U.S. 'hybrid' market has a French flavor - Leedmark to operate under French corporate structure plan

Discount Store News, June 17, 1991 by Arthur Markowitz

U.S. |Hybrid' Market Has a French Flavor

GLENN BURNIE, Md. - New Eldis Corp. launched its Leedmark hybrid store operation here using a unique corporate structure that mirrors the Edouard Leclerc hypermarket group of France, some of whose members helped fund the American venture.

New Eldis currently owns 99% of the initial Leedmark, with 1% held by G.B. Glenmark Ltd., the first company operating under New Eldis' auspices. New Eldis, however, has leased the $10 million, 306,000-square-foot food and general merchandise combination store from the Invesdis Corp., a separate firm that will own the real estate and buildings of all Leedmark units.

G.B. Glenmark can operate only one other Leedmark and can own 50% of each venture, with its investment also being the corresponding value of shares in New Eldis.

New Eldis' structure is similar to the Leclerc group, whose official name is Association des Centres Distributeur LeClerc. A.C.D. Lec. is composed of separate companies, each of which can own a few Leclerc units. The group operates like a cooperative wholesaler and did over $17 billion in sales last year, making it the biggest retailer in France and tenth largest in the world. Its 600 stores in France include 187 hypermarkets, 317 supermarkets, 51 specialty stores and 35 lawn and garden centers.

Didier Leconte, a member of A.C.D. Lec. for over 15 years and former owner of two Leclerc hypermarkets in the Normandy region of France, invested $800,000 to launch New Eldis three years ago and is its chairman and ceo. New Eldis said Leconte was the first member of the group to propose building stores outside of France that followed the Leclerc philosophy.

G.B. Glenmark is owned by its president Thomas Lenkevich, a Baltimore area food retailing executive. He had been vp of retail operations for B. Green & Co., a local food wholesalers, and prior to that president and owner of the Glenmont Food Rite in Wheaton, Md.

Invesdis Corp., a $5 million company, was funded by 200 members of A.C.D. Lec. who were interested in extending the group's concept to the United States. Leconte is Invesdis' president, while Marie-Laure Bordais is chairman and the other board members are Andre Jaud, Jean Paul Pageau and Michel Payraudeau.

While New Eldis will own a 50% interest in all Leedmarks, the company's day-to-day business, Leconte said, is to provide "general staff services" to the members of the group and to Invesdis.

Each Leedmark (or two-store venture) will have its own buyers, Leconte said, who will regularly meet to determine what goods the hoped-for chain will carry. Each Leedmark will purchase goods on its own, and can include items other stores don't carry to individualize its assortment, he added.

He said that Leedmark's unique structure should enable the venture to grow in the United States as owners of stores will only have to finance their basic operation, with Invesdis funding the real estate and building. Invesdis' income and outside funding, guaranteed by the real estate company, will be used to build stores.

The Glen Burnie Leedmark cost $26 million, $16 million for the land and building and $10 million for start-up of operations. The $10 million is for fixtures, advertising and related expenses and doesn't include the undisclosed inventory cost.

Leconte said the Baltimore/ Washington market could hold about 10 Leedmarks, with future growth in contiguous areas. Baltimore was picked as the first market because it's the fifth largest in the United States, with Glen Burnie accessible to 1.5 million people within a 15-mile radius.