The Bookseller.com

5th July 2008

Alan Giles spent 20 years in bookselling with Waterstone’s and W H Smith. He retired as c.e.o. of HMV Group last year to take up non-executive and teaching roles.

A French revolution

21.04.08

Last month several reports suggested that Fnac was finally coming to the UK. More than 50 years after starting life as a members' purchasing club, the iconic French retailer was said to be looking for a 50,000 sq ft site in central London.

Retail group PPR, which bought Fnac in 1994, already trades in the UK through its catalogue operation Redcats and luxury brands YSL and Gucci. Yet it has focused its investment in Fnac in its home country (where its 77 stores account for 75% of Fnac's sales), and 54 other stores in Europe and Brazil. As one of the world's largest markets for cultural and electrical goods, the UK represents a tantalising opportunity to reduce Fnac's dependence on its domestic market.

What could London expect from Fnac? Its other international ventures closely follow the French formula—which probably explains why it didn't succeed in Germany and Taiwan. Although a bedrock of its heavyweight cultural formula, books account for less than 20% of sales, about the same proportion as CDs and DVDs. The ground floor is usually devoted to consumer electronics, which is more than half the business. Upstairs, booksellers beaver away at computer screens in their green-and-yellow waistcoats, but offer a lot of expertise if you ask, and are renowned for their independent thinking. Fnac would also set new standards for author talks and other literary events; many stores have purpose-built lecture theatres hosting an ambitious programme of cultural activities.

The company disguises its orthodox corporate ownership well, exhibiting a campaigning zeal to bring culture to the masses at low prices. In France and Spain book discounts are constrained by regulation to just 5%, but elsewhere are more aggressive. And Fnac has probably been the most successful traditional retailer in its markets at building an online business; fnac.com accounts for 8% of its annual sales of €4.5bn (£3.6bn), successfully seeing off Amazon's attempts to exert its usual domination in France.

Fnac's rather po-faced commitment to highbrow culture would please those who believe British booksellers have sold out to the mainstream. In London, with its huge and cosmopolitan market, it would surely thrive. But it's harder to see the formula working more widely, let alone well enough to trouble Waterstone's market leadership. I therefore suspect that PPR's corporate development gurus will view the intensely competitive and saturated UK market as a lower strategic priority than, say, the emerging opportunities in India, China and eastern Europe.

So it's "adieu", perhaps, rather than "au revoir", to the prospect of Fnac in the UK.