Enrique Martinez (Fnac Darty) | Podcast de l'Hypertransformation by Sia – Saison 2 Épisode 6

And we have a brand that speaks a lot and is very heard because we are on subjects of innovation, society, culture. So we can see that in the long term we will no longer be able to avoid the question of ecological transition, the way we consume and the way we must protect our ecosystem. Obviously, there are areas where we are very eager to see how AI can help us optimize our processes. Imagine 30 years of repair, millions of products each year. How much data have we created to qualify what the best diagnostics are before even going through a technician? There is a revolution coming on the use of energy in the home. We think we will bring a real know-how to the service model, and that is part of our horizons for the coming years.

They are more than good, they are very complete, very good for the documentation and your ability to synthesize. So there is no error. That opens the discussion well.

Well, for us, we have been on an acceleration of a transformation for a little over 10 years that aimed to transform the economic models of Fnac. That was before the acquisition of Darty, so the genesis of all this is 2016, the fall. Actually, from 2012 we started asking how to give a different future to the group that needed diversification, size and internationalization. So these three things were very important because Fnac had an economic model still based on cultural products and others, so it needed to face these three challenges. The steps you know: the acquisition of Fnac and Darty gave us both size and a first response to diversification. The acceleration of digital was the second part to face the disjunction of channels with the arrival of mass e-commerce. And finally, the third step of this challenge was the acquisition of Unieuro last year in Italy. I like to say it simply: it opened up the third level of these challenges, which is how the group is still 60% dependent on France, so 40% of activity outside. That is for us a way to tell the story. Obviously Covid came in between, many necessary adaptations, a lot of capacity, flexibility, taking on challenges, weak growth, especially in France. But we kept the course of what was at the beginning of our roadmap and the different strategic plans we followed. And finally, we arrive at this new plan Beyond Everyday, which you mentioned, which gives meaning to all this with in the middle a huge challenge: how can we be an actor in the transformation towards more sustainable consumption and how can we create an alternative economic model once the challenges of diversification, size and internationalization have been successful? That is the basis to move to the next step.

The next step is a very diversified model, notably towards service.

Yes, there is an even more impressive figure: we have 1,100 stores in the group today. That corresponds to about 1.5 million square meters and it is hundreds of millions of visitors each year. So we are talking about an industrial tool that we have built over 40 or 50 years. So it is a massive competitive advantage that allows us to position ourselves as the only major player in our industries capable of offering both a digital presence and a nearly perfect store network. You see, there is no equivalent. There is no equivalent to this intensity in markets like ours. And so we say that the future of commerce is hybrid between physical and digital, and the good integration of the two. Well, we are today the only one that can have these dimensions at this scale. So the role for us is essential. It will remain fundamental in the customer relationship between the brands and the consumer. We think that digital, all that we hear, obviously creates new opportunities for commerce, but stores remain an important foundation of the relationship because our customers, for the type of products we sell, our ecosystems, they continue to appreciate the services that stores offer: immediacy, advice, access to human contact, products, experience. And in fact, 25 years of e-commerce experience shows us that e-commerce is a great opportunity to broaden channels, contacts and others, but it does not completely replace everything that physical stores can offer. So the combination of the two, increasingly integrated, increasingly seamless journeys between stores and digital and vice versa, are for us the frontiers of commerce. Especially since a statistic that impressed me is that in click and collect, 50% of purchases made on the site, for example on Fnac.com, are picked up in store. So that shows the importance of the physical store. Moreover, I think that the key is not the relevance of e-commerce, but rather the resistance capacity of physical commerce. That's where everything plays out in the sectors. And we have seen in countries and sectors where physical commerce did not do its homework, did not invest in experience and quality, did not work on its economic model, well, obviously e-commerce killed it. But on the contrary, in sectors where there is an actor, a leader or several who reinvented the experience and knew how to value these assets to compensate for the constraints, well, we see that the consumer can choose, often largely, for physical stores. So the combination of the two, increasingly integrated, the increasingly fluid journeys between stores, digital and vice versa, are for us the frontiers of commerce. And I think that the customers, we don't need to explain it too much because they understand it well: customers are always looking to optimize their economic investments, ease, access, relevance. If we look at the figures we have made in recent years on click and collect flows, it's really impressive. It corresponds to 5 times more than 4 years ago. So the volumes are growing exponentially.

I think there is a hypothesis that every year e-commerce will gain one point. That seems to be the trajectory of the last 25 years. That means acceleration. But acceleration at a certain point, when the market is more and more mature, it's a bit more difficult to accelerate. It might be slower. But I think the key will not be on the relevance of e-commerce, but rather the resistance capacity of physical commerce. That's where everything plays out. In the sectors and countries where physical commerce did not do its homework, did not invest in experience and quality, did not work on its economic model, well, obviously e-commerce killed it. But on the contrary, in sectors where there is an actor, a leader or several who reinvented the experience and knew how to value these assets to compensate for the constraints, well, we see that the consumer can choose, often largely, for physical stores.

Well, today we have over 10 billion in revenue with 30,000 employees in the countries where we are present. We already have a size that allows us to be very relevant, very efficient in terms of networks, territories, delivery. So I think we can continue to progress, grow organically, but I think today we no longer have problems of critical size.

We can see that it's good intelligence, but I think it hasn't understood everything yet. But we will help it, we will help Alice. I think the big risks are not for the big ones, they are for consumers. That's the real risks. And what risk? Today, we have built a responsible business ecosystem that follows a huge one and that somehow protects consumers from the industry. That was the story of the last 40-50 years. The norms, the competition, they give a huge advantage to the consumer. In a black scenario like the one proposed, it's a world where a few platforms, a few actors dominate global commerce, so the powers will reverse and consumers will not have choices, they will have choices imposed on them. So the first existential risk is the risk of a monopoly that is not subject to the best competition rules that we have today and that strongly protects consumers. Second, even more with actors who are sometimes not even subject to, or believe they are not subject to, the legislative and normative control that we have given ourselves. Today we see on some platforms products that do not respect the norms present in European territory: social, product safety, materials, tests, guarantees of all types. So those are two non-trivial risks. One is being too dependent on a few actors, and obviously they will destroy a lot of existing fabric, and the subjects of consumer protection itself. That is a scenario that has accelerated recently with the arrival, the simplicity of e-commerce and the inability of European legislators to enforce the norms that exist in these European markets. And I think it's not new, we've been talking about it for years, but 2025 probably the acceleration was so important that the reality was impossible to look away from for public authorities. So maybe it's good news. It probably took a lot of damage, a lot of people who suffered in 2025 in these businesses, so that finally it becomes a reality that no one can escape. And I think the first norms, the first controls are arriving, and that will probably allow us to start putting some norms in this mess. The good scenario, the good solution, is that we think that markets, competition has always been for the benefit of consumers and industry, but with the condition that norms are respected. So let's make everyone respect the norms.

Especially the advantage for the consumer is that the role of a distributor has always been to filter, to act as an intermediary between the industry, which today is almost infinite with a choice of qualities, safety, prescription. And when someone comes to our stores or on our sites, they are sure that what they have found corresponds to the standards we have decided together. So they don't have to ask themselves every time: Is this product fake? What happens if there's a problem? Does it meet the norms? Etc. So it's the role of intermediary, which we have the impression that with e-commerce, platforms, it has no more value, like information. We have the impression that today we don't need traditional media to be informed, social media. But in fact, we realized that sometimes information is even more important today because the intermediation of a responsible person gives a guarantee of conformity, of veracity. And I think that is an even more important role in this digital world. Someone, I think it was the Spanish president, Pedro Sánchez, who spoke of the Wild West of commerce or digital, it corresponded well to what we sometimes see, phenomena that are out of control of these platforms, which by definition are much larger than the capacities of countries to control them.

No, I think we must not confuse what we do and how we do it, what we sell and how we serve customers. I think the essential work must be to choose products well, work with manufacturers who respect norms, find a service model for repair, make a responsible and independent choice, and then deliver faster or make them attractive is our duty because we are in competition sometimes with all these worlds. But we must not confuse the fundamentals and the form. The fundamentals are what matters more, and then the form. In any case, we are convinced that the best ecological balances of commerce are made in stores. So that's where we do the vast majority of our revenue. But no one can ask us to abstract ourselves from the trends of the fundamentals. It's e-commerce that takes an important part with its codes. So we also have to be present in these markets to defend our model.

That covers a lot of things, but to be clear, let's take the example of repair. We were all carried along in this period of equipment, technology arrived in our homes 30-45 years ago, everything was invented. There was a race in the industry to make products accessible at the best price quickly because people wanted to equip themselves, so the logic was equip, equip, equip as much as possible. Yes, a consumption that allowed everyone to have access to technology, comfort at home and so on. It was logical. But I think this phase is a bit over, not completely, but it's not the essential of our future hopes because everyone is equipped today. Production is better and better quality, so the next step will necessarily be how we can maintain and help consumers make the best choice, use it regularly, and then why not find a repair industry that compensates for the decline in volumes that will come from quality and the fact that we keep products longer. So from the moment we do not industrialize planned obsolescence of products - where before it lasted 5 years, today after 2 years it's dead - I have never heard that. Frankly, those are fantasies. We could ask what they think. I tell you what I think. I have worked in this industry for 30 years. Honestly, what I see is that products are better and better in terms of design and quality. There are sometimes, and I think we should avoid this error, a race to too low a price that sometimes leads to choices by some manufacturers to lower the quality of components, and that can have an impact on lifespan. But when we look at the products we sell today and how long they keep them in good working condition, the industry has made enormous progress in quality, and these phenomena of planned obsolescence have never been truly proven.

Well, AI, I think we are all in the process of understanding how it will change Fnac Darty, our companion in all the universes we work in. Because globally, we are talking about a new revolution, a new frontier that comes to accelerate what the last 20 years of digital transformations initiated. And so I think we feel that sometimes there is a bit too much promise, but we can see that there is a revolution that will affect and favor the acceleration of all the processes we are experiencing. So we intend to use it to its full potential in the service of our model, and that is what we are trying to understand. And obviously there are areas where we are very eager to see how AI can help us optimize our processes. How we repair millions of products, manage hundreds of millions of customer contacts. Any tool that allows us to better qualify, better order, benefit from the data we manage and have kept for decades. All of that serves operational excellence, profitability and productivity. In terms of breakdown management, catalog management, data, stocks, product sheets, diagnostics of products to repair, AI will be a real booster and will bring significant productivity gains. For example, when you have a breakdown, someone calls our service every 2 seconds for a problem related to a product. Every 2 seconds. A few years ago, the person who took the call was very trained, had a lot of information, had manuals, and sometimes consulted manuals for the product. So the first filters they could do were very linked to their personal knowledge. Well, imagine 30 years of repair, millions of products each year. How much data have we created to qualify when someone calls us on a given product? What are the best diagnostics to do before even going through a technician? Well, today that is a reality. We can do predictive bot, pre-diagnosis. We can even help customers start their own pre-diagnosis. Then it can go to the person who will qualify using AI, which will give superpower to our teams to treat quickly. And then how it falls into our back office to decide how we manage the customer, how we manage the part that needs to be ordered, what part to order, so that everything is set in motion to manage the customer as quickly and efficiently as possible, and at the least cost for them and for us. And that is typically the kind of process we like. We have been investing in it for years and we think they will continue to help us improve. There are dozens of others, but that's one that will be very visible today.

Yes, we are working particularly on the search engine and on the site. When someone arrives on our site and has an expectation, with the millions of references we manage today in the catalog and with what we know about these people, we will be able to propose the most relevant things. We will gain relevance. E-commerce generates a lot of traffic. As soon as you have massive processes and data, which is the case for Fnac Darty, it can lead to actions on inventory management, team management in terms of timing and organization, training, on the offer, how the offer is presented, on customer relations. It generates dozens of billions, hundreds of millions of lines that today we process as best we can, but obviously with AI, we will manage them better and better. So yes, we feel that it will be a factor of acceleration in how we can optimize our operations and gain efficiency, even gain competitiveness for customers.

Well, today, a group like ours is what we call a social brand. That means we have contact with many customers with whom we interact through different types of channels. Through sellers, through call centers, through websites, but also through social networks. And we have a brand that speaks a lot and is very heard because we are sometimes on subjects of innovation, society, culture. So we have territories where listening in all these channels is very important. So we are able to speak and we are also able to listen and understand potential customers interested in our universes. So we develop this kind of social media monitoring to see investments, influencers, to reach audiences with strong affinity in our categories for communication. The media mix has been largely digital for a long time. Before it was digital display, then digital search, today it's all of it: search, social, display, and tomorrow it will be agentic too. Because the obligation of a group like ours is to be able to optimize its mix to reach customers where they are and to be...

Yeah, I think the model will evolve. We've just lived through the last 20 years of e-commerce by Google in a very organized way, very profitable for Google too. So congratulations to Sébastien and his teams. Probably, we are opening a new stage. You see, it's a question of we let it disappear and finally the brand had no importance. We had already heard at the beginning of e-commerce, and even Google at one point had a project to become the sales tool and connect to all other sellers, not as a seller but as a kind of storage, it never really existed. Also because we were able to create services, create a model that is complex for customers, brands are important, and in the digital world, it's even more important. So our view is we don't really know how the future will be because it's very pretentious to say. We need to be very reactive. And before, we had a model that was stores, then we invented e-commerce, then we did hybrid. Today we are, and tomorrow there will be agentic commerce. We will be there with our value proposition, our personality, our ability, influence, and strong recommendations. And I think that will be important enough to impose itself in a model that will still evolve and that's good. Because obviously we are only at the beginning of this transformation towards a much more omnipresent and omnichannel commerce.

Well, that's an excellent question. Thank you very much. We discussed a bit at the beginning, we are completely in both camps because we see that as soon as there is data and processes that can be optimized, that's where AI will be very sufficient, very relevant. Digital had started, we are not starting from zero. For years, there were algorithms optimizing processes, supply. We generate, we manage today hundreds of thousands of references, and obviously we have systems to help us improve our processes, but probably we had a much more limited ability to integrate variables in real time and learn from these models. Today, we can see that the computing power of AI allows us to go much further. Yes, to integrate variables sometimes on models that are less or more difficult to predict because the frequency is relatively low. And then learn from its own results on the processes of pricing, organization, assortments. We are starting to see things that are significantly more efficient than we had before. So there is a kind of continuum from 20 years ago. Now, we feel there is an acceleration on things that could be very differentiating, so it's worth investigating. Obviously, it requires some discipline because I think a group like ours has responsibilities. We can't just send a hundred bottles into the water. We have to make choices. The choices were made by the teams where we have well-structured data, secured our systems, and today we are testing about thirty projects, as many internal as external, on both the efficiency of customer relations and the relevance of our offers, as well as the organization of the back office, and both can be done in parallel in our opinion.

Well, precisely no, we think we need to defend our territories. I think it's the theory of keeping a strong position in our value chains. We talked earlier about the existential risks of complete disintermediation. I put it the other way. We can also play an increasingly important role in organizing the distribution of our products, and that is obviously by defending our own positions, which is pure distribution, but also by offering other sectors of industry the benefit of the assets that Europe has developed very significantly in terms of service and logistics, repair, installation, advice, and many others that today we are able to scale up industrially to offer to others.

But today I don't know if people know, but we deliver almost 1.5 million bulky products, large volumes, by our teams all over France. So we are able to deliver from one day to the next, the longest lead time in France. And that's a capacity we created thanks to our logistics installation teams, delivery platforms nearby, crews everywhere on the ground. Not everyone has the ability to create this network or this level of service. So for a while now, we have proposed, we decided to open this offer to other sellers with whom we will deliver their products to their customers on the territory. So that's a good example of services for third parties, for large volume products, also for e-commerce. We created a company with Sval logistics to do fulfillment. Fulfillment is the logistics preparation of products that we sell on our marketplace, but also that they sell on other marketplaces. So we are offering logistics services to those who do not have or cannot develop them, and I even propose the subjects for example repair. We repair today with our team products that are part of, for example, insurance contracts that are not our customers, but we do it for the premium customers of insurance companies, or even banks that have access to Darty Max. There you go. Or the bank that offers its customers a repair insurance for these products, but the back office and repair management is done by our teams, and we think that's an opportunity to continue to gain relevance and size in volume for the products and services that are important to us, and also strengthen our position in this value chain that is ours.

No, on the contrary. No, no, they will follow us, it's true, they don't have much choice because our models of commitment to repair, it's not by chance, we arrive there with a strong conviction that we must change the ways of the industry, and that means choosing virtuous consumption. Yeah. Choose and build more durable and virtuous products. Work with a service model of affordable and economically accessible repair, and then work with the industry on a second-life model for products that have a repair cycle. All of this requires bringing the industry along with us. Today, we are co-responsible with the industry for the quality of products because we repair them in our subscription programs. So we have an interest in improving the quality of the products we distribute. Hence the repairability index. And we have an interest in strongly influencing the industry so that when a product breaks down, we can repair it quickly. And that's what the repairability index is about. So all these things have allowed us to have a very significant positive influence in our industries, which today generates a lot of customer satisfaction because products break down less, and when they do, it costs less.