Our colleague and friend Thierry Coeman, outlines “the raison d’être for strategic alliances”. He has a closer look at one of the world’s largest DIY buying alliances, A.R.E.N.A., which has its HQ South of Paris.
We are facing many global challenges:
- The impact of the current economic climate
- The uncertain geopolitical situation
- Persistent end-user purchasing power issues
- The impending European payment regulations that will undoubtedly have an impact on the cashflow of companies and their investments
- A volatile building market
- The breakthrough of digitalisation and technology
- The huge opportunity in the renovation market
- The uncertainty of sourcing operations
- The shortage of tradespeople.
All together these are crucial and critical concerns because they are forcing more and more DIY retailers and suppliers in the broad DIY sector to join forces in search of solutions to turn the tide.
What deployment strategy should DIY retailers and suppliers adopt?
Strategic Alliances as lever for growth?
Strategic alliances are not a new phenomenon for retailers, but they are obviously opportunities for retailers and suppliers to reflect on a renewed model of partnership.
How do European DIY retailers create added value among themselves and how can suppliers connect with them? To answer that key question, we had a closer look at one of the world’s largest DIY buying alliances which has its headquarters South of Paris.
A.R.E.N.A.
The A.R.E.N.A. alliance was created in 2000 by the French retail group Les Mousquetaires (Bricomarché, Bricorama and Brico Cash) and the German DIY retailer Hagebau.
The other European members are: Jumbo (Switzerland, part of Coop Bau & Hobby), Bricofer (Italy), Dedeman (Romania), Pevex (Croatia) and Maxeda (Belgium and The Netherlands). Last year the alliance was strengthened by the addition of the Canadian retailer BMR (Montreal, Quebec), a subsidiary of Sollio Groupe Coopératif, which positions A.R.E.N.A. at world level.
As this article was being produced the board of A.R.E.N.A. announced and welcomed its ninth member, Kent Building Supplies (Canada) part of J.D. Irving (St. John, New Brunswick). Bruno Ménage, General Manager and Frank Staffeld, President, commented at the time “We welcome our new ally Kent Building Supplies, who strenghtens our Alliance and confirms the good momentum we’re in”.
With this addition A.R.E.N.A. now has become a wordwide alliance representing close to 4,670 stores. That brings the total value of the A.R.E.N.A. alliance to more than €16 bn.
Role and Mission for Strategic Alliances
The core mission of a DIY strategic alliance is to optimise the buying, import and quality of product through traditional purchasing processes or by responding to calls for tender.
It also means knowing how to buy by taking into account Corporate Social Responsibility (CSR) considerations, which are now unavoidable. For quite understandable reasons, linked in particular to manufacturing costs, this sourcing has long been in Asia.
However most of the Far-East countries, quite logically, want to supply their domestic markets first. Exports can therefore be interrupted, or at least limited, from time to time. And if you add for example, a drastic increase in the cost of transport by cargo ship and container, then sourcing products in the Far East becomes a challenge.
In a nutshell, a strategic alliance puts its focus on five main issues:
- Streamlining internationally cooperative business approaches
- Assuming organic growth for its members
- Developing human competence, NPD (new product development), enhancing the performance of internal procedures and strengthening mutual skills
- Increasing the value of sustainable procedures
- Sharing best practice
Following the same logic, the idea is to also enhance the e-Commerce capability and all issues relating to databases and by extension data analytics. And for sure, in the near future, the power of nine international DIY & Home Improvement retail databases will allow A.R.E.N.A. to better benefit on the new opportunities regarding artificial intelligence (AI).
Bringing sourcing closer together
A.R.E.N.A. has opened a third office in Poland at the beginning of 2023, in addition to the three Asian sourcing offices based in Shanghai (China), Ho Chi Minh City (Vietnam) and New Delhi (India). Moreover, the alliance is empowering and improving its structures whilst enforcing the mass buying power amongst its members and putting the focus on allowing new members worldwide to join A.R.E.N.A.
With the knowledge that DIY retail today is driven by multiple processes that require multiple areas of expertise, it seems logical that decision-making regarding procurement, marketing, logistics, e-Commerce, data intelligence, among others, should be driven mutually at retail level and at supplier’s level.
That’s precisely where the renewed business model of partnership starts.
The message is clear, there are lots of opportunities to create value whilst reinventing the model of joining forces.
Testimonial by Jacques Hayaux du Tilly, Maxeda
Group Assortment and Supply Chain Director
Maxeda joined the A.R.E.N.A. Alliance in 2020 and we are now the 3rd largest contributor.
The aim of the A.R.E.N.A. Alliance is to improve buying conditions and the results have been very positive for Maxeda. The Alliance has enabled us to discover new European suppliers but also to provide outlets for our existing suppliers.
The Alliance operates in a very pragmatic and operational way, which allows us to benefit from its purchasing power while retaining our autonomy.
The A.R.E.N.A Alliance continues to grow and this opens up interesting prospects for the future.
A.R.E.N.A at a glance
| RETAIL BANNER | COUNTRY | # STORES |
| BMR | Canada | 275 |
| KENT | Canada | 50 |
| BRICOFER | Italy | 106 |
| DEDEMAN | Romania | 61 |
| HAGEBAU | Germany | 500 |
| ITM-EM (Equipment de la maison) | France/Spain/Portugal | 905 + 2,000* |
| JUMBO | Switzerland | 122 |
| MAXEDA | Benelux | 345 |
| PEVEX | Croatia | 28 |
