Russia: The war in Ukraine is a death knell for Auchan – 04/08/2022 at 14:25

The brand’s stores in Russia are closed due to lack of supply. But the choice was complicated for the company, which chose to remain present in the country.

The French brand has been present in Russia since the 90s (AFP / NATALIA KOLESNIKOVA)

The French brand has been present in Russia since the 90s (AFP / NATALIA KOLESNIKOVA)

A torrent of complications for Auchan.

The French brand has long shown unabashed success in Russia

where it is located in a lucrative but difficult market. Other foreign channels have failed. But for several years now

the French retail giant faces a series of setbacks

from allegations of corruption to controversy related to the conflict in Ukraine.

In 2002, the first Auchan hypermarket in Russia was opened in the suburbs of Moscow. The French group then entered a market where:

everything has to be (re)built, after the collapse of the 90s

† Through acquisitions, he consolidated his presence and opened hundreds of stores over the years. At the same time, the group gained a foothold in neighboring Ukraine from 2008, the year the first hypermarket opened in Kiev, followed by a second in Donetsk – currently in the area controlled by pro-Russian separatists.

corruption scandal

From the mid-2010s, the Russian sky darkens:

Auchan starts to make losses

in the country, sales are falling and shops are closing. The French giant is only slowly adapting to new formats and fierce competition from local channels such as the giant X5. In 2019, the activity in “Central and Eastern Europe”, including Russia, still represents 20% of the total turnover, or 9 billion euros. As of December 2021, Auchan Russia had 231 stores across the country, including nearly 100 hypermarkets. But at the beginning of 2020 the storm broke: the newspaper

the echoes

reveals a large-scale corruption scandal, citing lawyer Alexei Jarkov, a time the group worked in an anti-corruption team.

The latter confirms the French daily

“being struck on the head with an iron bar”

and suspects “one of the five corruption networks he discovered to be behind his attack”. According to Alexei Jarkov, quoted by

the echoes

“Every year, between 80 and 100 million euros, or 2 to 3% of the turnover achieved in Russia, is transferred.”

place products at Auchan without paying

Alexei Jarkov told AFP again in April 2022. “The problems of corruption remain,” he adds, believing the scourge is “quite widespread” in major Russian distribution.

In March 2020, Auchan is trying to regain control:

he admits dealing with bribery but claims it has been ‘settled’

, adding “not having knowledge” of its persistence. Unfortunately, the group will be talked about again when

the echoes

reveal that Auchan uses lie detectors to fight corruption, a common industry practice in Russia, but shocking in France. In the wake of these revelations, the German boss of Auchan’s Russian subsidiary, Johannes Tholey, landed who had confirmed to AFP the use of these devices. Cultivating a culture of secrecy, Auchan communicates in shreds and sludge – the group has repeatedly declined requests for interviews from AFP.

113 stores and 45,000 employees

On February 24, the Russian offensive launched in Ukraine deals another blow to Auchan, while the signs of the Mulliez galaxy are major employers in Vladimir Putin’s country: 45,000 employees and 113 stores for Leroy Merlin, 30,000 employees and 232 stores for Auchan, 2,500 employees and 60 stores for Decathlon. These have since been closed due to lack of supply. But Auchan, provoking a difficult choice, decides to stay.

This choice is being denounced by Kiev, which is calling for a boycott of the brand’s stores. It was Ukrainian President Volodymyr Zelensky himself who asked the group to leave Russia, sparking controversy in France. Yves Claude, the CEO of Auchan, answers it in the weekly JDD. “These words are unfair,” he said, claiming to “preserve” the group’s employees (30,000 in Russia, editor’s note) and ensure its “primary mission, which is to continue to feed the populations of these two countries.” Auchan has suspended his investments in Russia and his subsidiary there now operates “in autarky”, he pleads.

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