Less a shop, more like a cultural superstore: Fnac comes to Britain

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The Independent Online

Imagine you are in HMV and fancy a flat-screen television to watch the Coen Brothers movie you have just bought. Or in Currys wishing you could slip the latest Jack Johnson CD into the box containing your sleek new hi-fi system.

Soon you may be able to do both at a new chain of "culture superstores" with a laidback, Gallic approach. The French books-to-DVDs, video games-to-computers retailer Fnac is looking to tighten its grip on audio-visual and literary retailing in Britain.

A team from the company (originally called Fédération Nationale d'Achats pour Cadres, or the National Purchasing Federation for Managers) has been scouting London for a site of about 50,000sq ft. Acquiring such premises would give the French retailer one of the biggest standalone shops in the capital, as well as a UK base from which to launch a national chain.

Fnac has 77 stores in France and 54 in other countries – Spain, Portugal, Italy, Switzerland, Belgium, Greece and Brazil. A spokeswoman for the chain, based in the Paris suburb of Clichy, confirmed that it wanted to expand across the Channel, saying: "We met some people in England to speak about this eventuality." Fnac's eventual arrival here could create a stir on our high streets, where specialist books and electronics stores are struggling to compete against each other and, more pressingly, with online retailers.

Apart from department stores, British shops tend to either sell audio-visual hardware such as televisions, DVD players, stereos, computers, cameras, games consoles and so on, or the software to play on them – such as DVDs, CDs, video games. Fnac, however, sells all these things under one roof, as well as books.

Since it was founded in 1954, this all-in-one format has proved attractive to shoppers, who are also seduced by its relaxed attitude, knowledgeable staff and live in-store performances by musicians and other artists – a little like a funky Waterstone's with televisions and computers.

The company is owned by PPR, the French luxury goods empire which counts among its brands Gucci, Yves Saint Laurent and the German sportswear maker Puma. Last month, it announced a 35 per cent net increase in profits to €922m (£702m), suggesting that it has plenty of money for expansion.

In London and elsewhere, Fnac will encounter a book trade which has lost much of its confidence since the growth of the 1990s. According to the Office for National Statistics, the standalone bookshop has fallen on hard times. While retail sales rose by 23 per cent overall between 2000 and 2006, sales at booksellers fell by 6 per cent.

Industry experts complain that the £3.5bn-a-year books market now revolves around selling blockbuster titles at well below their list price. "Book traders are shifting more product but making less money. More than half of books are sold at discount now," one shopkeeper told the retail analyst Mintel last year.

The market for audio-visual products, also sold by Fnac, is worth twice as much – £7.3bn in 2005, according to Mintel – making the French group's total target market a tempting £10bn. However, times are tough for electronics stores, too. DSG International, the owner of Dixons and Currys, issued a profits warning in January, blaming its woes on smaller mark-ups on goods and competition from the internet. Department stores such as John Lewis, however, have bucked the trend with booming sales of electrical items, while Marks & Spencer, Tesco and Asda are also expanding their "brown goods" ranges.

Mark Webb, a spokesman for DSG International, said his company had chosen to take on Fnac on its home turf through the PIXMania website because Fnac's presence on the French high street was so dominant.

"We are aware of them. They have good operations in France but it is a case of adjusting our own market," he said, adding that DSG was able to offer lower prices by buying its stock in bulk.

Waterstone's, which last year announced plans to close 30 branches, is owned by the HMV Group – whose music stores could also be affected by Fnac. Neither was available for comment last night.