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Party supplies are displayed at a discount store in Saint-Brieuc, western France. The photo is unrelated to the article. /Photo by Lim Yu-jung, Paris correspondent

GiFi, a French discount retail chain specializing in household goods with a 45-year history, has entered court-supervised restructuring proceedings after struggling with financial difficulties.

French business news outlet BFM Business reported Tuesday that GiFi, which operates 513 stores across France, had ultimately entered judicial restructuring after failing to adapt to changes in the retail market.

Founded in 1981, GiFi is a discount retailer selling a wide range of products, including home decorations, household goods and leisure items. The company employs approximately 6,000 people.

A combination of factors reportedly contributed to the company's financial troubles. One major challenge has been the growing market share of competing Chinese online platforms such as Shein and Temu in France. These companies have rapidly attracted customers through extremely low prices and convenient online shopping systems.

According to research by retail industry publication LSA, Temu's revenue reached €1.4 billion (approximately 2.1174 trillion won) in 2024, up 42% from the previous year, while Shein's revenue rose 34% to €2.3 billion (approximately 3.4786 trillion won).

Competition from Action, a Dutch discount retail chain with approximately 900 stores in France, has also been fierce. Like GiFi, Action sells discounted products, but it has attracted consumers through a marketing strategy that encourages them to buy items they do not necessarily need. The company also introduces 150 new products every week, giving shoppers a reason to return regularly.

"With approximately 3,500 discount stores operating in France, GiFi failed to adapt to the changing market, and that ultimately brought the company down," retail marketing expert Frank Rosenthal said. "Even as advertising channels have become more diverse, GiFi continued to spend more on television advertising than its competitors."

GiFi's deteriorating financial position also contributed to its difficulties. In 2023, the company introduced a new integrated information system to manage communications between stores and warehouses. However, technical problems caused major disruptions, leaving store shelves empty for weeks.

The problems reportedly resulted in losses of €100 million (approximately 150.6 billion won) before they were resolved. As cash flow dried up, GiFi was unable to pay suppliers on time. Suppliers subsequently lost confidence in the company and began demanding payment in advance before shipping goods, creating a vicious cycle.

The Toulouse Commercial Court, which is overseeing GiFi's restructuring proceedings, has ordered a six-month observation period. A hearing to assess changes in the company's financial capacity is scheduled for Jan. 8 next year.

"We will continue managing the company alongside the court-appointed administrators, and our stores will remain open," GiFi's management said. "Our employees are doing everything they can to prepare for the busy year-end shopping season."

                                                                                                              Lim Yu-jung