsive buying, etc.)19".

On a market which has come to maturity, this diversity of distribution channels is the result of a recent
evolution. The sector « arts de la table » has constituted an important element of diversification for
brand stores that had first developed in the sector of decoration. One can cite for example the brand
stores for young households (Ikea, Habitat, Fly) and furniture stores in general.

The sector « arts de la table » is extremely atomized. Independent businesses (not connected to any
group or other form of business) still represent 80% of all businesses. The franchise (Geneviève
Lethu et le Torchon à Carreaux) is one way of developing which has hardly been used as yet,
compared to household goods and decor where more than half of the brand stores have developed a
franchise.

Many investors are interested in the distribution networks of household goods and decor. In 2005,
Capzanine et CDC Entreprises became part of the capital of Bois et Chiffons. Maison du monde was
bought in MBO by Barclays Private Equity et Natexis Industry. The Vizille bank(CIC) invested in the
capital of Comptoir de Famille. (Précepta, Communiqué Paris 3 February 2006).

New shops and brand stores are setting up. Many of them clearly wish to develop through a franchise.

Sales are also developing thanks to distribution channels which are not characterized by any direct
link to “arts de la table”: gardening (Truffaut), textiles (Bouchara). This is without counting the decor
brands created by the distributors of ready-to-wear clothes (Zara Home, subsidiary of the group
Inditex) or the fashion designers (Armani Casa).

Finally, even if it is still only a small part of the sales, e-commerce is also developing on the “arts de la
table” market. Its potential is important especially among young people. There again, operators are
numerous and their profile varied: traditional mail-order companies (La Redoute especially), click and
mortar, some specialized, some not, in arts de la table (Ikea, La Vaissellerie…), manufacturers
(Bernardaud, La Maison de la Porcelaine, Villeroy & Bosch…). Add to these, new categories of
operators and in particular : the pure players sites constructed around household goods and decor
(decoclico.fr, univers-maison.com…) giving more confidential brand offers, plus private sales sites

19
Xerfi, La distribution des arts de la table, code étude : 4-DIS-11, Juillet 2004

© CCMP – 2008 – Le cas des Moulins Peugeot – Marcel Truche et Sophie Reboud – Groupe ESC Dijon Bourgogne 11
which are so successful these days and with whom big brands like Guy Degrenne et Villeroy & Bosch
are already working.20"

"Manufacturers of “arts de la table” (Haviland, Guy Degrenne, etc.) are very present in
the sector as well, mainly via their own exclusive shops or boutiques. True showcases for
their product ranges, this allows them to keep control of the marketing of their products
and therefore of their image. At their side, one can notice the presence of luxury groups
such as LVMH (via an agreement between Christian Delacroix and Christofle) and
Hermès. As with the closely related jewelry market, this sector’s market has been forced
to adapt itself quickly to marketing imperatives which has resulted in the development of
luxury brands and labels whose credibility for « arts de la table » is based more on the
prestige associated with the name than on a traditional savoir-faire21".

b. … pressure on prices is very high

" …in an economic context marked by a weakening of the purchasing power … favorable to the
competition of discount brands, discount stores (Gifi, Foir'fouille), and even of supermarkets
(hypermarkets or general stores) … the pricing policy of big brand stores show their willingness to
adapt to the slowing down of the market : a decrease of 5 % at Ikea in September 2005, , extension of
the range for items at reduced prices at Résonnances…a favorable context for the creation of brands
positioned in the low market range … and foreign concepts such as Butlers (a German brand for
decorative items at low prices) which could eventually make their way to the French market22." "Most
specialists of home decor have chosen a policy of sophistication – refine the concept and target the
clientele – to increase the value perceived by the client, without regularly revising the prices…with a
reinforced communication around the exclusivity of the collections, the savoir-faire of the designers
and the stylists23”.

c. …and the threat of substitute products is real

In the “arts de la table” sector and more particularly concerning the salt and pepper mill products, the
choices made by the manufacturers of salt and pepper in terms of packaging constitute a real threat.
In 2005, Ducros, for example, introduced a range of 9 innovated and patented mills in which could be
distributed coarse black pepper, gourmet pepper, spiced white pepper, mixed peppercorns, gourmet
sea salt from Guérande, gourmet Mediterranean salt, garlic selection, a mix for steak and a mix for
salads (with peppers). This innovation comes in on the only dynamic segment of the peppers which is
that of the mills (25% of sales). The new transparent mill, without a lid, is the first on the market to
have the mechanism on the bottom, like the traditional mills. The “turn/close” system to close it, and
which preserves the savor of the spices, is also unique24.

Mills 25,20%

Metal boxes 0,30%

Packets 2,10%

Plastic boxes big size 32,10%

Plastic boxes small size 5,70%

Glass bottle big size 6,20%

20
Precepta, Communiqué Paris le 2 Octobre 2006.
21
Xerfi, La distribution des arts de la table, code étude : 4-DIS-11, Juillet 2004
22
Precepta, Communiqué, Paris 3 Février 2006.
24
23
Process
Precepta,Juin 2005 No 1216
Communiqué, Paris 3 Février 2006.

© CCMP – 2008 – Le cas des Moulins Peugeot – Marcel Truche et Sophie Reboud – Groupe ESC Dijon Bourgogne 12
 Glass bottle small size 28,40%
Table 3 : Breakdown of pepper sales in terms of packaging

(Source Panel Distributeur IRI, CAM April 2005 in Process June 2005 No 1216)

3.2. Breakdown of sales by distribution channels

Figure 5 : Breakdown of sales by distribution channels

(Source: « comité des arts de la table », Structural study of the arts de la table market in France,
Synthèse 2007)

Figure 6 : Product segmentation created by distribution networks

© CCMP – 2008 – Le cas des Moulins Peugeot – Marcel Truche et Sophie Reboud – Groupe ESC Dijon Bourgogne 13
 (Source : « Comité des arts de la table » in « les Échos », Monday 24 December 200725)

Figure 7 : Evolution of retail sales by distribution network 2004-2006

(Source: « Comité des arts de la table », Structural study of the arts de la table market in France,
Synthèse 2007)

3.3. Evolving rules of the competitive game

Changes in the demand have modified all of the parameters of the market and consequently the
nature of the competitive edge. Until now, competition was essentially structural, that is to say, based
on the legitimacy of the savoir-faire of craftsmanship first (the manufacturers of porcelain in Limoges,
of crystal in Sèvres, etc.) and secondly, on marketing with the associated services of well-known
brands (Baccara, Lalique, etc.). It is now based on the price and the aptitude for creativity of the
operators (original items, attractive packaging, and creative displays on the shelves or display stands).

This new way of thinking which is oriented towards the demand, is challenging for the traditional
operators in this sector (especially the top market manufacturers, independent retailers, and
department stores). They are the first to suffer from the decline in the captive market of wedding gifts,
while simultaneously having to face competition from recent actors namely the brand stores
specialized in « arts de la table », home decor and household goods. The other losers are the big
shopping centers and hypermarkets whose offer of low market range products has been done at the
expense of the attractiveness of the product (whether it be their creative aspect or in their display). In
other words, only those brands which have been created to parallel these changes have been able to
survive thanks to their ability to align themselves with the new expectations of the clientele.”

"The symbol of this success is the brand specialized in the “arts de la table”, Geneviève Lethu.
Created in 1972, it is constantly looking to be with the fashion trends. It basically offers two collections,
however it also proposes one or two themes per month for which there are specifically organized
activities. 1 500 novelties are launched each year while references are progressively extended to
connected areas such as bed linens, bath towels or decor. Creating a global environment or universe,
so to speak, (which responds to the French interest in the art of living) also explains the drive and
buoyancy of brands of home decor and household goods (Ikea, Habitat, Casa, Gifi, etc.). These big
specialized stores have won market shares ever since the year 2000. Their offer of a wide range
which is modern at attractive prices has allowed them to meet the needs for young households as well
as favor impulsive buying.

25
Caption: preparation includes household appliances and kitchenware ; the dinner table includes
dishware, glassware, tableware and table linen.

© CCMP – 2008 – Le cas des Moulins Peugeot – Marcel Truche et Sophie Reboud – Groupe ESC Dijon Bourgogne 14
The traditional circuits are therefore challenged to modernize their image to appeal to new
generations. This is particularly trying for independent retailers who are confronted with a total
transformation of their profession. The deconsecrating of the « arts de la table » has in fact upset the
traditional rules not only of marketing but also of management. Selecting quality products and giving
advice are no longer enough. At the same time, however, the modifications in what the boutique has to
offer must be done with care in order to keep loyal customers. The greater emphasis being put on the
enhancement of the product (namely via an organized activity or promotional event) plus the new
demands concerning supplies, create important handicaps for independent retailers up who are up
against the groups. Consequently, more and more of them are finding support in re-grouping which
gives them the means (beyond that of a known brand when they have one) to adapt their offer
(extending to home decor, to the kitchen, catalogues made available, favorable conditions of payment,
product enhancement events or promotion kits, etc.), and to adapt their management (via delivery of
small range products in small quantities at reasonable prices)26".

Strong competitive tensions are created by the sheer number and diversity of the distributors, the
abundance of what is offered, and the distributors having to re-shape and re-position their production
while making consumers want what is offered though continuous innovation and trying to make « the
objective characteristics of the product coincide with its symbolic attributes » « at a good price ». As a
result, these competitive tensions create a deflationary trend since the price is such a strong ingredient
in the product appeal.

"The « arts de la table » is a market which has reached maturity. Consequently, the growth for each of
the circuits involved will not come so much from the market itself as it will from the redistribution of the
competitive game cards, so to speak. The progressive structuring of the specialized distribution will
have as an effect the decrease, which has already begun, of the number of independent retailers in
favor of groups and franchised chain stores. This greater concentration of specialists will be the basis
for the continuing growth of their turnover27"

3.4. The competitive position of the main distributors

The abundance of what is offered, the deconsecrating of « arts de la table », and the big diversity of
the distribution circuits may make the product commonplace thereby making its positioning difficult,
« the risk being to let the market lose its value and the product lose its quality. If “arts” disappear than
all that is left is “table”.28". In this evolving market one can nevertheless propose the following matrix
positioning of the different distributors of “arts de la table”.

26
Xerfi, La distribution des arts de la table, code étude : 4-DIS-11, July 2004
27
Xerfi, La distribution des arts de la table, code étude : 4-DIS-11, July 2004
28
Comité des arts de la table, Structural study of the market of arts de la table in France, Synthèse

© CCMP – 2008 – Le cas des Moulins Peugeot – Marcel Truche et Sophie Reboud – Groupe ESC Dijon Bourgogne 15
 Top market
positioning
Figure 8 : Strategic groups in distribution of arts de la table

(Source: completed by the author based on a study by Xerfi)

3.5. Impact on distribution of the reasoning behind modern purchasing.

The evolution of the demand imposes a number of constraints on distributors concerning management
which correspond to the expectations they will have of the manufacturers. Table 4 summarizes these
constraints.

© CCMP – 2008 – Le cas des Moulins Peugeot – Marcel Truche et Sophie Reboud – Groupe ESC Dijon Bourgogne 16
 Communication Important

needs (attract the consumer)

Visibility on Shelves very important (create desire)

Store offer It can be small if it is original and often renewed

Fashion products at reasonable prices

Often renewed

Customer order Take away

Type of Management Strong rotation of stocks

More numerous references

Follow up of small product ranges

Table 4 : Management constraints coming from the reasoning behind modern purchasing
(Source: Xerfi, distribution of arts de la table, code étude : 4-DIS-11, July 2004)

4. Internationalization of the market and the growth of imports

4.1. Evolution of exchanges

The deflationary trend noted in the preceding paragraphs has been made worse by the increasing
penetration of the low market and middle market ranges of imported products which are innovative,
quality products at a low price and which represent a heavy trend on the market. There is still a
surplus in the international exchange but the trade balance has decreased by half in two years due to
the push of imports and stands at only 200 million euros in 2006. The exportation has been stable
from 2004 to 2006 (2119 million euros), while the importation has increased by 10% (1903 million
euros).
Evolution of exchange by product category ( in millions of euros)
Rate of sales
Exportations Importations Balance coverage
2006 2006/2004 2006 2006/2004 2004 2006 2004 2006
Dishware 388 -3% 563 11% -110 -175 78% 69%
Glassware 623 -10% 178 2% 517 445 395% 350%
Silverware 94 3% 127 7% -28 -33 76% 74%
Table linen 35 21% 76 6% -43 -41 40% 46%
Kitchenware 414 17% 292 12% 94 122 136% 142%
Small
appliances 424 4% 480 15% -10 -56 98% 88%
Decoration 141 -6% 187 5% -28 -46 84% 75%
Total 2119 0% 1903 10% 392 216 123% 111%
Table 5 : Evolution of exchange by product category (in millions of euros).
(Source: Comité des arts de la table, Structural study of the arts de la table in France, Synthèse 2007)

© CCMP – 2008 – Le cas des Moulins Peugeot – Marcel Truche et Sophie Reboud – Groupe ESC Dijon Bourgogne 17
4.2. The main French partners

Whereas Europe is still the main partner as much in what concerns exportations as importations, the
weight of Asia concerning importations is still growing. The imports from this area represented 33% of
all the importations in 2004, compared with 42% in 2006 (802 million).
Evolution of exchange by
country
Exportations Importations Balance Rate of sales coverage
2006 2006/2004 2006 2006/2004 2006 2004 2006 2004
European
Union 1132 1% 897 -6% 235 167 126% 118%
America 260 -4% 31 -9% 229 238 839% 800%
Asia 358 -10% 802 35% -444 -199 45% 67%
Other European
countries 243 2% 119 3% 124 123 204% 207%
Oceania and
others 126 31% 54 64% 72 63 233% 291%
Total 2119 0% 1903 10% 216 392 111% 123%

Table 6 : Evolution of exchange by country

(Source: Comité des arts de la table, Structural study of the arts de la table in France, Synthèse 2007)

The progression of the imports from China is particularly felt in the sector of household goods.

In % 1993 2000 2003 2005

Clothing, leather 45,6 51,7 57,9 72,3

Household equipment 18,2 25,2 39 38,5

Electric or electronic appliances 10,4 26,6 23,8 27,3

Textile 13,9 21,9 25,7 27,3

Chemistry, rubber, plastic 6 8,5 12 11,4

Metal 18,8 20,7 20,6 17,2

Electronic components 11,5 25,6 26,3 34,9

Total of manufacturing industry 9,4 15,1 15,8 16,9

Table 7 : Progression of importations from China in the sector of household goods.

(Source: Douanes, Sessi-EAE in CCPI Edition 2006)

© CCMP – 2008 – Le cas des Moulins Peugeot – Marcel Truche et Sophie Reboud – Groupe ESC Dijon Bourgogne 18
In millions of Euros 2000 2005 Evolution en % 2000-2005
Asia without Japan 27418 38030 39
China 10991 20966 91
South Korea 2393 3613 51
Singapore 2554 3148 23
Taiwan 2857 2404 -16
India 1214 1765 45
Malaysia 1819 1257 -31
Eastern Europe 7038 13558 71
Poland 1678 3530 110
Czech Republic 1242 3111 150
Hungary 1939 2285 18
Romania 911 1596 75
North Africa 5628 6219 11
Tunisia 1780 2489 40
Morocco 1934 1839 -5
Latin America and South 2872 3158 10
America
Brazil 1420 1586 12
Others 1025 1568 53
Total 44 881 62539 39
Table 8 : Imports by country of origin

(Source: Customs, in CCPI Edition 2006)

5. The state of the industry

5.1. A highly threatened competitiveness

Competitiveness is highly threatened in the segments of low market and middle market product
ranges. Margins have been eroded, and profitability is low.

"The profit margin and the rate of investment show that there are considerable problems in all of the
« arts de la table » industries. Textile alone has ratios close to that of consumer goods as a whole.
The sector is faced with several difficulties: production suffers from a lack of competitiveness due to
the importance given to the finishing done by hand for most of the products. This entails substantial
labor costs which take off a large part of the added value. To this one can add a lack of buoyancy in
the market of « arts de la table » due to the slow down in the spending of households and to a slowing
down of foreign demand. Moreover, a slow down in the price increase because of the rise in product
range of imported products which are creative and cheap, reinforces the difficulties of manufacturers
whose margins are negative and whose capacities for self-financing are deteriorating.29 »

5.2. New Strategies

New strategies are necessary because of the pressures on distribution which are linked to the
evolution of the demand, (buy more cheaply in order to change more often to follow the latest trend),
and the competitive pressures linked to an internationalized offer. The evolution of the expectations of
distribution is illustrated in Table 9.

29
Sessi, Les arts de la table en chiffres, édition 2007

© CCMP – 2008 – Le cas des Moulins Peugeot – Marcel Truche et Sophie Reboud – Groupe ESC Dijon Bourgogne 19
 "Traditional" Purchasing "Modern" Purchasing

Communication Not very important Important

needs (attract the consumer)

Visibility on shelves Secondary Very important

Store offer Largest possible range Can be small range if it is original and
often renewed
complete

Very Cost effective (product), Reasonable prices ranges, regular

quality/service (store) product renewal

Customer order On order accepted Take away

Type of Bigger managing costs Stronger stock rotation references

management more numerous, follow up of small
product ranges
Table 9 : Evolution of the expectations of distribution
(Source: Xerfi, Distribution of arts de la table, code étude : 4-DIS-11, July 2004)

5.3. Restructuring of the offer

Faced with the pressures of distribution needs, manufacturers have looked to diversify their product
ranges. They create less expensive items which are more “trendy”, with fewer added values, to meet
the tastes of the clientele.

a. Creative, reactive, flexible

Confronted with a demand which is more and more sensitive to fashion and innovation, manufacturers
must be creative in order to offer products which will be frequently renewed and will have shorter and
shorter life spans on the market. Because of these constraints they must become highly reactive and
highly flexible in their production methods which replace a stock which is very quickly threatened with
obsolescence by a demand which is difficult to foresee.

b. A reasonable, competitive price

This constraint is not to be neglected; the part of production concerning hand finished work is still high
and involves high labor costs. Businesses which deal with middle or low product ranges must often
adopt strategies which rely on outsourcing.

c. The top market segment as security

The top market segment, which is still backed up by the traditional values of French “arts de la table”
(creation, tradition, and brand), is still secure for French manufacturers on both the domestic market
and foreign markets which are sensitive to its reputation. Creation, tradition and brand make up the
technological barriers for this segment which seem to make the difference in what concerns the
penetration of the competition coming from the developing countries.

5.4. A vulnerable industry

These challenges are difficult to face by manufacturers who have now little room for financial
maneuvering and who have traditionally done little to invest in production, with strong capitalization of

© CCMP – 2008 – Le cas des Moulins Peugeot – Marcel Truche et Sophie Reboud – Groupe ESC Dijon Bourgogne 20
a labor force and little inclination towards automation. The competitive edge coming from their know-
how having been eroded by the evolution of the demand, it is the entire industry which is threatened.
The relocation of production in countries having a cheap labor force is often a strategic choice which
they are forced to make. However, this is a competitive illusion if these gains in productivity do not
include an investment in creative and innovative resources. This does not seem to be the case. The
small part of resources which is applied to the new context stands out in the compared analysis of the
professional profiles of the sector, where the jobs which contribute strongly to the competitive edge of
the products (technicians and engineers) are few compared to the average in the consumer goods
industries.

Figure 9 : Job positions by social/professional classification in the “arts de la table” industry

(Source: Sessi, Les arts de la table en chiffre, édition 2007)

© CCMP – 2008 – Le cas des Moulins Peugeot – Marcel Truche et Sophie Reboud – Groupe ESC Dijon Bourgogne 21