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Ludendo S.A.

Ludendo S.A.

16 rue Vladimir Jankelevitch
Emerainville
Marne La Vallee, F-77436 Cedex 2
France
Telephone: (33 01) 64 61 65 37
Fax: (33 01) 64 61 65 17
Web site: http://www.la-grande-recre.com

Private Company
Incorporated: 1994 as La Grande Recré
Employees: 1,800
Sales: EUR 350 million ($500 million) (2006)
NAIC: 451120 Hobby, Toy, and Game Stores

Ludendo S.A. is Frances leading privately owned retail toy specialist, with ambitions to develop itself into a leader in the European toy market. Ludendo operates nearly 315 stores under a multibrand concept. The companys flagship is La Grande Recré, targeting the middle to high-end segment with stores ranging from 500 to 1,500 square meters. La Grande Recré stores operate in all three major retail markets, and include city center stores, as well as suburban and shopping mall locations. The format is also the groups most international, with six stores in Morocco, six stores in Belgium, two stores in Switzerland, and one in Spain. Ludendos Jouetland format operates specifically in the suburban market, with 42 stores at an average floor space of 1,000 square meters. Jouetland stores are typically located in large commercial zones situated on the outskirts of major cities. Jouetland stores also feature a second, in-store retail format, Bébéland. That format, launched in 2004, focuses on clothing, furniture, equipment and other accessories for infants and toddlers. At the end of 2006, Ludendo operated 30 Bébéland stores with an average selling space of 600 square meters. The companys third major format is the network of 85 Starjouet stores. These stores are independently owned, feature an average selling space of 300 square meters, and focus on the city center market.

In 2006 Ludendo launched the first store featuring a new retail concept, called Ludendo Village. The large-scale formatwith stores sizes expected to range from 3,000 to 7,000 square metersalso boasts several new in-store formats, including Lire et Grandir (books, educational toys, and creative activities), Cado Déko (furnishings, decorations, etc.), B comme BéBé (childrens clothing and furniture), and La Farandole (confectionery). Also in 2006, Ludendo acquired the nine Franz Carl Weber toy stores in Switzerland from Denner AG. Ludendo itself was formed only in 2005, through the merger of the CEDIJ (Jouetland, Bébéland, and Starjouet) into La Grande Recré. Ludendo is led by chairman Arnaud Grunberg, and comanaging directors Jean-Michel Grunberg and Daniel Velasco. The company has announced plans to expand its operations to more than 500 stores and more than EUR 1 billion in sales by 2010.

TOY STORE BEGINNINGS IN 1977

Ludendo stemmed from a single toy store founded by Maurice Grunberg in a northern Parisian suburb in 1977. The opening of the new Parinor shopping mall, one of the first in France, in Aulnay-sous-Bois, provided Grunberg with the opportunity to test the relatively new category killer retail concept. Grunberg called his store La Recré (French for recess) and developed a retail format specialized in toys and games. Grunberg, joined by the beginning of the 1980s by son Jean-Michel Grunberg, continued to refine the La Recré format, positioning the stores offering toward the middle and high-end market. The Grunbergs also developed experience in other retail segments, including a shoe store, a stationery shop, and restaurant operations, and by the end of the 1980s operated several sites at the Parinor mall. Yet La Recré remained the familys main business, and by the middle of the decade the Grunbergs had made the decision to expand the chain. This led to the opening of a second La Recré store in the Créteil Soleil shopping center in that eastern Parisian suburb. The new store, which boasted 1,000 square meters of floor space, pointed the way toward the companys future.

The emergence of Frances large-scale distribution groups in the 1960s and 1970s, and the appearance of new hypermarket store formats had by then begun a radical reshaping of the French retail landscape. The countrys toy and game retailers, already under pressure from the arrival of U.S. giant Toys R Us into the market, found their market share increasingly eroded in favor of the nations supermarkets and hypermarkets. By the late 1980s, growing numbers of the countrys independent retailers had begun to join together to form central purchasing operations. In this way, the independent retailers were able to gain the advantages of the higher purchasing volumes, enabling them to counter the supermarket operators low-pricing strategies. Among these new buying groups was the CEDIJ, created in 1981.

La Recré joined a purchasing group in the late 1980s as it began adding new stores. In the early 1990s, however, the company, under Jean-Michel Grunbergs leadership, decided to go it alone. This led the company to exit its purchasing partnership in 1993. Instead, the company adopted a new expansion strategy. The company stepped up its new store openings, while expanding its store format to feature more selling space. By 1994, with 15 stores in operation and another eight stores expected by the end of that year, the company changed name, becoming La Grande Recré. At that time, the companys strategy, dubbed Horizon 2000, called for the companys network to top 50 stores by the beginning of the next century.

HORIZON 2000 SUCCESS

Jean-Michel Grunberg recognized that the company was unable to compete on pricing alone against its larger retail rivals, including Toys R Us, which by then had gained a major share of the French toy market. Instead, Grunberg successfully positioned La Grande Recré with a strong focus on service and midsized stores ranging between 800 and 1,000 square meters. Grunberg also shrewdly developed partnerships with many of the leading European toy manufacturersmany of them based in Francewhich themselves faced increasing pressure from inexpensive toy imports from the Asian markets. La Grande Recré built strong relationships with Smoby, Lego, Berchet, Ecoffier, Lardy, Superjouet, AB Toys, Monneret, and others, by bringing representatives from the toy companies to provide product training for its sales staff. The training enabled the companys employees to function as brand ambassadors for the different brands. La Grande Recré also created a policy of featuring its partners products in its store windows on a regular and rotating basis. As a result, the group was able to double sales of many of its partners in its stores, while at the same time reducing La Grande Recrés own reliance on the all-important Christmas season. By the end of the 1990s, that period represented only 50 percent of the groups total annual revenuesin contrast to as much as 80 percent at its larger competitors.

These efforts paid off strongly for the company. By the late 1990s, La Grande Recres sales had topped the equivalent of EUR 60 million. The Horizon 2000 objectives appeared too low, as the company entered 1998 with the opening of its 40th store. With a new store opening rate as high as 15 per year, the company soon topped 50 stores. By 2000, La Grande Recré boasted nearly 70 stores. By then, the company had begun to experiment with an expanded product range. Starting from 1998, the company had begun developing in-store corner shops for such items as confectionery, jewelry and other beauty accessories, as well as party goods.

COMPANY PERSPECTIVES

The Ludendo Project: Horizon 2010. Our intention: To grow the company by developing its profitability while preserving a humane dimension.

The company targeted new horizons for the new century. In 2002, La Grande Recré made its first move into the international market, opening a store in Morocco. That store was quickly followed by the opening of the groups first store in Belgium that same year. The company also took steps to boost its expansion, launching its first franchising operations that year. In order to finance its expansion plans, La Grande Recré brought in a number of institutional investors. Nonetheless, the Grunberg family remained in control of the business.

La Grande Recré celebrated the opening of its 100th store in 2002. By the end of 2004, the companys network had grown to 120 stores. These included a total of six stores in Morocco. Similarly, the La Grande Recré format appeared to appeal to the Belgian consumer, and the company built up a network of six stores in that country as well. The successful extension into Belgium and Morocco encouraged the company to seek out new markets. By the middle of the decade, the company had expanded into Spain and Switzerland as well.

TARGETING EUROPE IN THE NEW CENTURY

Jean-Michel Grunberg had in the meantime been nurturing still higher ambitions for the company founded by his father less than 30 years earlier. The companys chance came at the beginning of 2005, when the Grunbergs reached an agreement to acquire one of its main rivals in France, the CEDIJ, which had been formed in 1981 as the purchasing cooperative Central des Independants du Jouet. Leading the CEDIJ was the Ruyer family, which had been involved in the retail toy business since 1940, when Ernst Ruyer began selling toys fromof all placesa store selling tombstones, caskets, and other funeral goods. Based in Hagenau, in the Alsace region, the store enjoyed its proximity to the center of French toy manufacturing. Ruyer bought out that stores owner and soon converted the store entirely to toys.

The next generation of the Ruyer family expanded and modernized the store, which was renamed as Jeux, Jouets, Modelisme in 1974. The addition of model kits to its product mix became something of a company hallmark. In 1979, the Ruyer family opened a second store, and then became a founding member of the CEDIJ in 1981. Starting with 15 member stores, the CEDIJ grew strongly through the decade. By 1990 the groups members, which had maintained their own store names through the 1980s, agreed to adopt a single name for the growing network, Jouetland. Into the middle of the 1990s, the group began to differentiate its different store formats, and in 1994 created a new format, Starjouet, for its smaller, city center locations. Jouetland then came to represent the CEDIJs larger stores, typically located in the growing commercial districts on the outskirts of Frances larger towns and cities. By the end of the decade, the larger format of the Jouetland stores enabled the group to develop an in-store department devoted to baby furnishings, clothing and other equipment, such as strollers and car seats. This department became more and more important to the groups operations, and in 2004 was relaunched under its own dedicated name, Bébéland.

The merger of the CEDIJs store formats into La Grande Recré formed the basis for the creation of Ludendo SA. The newly enlarged company, which claimed the leadership of the French retail toy market, remained under control of the Grunberg family. Ludendo set its sights on repositioning itself not only as a French leader, but also as a major European retailer. In 2005, the company adopted a new strategy, dubbed Horizon 2010, which called for its expansion to more than 500 stores by that year. By then, the company, which already posted combined sales of more than EUR 350 million, expected its turnover to top EUR 1 billion.

KEY DATES

1940:
Ernst Ruyer opens toy shop in a funeral supply shop in Alsace.
1974:
Ruyer family store becomes Jeux, Jouet, Modelisme.
1977:
Maurice Grunberg opens La Recré toy store in Parinor shopping center in Aulnay-sur-Bois, near Paris.
1981:
Ruyer family becomes founding member of CEDIJ toy retailer purchasing cooperative.
1990:
CEDIJ adopts new store format, Jouetland.
1994:
La Recré decides to build its retail network under La Grande Recré name; CEDIJ creates Starjouet for smaller, city center stores.
2002:
La Grande Recré opens first international stores in Morocco and Belgium.
2005:
Merger of CEDIJ and La Grande Recré forms Ludendo SA.
2006:
Ludendo launches large-scale store format Ludendo Village and acquires Switzerlands Franz Carl Weber.

Ludendo lost no time in seeking out new growth initiatives. In 2006, the company acquired struggling Swiss toy retailer Franz Carl Weber from the Denner discount supermarket group. The addition of the Weber network added nine more stores to Ludendos international total. Ludendo had in the meantime been developing a new large-format store. Called Ludendo Village, the new store format featured selling space ranging from 3,000 to 7,000 square meters. The Village store was arranged in a department store format, with several in-store shops, including La Grande Recré, Bébéland, and newly created formats including Lire et Grandir (books, educational toys, and creative activities), Cado Déko (furnishings, decorations, etc.), B comme BéBé (childrens clothing and furniture), and La Farandole (confectionery). The first Ludendo Village opened at the Val dEurope commercial center in Seine-et-Marne that same year, with plans to open up to 20 Ludendo Villages by 2010. Ludendo made growth into a leading European toy retailer look like childs play.

M. L. Cohen

PRINCIPAL SUBSIDIARIES

Franz Carl Weber AG (Switzerland); Jouetland S.A.; La Grande Recré S.A.; Starjouet.

PRINCIPAL COMPETITORS

Toys R Us France; Distritoys S.A.; King Jouet S.A.

FURTHER READING

Beaulieu, Philippe, Du Jouet à la Puériculture, Franchise Magazine.com, June 29, 2004.

Ghanem-Domont, Cynthia, Comment La Grande Recré Joue avec les Grands, Strategies, January 9, 1998, p. 37.

La Grand Recré Joue dans la Cour Internationale, Revue PIC-Inter, NovemberDecember 2006.

Un Nouveau Groupe Leader du Jouet en France, Observateur de la Franchise, January 24, 2005.

Peyrache, Camille, Affaires de Famille, News DIll, December 2004, p. 10.

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