2008 Registration Document - Rexel

3. Business descriptioni.e., approximately 14% of the Rexel Group’s consolidatedsales. The framework agreements entered into with “keyaccounts” provide for specific sales conditions basedon volumes purchased, product availability and deliverytimeframes. These agreements are generally entered into inthe context of bids and last for two to three years.3.1.2.4 Marketing organizationRexel Group companies’ marketing services operate on twolevels: on the one hand, downstream, to analyze customerneeds and ensure commercial promotion, and upstream, tomanage supplier relationships.Their role includes:− the preparation of competition studies, which allowsthem to adapt their choice of suppliers and productsaccordingly;− the analysis of their markets in order to ensure thatproduct ranges evolve in partnership with suppliers;− the creation of product names and customerdesignations;− the provision of assistance and advice to salespersonnel;− assistance in the drafting and design of catalogues;− the implementation of customer loyalty programs; and− the design and launch of advertising campaigns at thebranch level in partnership with suppliers and in line withnational or international product promotions.Furthermore, the Rexel Group develops and implementsmarketing tools adapted to its customers’ requirements.New distribution methodsIn order to better respond to the needs of local contractors,in France and Australia the Rexel Group has developed adistribution method consisting of off-the-rack sales that areassisted by product advisers.Development of e-commerceThe Rexel Group believes that e-commerce representsa distribution channel that can be a source of significantgrowth in the future. Distribution by e-commerce coverstwo distinct areas:− Electronic Data Interchange (EDI), through whichcustomers (principally industrial and commercialcustomers) benefit from a dedicated service providedthrough an extranet (consultation of available inventory,on-line purchasing, order status, billing, etc); and− on-line purchasing through the Rexel Group branches,which is reserved for professional customers.Numerous countries already promote these distributionchannels, including the United States, Canada, CentralEurope countries, Scandinavia, and, since 2008, Franceand Portugal. A plan to develop e-commerce is scheduledin 2009 and 2010 with respect to the United Kingdom,Australia and Spain.The Rexel Group’s e-commerce 2008 pro forma salesamounted to €1,071 million, i.e., 8% of its sales.3.1.3 Logistic organizationof the Rexel Group3.1.3.1 Purchases and supplyIn order to adapt its purchasing structure to theparticularities of each country or to a given geographiczone and to optimize its terms of purchase, the RexelGroup has implemented partnerships with its suppliers ona number of levels:− at a worldwide level, the Rexel Group maintains privilegedrelationships with approximately forty internationalsuppliers which it considers its “strategic suppliers.”These suppliers operate in different countries on one ormore continents and have joined with the Rexel Group ininternational development programs;− at each country’s level, the Rexel Group’s subsidiariesnegotiate specific purchasing terms with nationalsuppliers; and− at a local level, the Rexel Group’s branches may alsonegotiate specific commercial terms with individualsuppliers.In addition, the Rexel Group has a policy of reducing thenumber of its suppliers with the goal of rationalizing itspurchasing policy and strengthening its relationships withits most significant suppliers.In 2008, on a reported basis, the Rexel Group madeapproximately 53% of its purchases from its 25 leadingsuppliers, approximately 8% from the next leading25 suppliers, approximately 7% from the next 50 andapproximately 7% from the next 100, i.e., approximately75% from its 200 leading suppliers.The Rexel Group favors the development of sustainablerelationships with its strategic suppliers that have thecapacity to contribute to the Rexel Group’s businessgrowth on both a worldwide and local scale. The RexelGroup believes that this approach also allows it to benefitfrom attractive volume pricing, make economies of scale forsupport services such as marketing and logistics, adapt itsproduct offering to the specificities of each market and toimprove its gross margin.The Rexel Group’s relationships with its suppliers aregoverned by short- and medium-term contracts. Productliability is the subject of paragraph 3.8.1 of this Documentde Référence.PAGE 24 | REXEL 2008