Fnac

Name	Fnac
Logo
Type	Subsidiary
Foundation	1954
Founder	André Essel Max Théret
Slogan	"Agitateur de curiosité"
Location city	Ivry-sur-Seine
Location country	France |
Locations	207 (2008)
Area served	Belgium, Brazil, France, Italy, Portugal, Spain, Switzerland, Taiwan
Key people	Denis Olivennes, CEO Christophe Cuvillier, President Fabien Sfez, Director of French Stores Eric Angiboust, Global development director
Industry	Entertainment Retail
Products	Audio Books CDs DVDs Games
Services	Photography Ticket Sales
Revenue	€584 million(2007)
Net income	€199 million(2007)
Num employees	19,366
Parent	PPR
Subsid	Contact Magazine Fnac.com Fnac Éveil & Jeux Surcouf Fnac Voyages Le Pôle Spectacles
Homepage	Fnac.com Fnac.be
Intl	Yes

Fnac (originally Fédération nationale d’achats des cadres, or National Purchasing Federation of Managers) is an international entertainment retail chain offering cultural and electronic products, founded by André Essel and Max Théret in 1954. It is the largest retailer of its kind in France. Its head office is in Ivry-sur-Seine near Paris.

Core values

The company's founders, André Essel and Max Théret were both part of France's Young Socialists movement, a left-wing militant group. Fnac was founded to provide affordable products to the worker, who had increasing purchasing power. As a result, it remained true to its socialist beliefs. Today, the company prides itself on offering a diverse range of products, impartial advice from their employees, ensuring their products are up to standard by being checked in an independent test centre and blacklisting those that do not meet a minimum set of requirements.

Fnac also holds multiple "forums" throughout the year, which are opportunities for customers to have open dialogue with people such as Pedro Almodóvar, George Lucas, and David Cronenberg, discussions with authors including Paul Auster, Pierre Bourdieu, and Françoise Giroud in addition to exclusive concerts. Musicians playing in these concerts have included Yann Tiersen, Ben Harper, Keane and David Bowie.

Each year a "Book Fair" is held with discussions among writers, opinion leaders, politicians and the public. Topics related to literature, culture, society and the sciences are discussed. Since 2001 the company has also annually presented an award, Le prix du roman Fnac, whose winners are chosen by an independent panel of booksellers and members. Dominique Mainard, Pierre Charras and Pierre Péju are among those who have won. These events are shown on the company website fnaclive.com (in French).

Fnac also participates in campaigns against exclusion, racism and censorship. In 2003, the firm began a five-year plan to combat illiteracy among schoolchildren.

The company is also committed to defending the diversity of music. In February 2002 Fnac published with UPFI (Union des Producteurs Phonographiques Français Indépendants) "Manifeste pour la diversité musicale", as a prelude to a policy of favorable treatment for independent labels and their artists. Fnac publishes "Indétendances," a compilation of ten artists bimonthly published by independent labels, which it set aside part of its listening kiosks in stores to promote their work.

History

Fnac (originally Fédération nationale d’achats pour cadres, or National Purchasing Federation for Managers) was founded in 1954 as a members-only discount buyers' club by André Essel and Max Théret. The objective of the company for the two founders would be to serve both the commercial and consumer industries, offering discounted equipment through a magazine titled Contact, and by cutting the standard retail mark-up (as high as 50 percent elsewhere) on its products down to as low as 15 percent, thereby making products more affordable and increasing the purchasing power of the worker. The first shop was opened in a sublet, a second-floor apartment on the rue de Sebastopol in Paris on July 31, 1954. The company differs from its competition with a "unique brand positioning based on the exaltation of pleasure to discover the diversity of cultures and technologies".

This unique brand positioning of the company was continued with the training of all sales assistants in their product categories, with purchases being guaranteed for one year. Furthermore, all products were tested in the company's independent test centre before sale. The test centre would check for technical quality, ease of use, price and the "price/quality ratio," and all results were published in the companies free members' magazine Contact, which today can also be found advertised in store. In addition, staff were expected to do more than just sell their products but offer advice to customers and beginning in 1957 blacklist any unsatisfactory products, such as those with technical difficulties. By the end of its first full year of operation the company saw revenues of 50 million old francs. In 1957, it was selling televisions, hi-fis, recording equipment, radios and records.

1960s and 1970s

In 1966, the Fnac store was opened to non-members and began to expand, opening its second store, also in Paris on the avenue de Wagram, near the Arc de Triomphe in 1969. By this time, the company had 580 employees.

The 1970s saw further expansion for Fnac, as the company began opening shops in the French provinces outside Paris and a third in the city itself that sold books, the newest addition to the product range. The founders of the company sold 40 percent of the company to insurance firm Union des Assurances (AXA) to raise money to fund growth. In turn, the insurance firm sold 16 percent of its shares to investment bank Banque de Paris et des Pays Bas (later known as Banque Paribas), in 1972. During this period, the company's sales were worth an estimated $70 million, generating net profits of $2.2 million, translating to 4 percent of all record sales in the French market, eight percent of sound equipment sales and ten percent of photo equipment sales.

In 1974, the company began selling books at 80% of the RRP, which sparked protests from publishers, writers and independent booksellers alike, who could not benefit from the economies of scale. This prompted government action in 1982 with the so-called 'anti-Fnac' law, that was signed to limit discounts on books to a maximum of five percent. In 1975, videos were added to the product range.

Towards the late 1970s, Fnac continued to expand by building to 12 stores in Paris and other cities through France. In 1977, the remaining shares of the company's founders were sold to the Société Génerale des Cooperatives de Consommation (SGCC, the financial arm of the Coop retailing group) to raise more capital.

1980s and 1990s

Megastore Paris]] FNAC became a Public limited company on the Paris stock exchange in 1980 when 25 percent of the company was offered to the public. SGCC, however, maintained a 51 percent control of the company, which now employed more than 2,700 and was declaring turnover of FFr 2.2 billion.

In 1981, FNAC opened a store in Brussels, Belgium under the management of Sodal, a joint-venture between FNAC (40 percent) and the GIB Group (60 percent). The GIB Group later added three more stores in the mid-1980s, in Ghent, Antwerp, and Liège.

In 1983, André Essel retired and was replaced by the then SGCC president Roger Kerinec.

In 1985, SGCC sold its shares to the insurance group Garantie Mutuelle des Fonctionnaires (GMF) due to growing competition from the French hypermarket and discount chains such as Carrefour and Leclerc. Michel Barouin, GMF's president and director general, took these positions at FNAC as well. In 1987, Barouin disappeared in an airplane accident and Jean-Louis Petriat was named to lead both GMF and FNAC.

In 1988, the first Virgin Megastore opened in Paris. Petriat announced a FFr 1.5 billion plan to add 15 new stores to the 31-store chain and double the company's gross revenues, in order to compete with the new entrant to the French market. Petriat also had plans to expand into the German market. By this point, sales of compact discs and other recordings had joined books as the company's most important sources of revenue. Fnac now has 20% of the recordings market, making it the largest retailer in the country.

During the late 1980s, Petriat added a music distribution division following the purchase of Wotre Music Distribution (WMD). In January 1991, Fnac Music was formed. Petriat hoped to build the first French multinational record company, with plans to capture as much as five percent of the market.

The 1990s brought fierce competition after the arrival of HMV and Virgin Megastores in 1988 as well as the strength of hypermarkets. The company responded by cutting its prices and stepping up the competition, which forced HMV to leave France after only six months. Virgin Megastores remained in the French market, and decided to open two more stores in addition to its original store in Paris. In response to the megastore, as seen to the right, Fnac spent around $23 million to build its own megastore, at 32,000 square metres, more than twice the size of the Virgin megastore, which became known as "the Cathedral".

In 1991, the first Fnac store was opened in Berlin continuing with Petriat's plans, this was close to the original Virgin megastore, which opened there only a few months earlier.

In 1992, the fate of FNAC Librairie Internationale, featuring books in languages other than French, was sealed and closed after only a year of trading. This store was converted to a computer products-only concept, called FNAC Micro, which proved more successful.

, Brazil ]] In 1993, the first Fnac store was opened in Madrid, Spain. However, the FNAC Music subsidiary, while posting some successes, failed to live up to the company's expectations and was unable to gain more than a two percent market share and was eventually sold off the distribution arm WMD, which shut down FNAC Music in 1994.

Despite some failures, the company revealed growing revenues though shrinking profits in the early 1990s, also attributed to the recession in the French economy. In 1991 the company recorded gross sales of FFr 7.4 billion, while profits fell approximately FFr 55 million, to FFr 159.5 million. The following year, despite a rise in revenues to FFr 8.9 billion, the company's net income dropped to FFr 31.9 million.

The falling profits for Fnac was a similar situation to the parent company, GMF whose share count totalled more than 80 percent. To raise more capital, GMF agreed to sell its shares of FNAC in July 1993 to Altus Finances, a subsidiary of government-owned Crédit Lyonnais, and Phenix, a property group owned by French waterworks company Générale des Eaux, for FFr 2.4 billion. The deal came under scrutiny by the Commission des opérations de bourse (COB) though was allowed to proceed in September 1993. Crédit Lyonnais became the majority shareholder, with 64 percent of shares, while Générale des Eaux held 34 percent. The remaining two percent of shares continued to be publicly owned.

In 1994, Crédit Lyonnais announced it was going to sell its 64 percent share of the company as part of a FFr 20 billion asset-reduction plan. In July 1994, the Altus Finances subsidiary agreed to sell the majority stake in FNAC for FFr 1.9 billion to François Pinault, the largest shareholder in and architect of Pinault-Printemps-Redoute.

Since 1994, PPR or Pinault-Printemps-Redoute has been the majority shareholder of Fnac and the company was led by François-Henri Pinault, son of the parent company's head François Pinault. The new ownership saw the closure of the WMD and FNAC Music subsidiaries and instead concentrated on further expansion of its retail chain. In 1995, the company added its 45th French store, while a second Spanish store, in Barcelona was opened in 1996. In 1995, the Fnac store was closed in Berlin and the company instead continued its international expansion in Belgium, which were now becoming profitable.

In October 1996, the new parent company assumed full control of the Belgian affiliate and announced plans to double the number of stores in Belgium that began with the opening of a fifth store in 1997. In March 1996, François-Henri, was named chairman of Fnac and opened two stores in France. At this point, Fnac had revenues passing FFr 10 billion and net earnings of FFr 200 million.

In 1999, the first Fnac store outside Europe was opened in São Paulo (Brazil)

Operations

(Spain)]]

As of 2009, the company has stores in France, Belgium, Brazil, Greece, Italy, Portugal, Spain, Switzerland, and Taiwan (where it is now known under the name Fayaque).

Brazil

There are 10 FNAC stores in Brazil (in order of opening): Pinheiros (São Paulo), Barra Shopping (Rio de Janeiro), Shopping Dom Pedro (Campinas), Paulista (São Paulo), Shopping Barigui (Curitiba), Parkshopping (Brasília), Morumbi Shopping (São Paulo), BarraSul Shoping (Porto Alegre), Ribeirão Shopping (Ribeirão Preto) and BH Shopping (Belo Horizonte). The headquarters is located in São Paulo.

Spain

There are 19 FNAC stores in Spain (in order of opening): Plaza Callao (Madrid), L'illa (Barcelona), San Agustín (Valencia), Triangle (Barcelona), Coso (Zaragoza), Bulevar (Alicante), Parque Principado (Oviedo), Diagonal Mar (Barcelona), La Cañada (Marbella, Málaga), Plaza (Marbella, Málaga), Plaza Norte (San Sebastián de los Reyes, Madrid), ParqueSur (Leganés, Madrid), Donostia (San Sebastián), Nueva Condomina (Murcia), Bilbao (Bilbao), Ave. de La Constitución (Seville), Praza de Lugo (Corunna), Málaga Plaza (Málaga), Plaza Imperial (Zaragoza), and La Gavia (Madrid). The headquarters is located in Pozuelo de Alarcón, Madrid.

Switzerland

As of 2009, there are four Fnac stores in Switzerland, two in Geneva, the third in Lausanne and the fourth in Fribourg

(Portugal)]]

Portugal

There are 17 FNAC stores in Portugal (in order of opening): Colombo (Lisbon), NorteShopping (Oporto), Chiado (Lisbon), CascaiShopping (Cascais), Santa Catarina (Porto), Almada (Almada), GaiaShopping (Gaia), AlgarveShopping (Albufeira), Forum Coimbra (Coimbra), MadeiraShopping (Madeira), Braga Parque (Braga), Alegro (Alfragide), Palacio do Gelo (Viseu), MarShopping-IKEA (Matosinhos), Vasco da Gama (Lisbon), GuimarãeShopping (Guimarães) and LeiriaShopping (Leiria). Also a website (fnac.pt), which was the most popular commercial website in Portugal in 2007.

Loyalty programme

Fnac operates a loyalty programme offering points that are awarded each time the card is presented at the till-point, for each euro spent. For every 4,000 points earned, a gift card worth €10 is issued to the card holder. As of 2008, Fnac boasts 1.8 million members to the programme with the loyalty card also serving as a credit card. As of 2008, there are two versions of the card, a one year membership card or alternatively a three year membership card. The membership card offers a 5% discount on hardware, books and various monthly offers.

Ownership

As of 2008, PPR or Pinault-Printemps-Redoute is still the majority shareholder in Fnac, which has since seen further expansion internationally with stores in Brazil (where it is commonly referred to as Fenaque), Greece, Italy, Portugal, Spain, Switzerland, and Taiwan (where it is now known under the name Fayaque).

Product range

Fnac stores stock a range of products from Audio, Books, CDs, Computer software and hardware, DVDs, Televisions and Video games. Some stores also operate services of photography and ticket sales. The company also offers a wide selection of higher-end consumer products positioning themselves above discount retailers.

Future

In 2008, Fnac opened 10 new stores bringing their total locations, internationally, to 207 with 63 of those outside of France. The company objective for 2009 is to strengthen their position on each of these countries as well as further international expansion. In November 2007, Denis Olivennes, chief executive officer of Fnac, said, "We are moving from a strategy based on our position as a retailer of cultural and technological products to undertake a new, more global initiative, in which the product is only one aspect among others."

The parent company, PPR highlighted Fnac's good performance in France in its quarterly business performance, citing acceleration in growth and market share gains supported by strong trading in technical goods.

In November 2007, Eric Angiboust, global development director at Fnac, said in response to a question regarding Fnac entering the UK market, "It’s a matter of timing. For sure we want to be in London"

On 30 December 2008, the British newspaper, the Independent, speculated that Fnac could be tempted into the UK market by bidding for the 125 stores of the Zavvi Entertainment Group, also an entertainment retailer, which went into administration on 24 December 2008 due to problems with their supplier EUK.

Head office

Fnac's head office is in Ivry-sur-Seine, France.

Previously it was located in Clichy-la-Garenne, Hauts-de-Seine. Around 2006 there were rumors stating that Fnac would move to Wissous. In 2008 the head office moved to Ivry-sur-Seine. The subsidiary Fnac.com moved from Aubervilliers to Ivry during the same year.

In popular culture

The story of the 2005 Spanish thriller Mar rojo, starring Maribel Verdú, begins with an armed robbery at a Fnac store in Barcelona.

See also

PPR - parent company (holding)

Media Markt - competitor

Dixons (UK) - competitor

References

International Directory of Company Histories, Vol. 21. St. James Press, 1998.

External links

French Fnac website

Belgian Fnac website

Brazilian Fnac website

Italian Fnac website

Portuguese Fnac website

Spanish Fnac website

Swiss Fnac website

Taiwanese Fnac (Fayaque) website

Category:Music retailers Category:PPR brands Category:Bookstores of France