nov 04

Imprimer ceci Article

Distorted Competition: Below-cost Legislation, ‘Marges Arrie`re’ and Prices in French Retailing

In France, the prices of major industrial brands have been rising for a number of years, while the price differential between these brands on the one hand and those of retailer brands and no-frills products on the other has widened. Moreover, the price differential between supermarkets and hypermarkets on the one hand and hard discount stores on the other has increased, leading to a loss of market share held by traditional supermarkets and hypermarkets, in favour of hard discount stores, which are experiencing rapid growth.
     Some retailers and manufacturers, as well as several experts, attribute these consequences to commercial legislation currently in force in France, in particular the Raffarin and Galland laws.
Three questions over this can be raised: does such a cause-effect relationship in fact exist? How is it apparent? Which business and marketing models can be used to clarify this relationship?
     This article aims to formulate an answer to these questions. In order to do so, it will refer to an analysis of economic, strategic and marketing literature, as well as professional surveys, statistical data, an analysis of the balance sheets of the main retail groups and interviews with professionals.
First, we will present the French legislation prohibiting below-cost selling, then we will explain its consequences and show data confirming our interpretation. Finally we will conclude and present limitations of our paper and directions for further research.

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