French gas station squeeze
While France is far behind the US in terms of having oligopolies transform the landscape, in at least one area they are having a big impact. According to a Wall Street Journal Europe story ("Hypermarkets Pump Up the Volume", 10/4/2004), small-time gas stations as well as major oil company chains in France are being eliminated as the hypermarket chains expand their discounted gasoline sales.
According to the article, retail giants E. Leclerc, Carrefour, and Auchan have gained a growing share of the gas station market, and have driven thousands of smaller stations out of business. They sell gas at a little over wholesale price, in order to bring in other kinds of business to their stores. The big retailers control over 56% of the business in France. Similar trends exist in many other European companies - in the UK, for example, large general retailers control 28% of gasoline retailing business. (In the US, by contrast, retailers like Wal-Mart and Safeway control only 7% of the market, though they are growing as well.)
The absolute number of gas stations in France is shrinking fast, from over 40,000 in 1990 to under 15,000 now, with a reduction to 10,000 stations predicted in a few years.
It's not only the local stations that are losing to the hypermarkets in France. Some big oil companies like BP, Royal Dutch Shell, and ExxonMobil are withdrawing from the retail market, though they are still supplying stations. According to the article, Shell plans to close two thirds of its 900 outlets in France by 2005. Only French oil giant Total is staying around to compete with the hypermarkets, often by entering into alliances with smaller ones like Casino.
The French government has set up a fund to help some smaller, independent stations remodel and keep up with the hypermarkets, but the trend seems irreversible. But in general, the government is happy with the lower prices of the hypermarkets which lower prices. An economist might see this as a classic case of inefficient businesses being trumped by efficient ones, and surely no tears need be shed for the oil giants, who are caught in a competitive matrix shift. Nevertheless, the move is having its impact in moving France even further from a nation of small shopkeepers to a centralized economy dominated by a small number of retailers.
9:49:22 PM 
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