System U boss fears an epidemic of SME crashes

Dominique Schelcher : System U did well during the health crisis. Our economic stability owes a lot to the fact that we are in the distribution of food, which is important. Our key role is a motivating factor for our teams. On the other hand, I am very worried about the crisis that has started: that of energy prices.

You are responding to inflation, precisely, for consumers, what are you putting in place to protect purchasing power?

We create a level of promotions rarely reached here. We are strengthening our loyalty program. Our flagship measure, the one we have been practicing since the beginning of the Covid crisis, is always 4 fruits and vegetables in price. Attention, this does not mean that our purchase from the producer is bad. We buy at the right price, within the framework of contracts, we just don’t take margin. This represents 15 million euros in additional annual purchasing power for customers.

Fixed prices? More symbolic and communicative actions than anything else

You have not chosen to communicate with hundreds of products at blocked prices, such as Leclerc, Casino, Carrefour…?

We prefer to selectively highlight our fruits and vegetables at cost price. Blocking price lists during inflation is not justified. However, in hindsight we can see that the blocked price lists were more symbolic and communicative actions than anything else.

Have consumption habits changed in the last few months in your stores?

The value of the average basket has not changed downwards, due to the price increase, but there are arbitrages. We buy less fresh produce, sliced ​​cheese, fish and butchery are affected. The question for us this fall is: how far are the food choices of customers with the surge of inflation?

What about the deficiencies noted in some departments in recent months?

I am not talking about a shortage, as in the case of mustard and sunflower oil sometimes, but in an event of occasional destruction of the presence of products on the shelves for 3, 4 days or even a week. Three reasons explain this: There is a shortage of truck drivers in France, logistics is suffering. There are human resources problems among producers that slow down their production, harvesting… Finally, the increase in the price of raw materials and especially energy sometimes leads to the pure and simple stoppage of the plant.

The loss of the tariff shield for companies is a disaster

You recently predicted a major economic crash in France, can you guess?

I want to alert public authorities, to sound the alarm about energy prices. In the past few days I have received many testimonials from companies that without help cannot survive the exploding bills. The loss of the tariff shield for companies is a disaster. There is a great danger because in the French or European talks I have heard nothing that can solve the intractable economic equation for many companies. The need for aid is great, especially for food. Without state help, the food chain could be threatened… I am worried about SMEs and those who supply us

Could the energy crisis upset Système U’s economic model?

Our bills are likely to double, our business model is disrupted, especially for stores that have recently been purchased and are therefore more in debt. But we are a cooperative, we will show solidarity between stores. I am more concerned about SMEs and those who supply us

We know that price negotiations are often difficult between suppliers and distributors. Have you implemented specific measures to support these SMEs?

We have set a recognition position regarding SMEs. For those who request it, we pay their bills in cash. This is an effort of more than 12 million euros in cash that has been improved by SMEs. We implemented a moratorium on penalties for SMEs (Editor’s note. Logistics penalties, delivery delays).

And vis-à-vis big companies?

Our discussions with large companies can be heated because we are defending the purchasing power of our customers and we need to make sure that the increases we accept are reasonable and legitimate. We do our job as an entrepreneur…

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