Gib Group Business Information, Profile, and History

Company Perspectives:

Our aim is to begin the new century with a group of companies which all enjoy a better positioning in their markets. More than ever, we are determined to build a strong, efficient retail Group, to create value for our customers, franchise partners, suppliers and shareholders, and to develop a motivational working environment rich in future prospects for our employees.

History of Gib Group

GIB Group, Belgium's top retailer, is active in four sectors: supermarkets and hypermarkets; do-it-yourself (DIY) home improvement and auto care stores; self-service and fast-food restaurants; and specialty retailing. A property division, GIB Immo, was formed in 1997 to manage the group's property interests. The group's parent company is GIB s.a. (formerly s.a. GB-Inno-BM n.v.).

GIB Group's supermarkets and hypermarkets operate under such diverse names as GB, with 58 stores trading under the name "Maxi GB," 88 as "Super GB," and three as "GB Express"; Bigg's Continent, with two stores; Unic, with 284 stores; Nopri, with 184 stores; and Globi, with 15 stores in Poland. The supermarket and hypermarket sector is by far the most important division for GIB Group, accounting for two-thirds of its total sales. Starting in early 1998 this sector was amalgamated into a single company called GB s.a., in which the French Promodès Group took a 27.5 percent stake.

The DIY sector accounts for almost 19 percent of GIB Group's total sales and seems to offer major growth potential both in Belgium and abroad. Within Belgium, Brico and Briko Depot, with their 100 outlets, are the undisputed leader in the country's DIY market. In addition, Auto 5 sells car accessories through its 48 outlets. DIY stores also are operated in France (37 Obi stores) and Portugal and Spain (19 Aki stores).

The success of fast-food restaurants is a phenomenon of our time, and GIB Group continues to expand in this high-growth market. The Quick fast-food chain includes 115 units in Belgium, Luxembourg, and The Netherlands, with 270 located in France. In addition, GIB Group operates the 63-unit Lunch Garden self-service restaurant chain and seven Crock'in sandwich bars. Restaurants account for about ten percent of GIB's overall sales.

The specialty sector of GIB Group includes department stores and some smaller retail chains. Inno, Belgium's only modern department store chain, operates 15 stores in major urban centers and shopping centers. GIB Group also operates 23 Disport sporting goods stores in Belgium and The Netherlands and 26 Club book and stationery shops in Belgium. About five percent of the group's revenues originate from its specialty sector.

GIB s.a.--from 1987, the name "GIB Group" has generally been used to refer to all of the activities of GIB s.a. (or s.a. GB-Inno-BM) and its subsidiaries--is the result of several mergers that took place in the 1960s and 1970s. In 1969, Innovation and Bon Marché, operating major department stores in Belgium, merged to form Inno-BM. Two years later Inno-BM also incorporated its subsidiary, Priba, which the two merged companies had set up jointly to operate variety stores. Finally, GB Enterprises merged with Inno-BM to form GB-Inno-BM on February 1, 1974.

Early History of Bon Marché

In 1861 François Vaxelaire, a 21-year-old native of the Vosges region of France, became manager of a small textile store, Au Bon Marché, at the rue Neuve in Brussels. During the following 30 years, Vaxelaire and his wife, Jeanne Claes, succeeded in expanding the company through the opening of new stores in Belgium and France. In 1894 upon the death of their mother, Raymond and Georges Vaxelaire joined their father as partners in the family business. Under their dynamic leadership, the company gradually was transformed into a full-fledged department store operator. A new department store, Au Bon Marché, was opened at the boulevard du Jardin Botanique in Brussels.

The company, from 1927 named Les Grands Magasins Au Bon Marché: Etablissements Vaxelaire-Claes, continued to grow with the founding of the Société Congolaise des Grands Magasins Au Bon Marché (Coboma) in 1928 and the Société Anonyme Belge des Immeubles Commerciaux in 1928, in 1933 renamed Société Anonyme Belge des Magasins Prisunic-Uniprix. Whereas the purpose of the first company was to enter the market of the then Belgian Congo, the goal of the second company was essentially a move to compete with variety stores, a new retail formula introduced by Sarma in 1928.

World War II and its aftermath--especially the Loi de Cadenas, or Padlock Law, which forbade the opening of new large diversified stores--slowed down the growth of the company considerably. The withdrawal of the Padlock Law in 1959 and the advent of the 1960s, however, resulted in a new wave of expansion with the opening of new department stores in Belgium's first shopping center.

Early History of GB Enterprises

In 1882 another Frenchman, Adolphe Kileman, opened his first store in Ghent, Belgium, under the name La Maison Universelle. He entrusted the running of this store to Mr. and Mrs. A. Martin. The year of his acquisition of the Grand Bazar du Bon Marché in Antwerp, 1885, is generally considered to be the founding date of the Grand Bazar d'Anvers, which would merge with Supermarchés GB in 1968 to become GB Enterprises. Kileman summoned Mr. and Mrs. Martin to Antwerp to run the newly acquired store, and in 1888 Mrs. Martin's sister and the latter's husband, Alfred Deslandes, were put in charge of the Ghent store.

World War I left the young company in a shambles. Upon his return from the French army in 1919, Auguste-Pierre Deslandes, nephew of Eugenie Martin--since 1890, a partner of Adolphe Kileman, and subsequently his heir--set up a new company, Les Grands Magasins d'Anvers Réunis S.A., with the aid of Émile Chaumont, an industrialist from Liège. The opening of new department stores in Antwerp in 1920 and in Ghent in 1921 were important events for the new company.

The Depression of the 1930s was almost fatal to Deslandes's company. Although the company had expanded its traditional range of merchandise through the introduction of novelties and had changed its name to the more stylish Galeries du Bon Marché, its financial situation deteriorated.

In 1932 Maurice Cauwe, previously employed by Innovation, was hired as administrative manager. After further difficult years and a reversion to the store's original and more popular name, Grand Bazar du Bon Marché, the new management was able to accomplish a gradual improvement over the period 1935-39. Despite World War II, the company was able to continue its expansion.

Cauwe was one of the first Belgian retailers to discover the United States and its modern distribution system. In 1956 he and Baron François Vaxelaire--son of Raymond Vaxelaire and later Cauwe's major negotiator in the merger of Inno-BM and GB Enterprises--attended a seminar held by the National Cash Register Company and led by Bernard Trujillo, in which they became acquainted with new retail formulas, such as shopping centers, supermarkets, and self-service discount department stores. Supermarkets and hypermarkets would become the keystones of GB Enterprises' fast growth during the 1960s.

The end of the Padlock Law in 1959 offered new opportunities for the company through the opening of a series of new department stores. Further growth was realized, however, with the introduction of supermarkets in 1958 and hypermarkets in 1961. Two separate companies were set up by the parent company: Supermarchés GB in 1960 and Super Bazars in 1961, in charge of the expansion process of a network of supermarkets and hypermarkets, respectively.

The opening of supermarkets and hypermarkets was pursued at a fast rate over the next ten years, partially in anticipation of the second Padlock Law. Soon the hypermarkets were joined by specialty stores such as Auto Centers in 1966, Garden Centers in 1968, and Brico Centers from 1973 onward. Initiatives to pursue expansion abroad were generally unsuccessful at the time. In 1967 Grand Bazar d'Anvers merged with Supermarchés GB to become GB Enterprises. A year later, Super Bazars also merged with GB Enterprises.

Early History of Innovation

In 1897 the third company, Bernheim-Meyer: A l'Innovation, established by Julien Bernheim and three brothers Meyer, all natives of the Alsace region, opened its first store in the rue Neuve in Brussels. The store proved highly successful, and additional stores were opened in Liège, Ghent, and Verviers.

After World War I the Tietz stores in Brussels, Bruges, and Antwerp, under sequester after the German defeat, were bought and gradually transformed into A l'Innovation department stores. Late in 1919 the company was renamed Les Grands Magasins à l'Innovation (Innovation).

In 1934 Priba, a subsidiary of Innovation, which had been set up in 1930 to develop a chain of variety stores, merged with Prisunic-Uniprix, a subsidiary of Au Bon Marché. For the first time a major link was established between two companies that would later participate in GIB Group. During the 1930s the variety stores did extremely well: by 1938 Sarma and Uniprix-Priba had become the first and the fourth largest retailers, respectively, in Belgium.

From 1959 onward, Innovation also pursued renewed growth through the opening of new department stores in several Belgian towns as well as in the Westland shopping center in Brussels. The great fire of May 22, 1967, in its Brussels department store, in which 251 people died, still casts a major shadow upon the success of Innovation in the 1960s. Growth also was pursued abroad through companies such as Inno-France, but with very little success. The time did not seem right yet for Belgian retailers to pursue expansion abroad.

Initiatives for cooperation or outright merger had been taken by several Belgian retail companies in the late 1920s, for example, by Émile Bernheim, but the first serious attempt at cooperation between Bon Marché and Grand Bazar d'Anvers did not happen until the early 1960s. The negotiations between the two department stores Innovation and Bon Marché were more fruitful, however. The companies decided to merge in October 1969 to form S.A. Innovation--Bon Marché N.V. (Inno-BM).

GB-Inno-BM Formed in 1974

New initiatives for cooperation were taken in the early 1970s between GB Enterprises, under Maurice Cauwe, and Inno-BM, under Émile Bernheim and François Vaxelaire. By the end of 1973 the two companies decided that the GB-Inno-BM merger would take place on February 1, 1974.

Maurice Cauwe became the first chairman of the new company, with Baron François Vaxelaire and Jacques Dopchie as managing directors. Upon Cauwe's retirement in 1977, Baron François Vaxelaire became chairman and Dopchie vice-chairman; both continued to act as managing directors.

The first two years after the merger were spent primarily in streamlining the organization and its operations and consolidating the selling and merchandising activities. Apart from the usual difficulties that follow any merger, the group was confronted with a series of problems arising from its economic and legal environment.

First, the Business Premises Act, the so-called second Padlock Law, made it virtually impossible to open new large stores or to enlarge existing ones. Expansion through the opening of supermarkets and hypermarkets all but stopped. Second, Belgium's small territory, already covered by an intensive distribution network, necessitated that further growth be pursued abroad. A third problem was related to the internal competition with which the department store division was confronted. In several major towns two or even three department stores, originally operated by GB-Inno-BM's constituent companies, fought for market share.

In the following years, GB-Inno-BM pursued expansion primarily through diversification. Important changes in structure were introduced to make this strategy possible. At the same time the group sought to rationalize its systems and to achieve economies of scale by integrating operations and merging production and service activities.

The department store division constituted a particular problem for the group. A special effort was made to assure its profitability, resulting in a "modularization" in the merchandising of the division, a revolutionary technique in department stores. Other measures included closing or modernizing older stores as well as opening new department stores in the newly developed shopping centers. In this context Fnac, the well-known French leisure goods retailer, was offered an opportunity to enter the Belgian market via the renovated Bon Marché store in the middle of Brussels (the New BM). GB-Inno-BM also decided to use the trade name Inno for all the department stores of the groups, with some minor exceptions. In 1975 GB-Inno-BM had already decided to close or convert the Priba variety stores as soon as possible, owing to reduced profitability and the need to reduce competition between the group's stores.

The strategy of diversification into new products and markets was maintained during the 1970s. Managers who were surplus to requirements after the merger were encouraged to study the opportunities for small specialty shops in Belgium. Benefiting from the growing success of the franchise formula in European retailing, this resulted in such new companies as Santal (perfumery shops, 1975), Club (books, stationery, and toys, 1975), and Sportland (sporting goods and sportswear, 1976). In 1982 the group acquired Christiaensen, the toys and games specialist.

In 1978 in response to an economic situation characterized by stagnation, inflation, and reduced consumer buying power, and in a further move to become even more diversified, GB-Inno-BM successfully introduced its own brand of goods (produits blancs) to offer consumers a low-cost alternative to branded goods. A diversification strategy also was actively pursued in 1979, where partnerships were established with other retailers abroad. Two activities stand out in this international expansion: DIY retailing and fast-food restaurants. New DIY ventures included Homebase in Great Britain (with Sainsbury), Somabri in France (with Casino), and Superdoe (with Vendex International) in The Netherlands. In the United States the group took a share in Scotty's, a DIY retailer in Florida, and in Handy Andy, a DIY chain in the Midwest. In the fast-food business the group established France Quick, a joint venture with Casino in France. GB-Inno-BM supplied the expertise and took a minority share in these new companies.

Operations Refined During the 1980s

In the 1980s the GB-Inno-BM merger had reached a certain level of maturity. After a very active period of diversification, the group concentrated on improvements and standardization of image, design, and equipment in its hypermarkets and supermarkets, cost reductions, and better merchandising, ranges, and pricing.

In October 1982 GB-Inno-BM introduced its new hypermarket formula. The group's hypermarkets, whose image would be determined in large part by a permanent offer of discounts on products, became Maxi stores.

In an attempt to improve the performance of the unsuccessful GB Home-Stocks, established in 1974, IKEA-Belgium was set up as a 50-50 joint venture with IKEA, a furniture specialist, in 1983. In 1989, however, GIB Group withdrew from this sector.

After a thorough study of GB-Inno-BM by U.S. management consultants McKinsey, a restructuring plan was developed, focusing in particular on the decentralization of the group's commercial activities, and was gradually implemented during the next few years. The plan proved to be very effective in terms of sales, cash flow, and net profit.

In 1987 GB-Inno-BM took over the activities of Sarma-Nopri, a J.C. Penney subsidiary. After major reorganization and rationalization, a new company, Sarmag, began to operate 14 Sarma-Star hypermarkets, six department stores, and 26 Sarma Shop boutiques.

Starting in 1987, GB-Inno-BM or GIB Group also was the largest franchiser in Belgium. In addition to Unic, the leading chain of independent supermarkets in Belgium, it operated the Nopri chain of supermarkets, Nopri being the trade name for the former Sarma affiliates.

New Leadership Took Over in the Early 1990s

The favorable results of 1990, confirming the positive developments of the previous years, were overshadowed by the unexpected death of François Vaxelaire, chairman of GIB Group since 1977. Baron Vaxelaire was an early advocate of closer cooperation among major Belgian retailers. As managing director of Inno-BM, he carried out the negotiations with Maurice Cauwe that finally led to the merger of Inno-BM and GB Enterprises. Vaxelaire, as chairman essentially responsible for the internal activities, left behind a highly diversified and successful company.

On March 19, 1991, Pierre Scohier, a banker and&mdash a major shareholder of GIB Group--a member of the board of directors for many years, became the new chairman of GIB Group. A new executive structure, in which a clear distinction was made between the responsibilities of the board of directors and those of the executive board, was implemented in June 1991.

As he reached the age limit for senior executives, Jacques Dopchie, who for years had been primarily responsible for all operations and over the previous several years for the external relations and the international activities of GIB Group, relinquished his position as managing director on this occasion; he remained, however, an honorary vice-chairman of the board of directors. Also in 1991 the board of directors appointed Count Diego du Monçeau de Bergendal, already managing director, as chairman of the executive board. Meanwhile, the group made its first foray into the territory of Eastern Europe, when it purchased a chain of four small supermarkets in Warsaw, Poland, in December 1991; GIB soon changed the chain's name to Globi.

Declining Profits Led to Restructuring Efforts in the Middle to Late 1990s

GIB's operating margin was a fairly respectable 2.17 percent in 1992, but the group's profitability suffered over the next several years, as the operating margin fell to a low of 1.39 percent in 1995 before recovering somewhat by 1997, when the figure was 1.55 percent. The group was hit hard by a recession in Belgium and also had to contend with increasing competition in both the food retailing and DIY markets.

Responding to these pressures, GIB Group cut costs and jettisoned unprofitable units. In its food retailing sector alone, staffing levels were cut from 30,075 employees in 1993 to 25,500 by 1997. These job cuts caused considerable labor unrest in Belgium. In an attempt to weaken the power of the labor unions with which it had to contend, GIB made significant alterations to its corporate structure, most notably transforming a number of divisions into full-fledged subsidiaries. In June 1993 a further step was taken with the Quick chain when it was floated on the Brussels stock exchange.

In the area of divestments, GIB Group began a retreat from the highly competitive U.S. DIY market in October 1995 when it sold its interest in the Handy Andy chain to the firm's management. In 1997 the group announced it would sell the Scotty's chain as well; the preceding year, GIB sold its 25 percent interest in Homebase to its partner, Sainsbury. This refocused the DYI unit entirely on continental Europe. Meanwhile, a new DYI warehouse concept, Briko Depot, was launched in May 1995.

In its restaurant sector, GIB in April 1996 converted its Resto GB restaurants into Lunch Garden cafeterias. In March 1994 the first Crock'in sandwich bar opened. GIB's specialty retailing sector was trimmed considerably in the mid-1990s, with the closure or sale of several chains: Sarma clothing stores, Fnac books/hi-fi/photographic shops, Christiaensen toy stores, and Pearle Vision Center optical shops in Belgium. This left only the Inno, Club, and Disport (sporting goods) chains.

As important as all of these events were, it was GIB's food retailing sector that saw the most dramatic changes. In October 1994 a new hypermarket concept was launched, initially called Bigg's, but eventually renamed Bigg's Continent. About a year later, GIB Group entered into an alliance with French retailer Promodès, in which the two companies agreed to combine their worldwide purchasing activities and to develop jointly the Bigg's concept, with Promodès taking a 20 percent interest in Bigg's. Another new concept, GB Express, consisted of a minisupermarket designed for service station and railway station locations; it debuted in August 1997. That same year also marked the debut of a new Super GB Partner format. This concept was formulated for the purpose of consolidating the Unic and Nopri chains--which were entirely franchised--under the GB banner, in the process achieving significant savings and benefits for the group and the franchisees.

In January 1998 GIB Group took another consolidating step when it brought all of its supermarket and hypermarkets businesses within a single new company called GB s.a. At the same time, GIB deepened its relationship with Promodès by selling the French group a 27.5 percent stake in GB for BFr 11 billion (US$292.5 million). In its combined form, GB had 630 stores in Belgium at the time of this deal and held 29 percent of the Belgian food retail market. The agreement between GIB and Promodès also anticipated that the partnership would become an equal one by 2003, sooner than that if a planned flotation of GB had not occurred by June 2001.

In February 1998 Roland Vaxelaire was named a managing director of the group's executive board, dividing the day-to-day management functions with Diego du Monçeau. Scohier remained chairman. It was this management team that would need to determine if GIB's years-long restructuring had gone far enough to turn the group's fortunes around.

Principal Subsidiaries: Aki Bricolage (Spain); Albi Restauration (France; 56.49%); Allinsure; Arilmart-RD (72.5%); Auto 5; Bascule-Rest (56.49%); Bayonne (France; 56.49%); Bel-Tex (72.5%); Bigg's (72.5%); Bigg's Continent Noord (72.5%); Brico Belgium; Brico International GEIE; Bricodis (Portugal); Bricogal (Portugal); Briko Depot; Briko Depot Noord; Cherbourg Rest (France; 56.49%); Club; Cotradis (72.5%); Crock'in; Disport International; Disport Luxembourg; Disport Partners; Distrirest; Ebam; Eufidis (Netherlands); Eufradis; Family Buffets; Filunic (72.5%); France Quick (56.49%); Fun Stores; GB International (Luxembourg); GB Retail Associates (72.5%); GB (72.5%); Gecotec; GIB Car Service (72.5%); GIB Consultant Services; GIB Coordination Center (99.85%); GIB Immo; GIB Management Services; GIB Toys; Globi (Poland; 47.6%); Grand Maine Restauration (France; 56.49%); Imodis; Inno; Jiceel (72.5%); La Rose d'Anjou (France; 56.49%); Lendit Kraainem (91.15%); Logimat (France; 56.49%); Logirest France (56.49%); Logirest Benelux (56.49%); Lunch Garden; Mabe (72.5%); Mantes est Restauration (France; 56.49%); Marseille Burel Restauration (France; 56.49%); Nausikaa (Netherlands; 56.49%); Negoce Pierre (France; 56.49%); New Motorest; Noprimmo; Obi (France); Outex (72.5%); Quick Coordination Center (56.49%); Quick Franchise Developpement (France; 56.49%); Quick Invest France (France; 56.49%); Quick Nederland (Netherlands; 56.49%); Quick Restaurants (56.49%); Ready (72.5%); Resto DM Jaude (France; 56.49%); Riom Rest (France; 56.49%); Rob (72.5%); Saboma (98.21%); Safe Insurance; Safe Reinsurance (Luxembourg); Sarma Shop; Sarmag; Societe Relais (72.5%); Sofira (France; 56.49%); Stigam (72.5%); Supertransport (72.5%); T.M.S.; Van Hemelrijck; Woippyrest (France; 56.49%).