Home to three of the largest global retailers, France’s grocery retail market remains one of the most innovative in Europe. Ahead of SIAL 2018, Jon Wright, head of retail insight at IGD, explores the trends shaping France’s grocery retail market. This article first appeared in ESM Issue 5 2018.
French retailers are introducing new store formats and designs while remaining at the forefront of developing online and fulfilment offers, while organic ranges are also becoming more of a focus. Given these developments, France is a country that requires further investigation, both today and on an ongoing basis.
Format Evolution Continues Apace
Hypermarkets remain a core format for most retailers in France. Investment is still happening, but this lighter-touch spending is aimed at evolution, rather than revolution. Auchan and Carrefour are set to launch new designs for their largest stores in 2018 and 2019, while Casino is focusing on adding Cdiscount corners to Géant, rather than overhauling the design of its stores.
On top of this, retailers continue to launch new and interesting store formats and concepts as they look to win in this competitive market. Intermarché has announced that it will open a new store format this autumn, tailored to the needs of elderly shoppers. The concept, called BienChezMoi, will measure about 200 square metres and bring together products and services for its older shoppers.
Elsewhere, Casino-owned discount chain Leader Price recently launched its new concept, dubbed ‘Next’, with trial stores enjoying an increase in turnover of up to 20%. The updated design, which will be rolled out to 120 stores in France by the end of 2018, has an upmarket look and feel, and incorporates dedicated areas for bakery, wine and pre-prepared meals. The store’s product ranges have also been expanded with more organic, local and fresh products.
Casino’s Franprix banner has also launched two stores called Le Drugstore Parisien, in conjunction with L’Oréal. The product range is split across three areas: make-up and beauty; hygiene and personal care; and healthy food and over-the-counter pharmaceutical products.
Organic Going Mainstream
One area in which store evolution has been quickest is the growing presence of organic and healthy ranges. In 2017, Franprix launched a new concept under the Franprix Noé brand, focusing on gourmet, organic and local produce. The store offers shoppers fresh organic juices and coffee to take away or to consume on site, as well as cheese and meat counters, freshly baked bread, pastries and pies.
Retailers in France are becoming more interested in organic products, with consumption tripling in the country in the last decade. This trend is set to continue, with the French Agency for the Development and Promotion of Organic Agriculture forecasting that the market will almost double by 2020.
One retailer aiming to make the most of this trend is Carrefour. As part of its 2022 Transformation Plan, the retailer is targeting €5 billion in sales of organic products in 2022. Carrefour will add Bio private-label ranges across all stores, with dedicated space across categories to Bio products.
In addition, at its Montesson hypermarket, an organic-focused ‘shop-in-shop’ has been created by the placement of three aisles close to each other, so shoppers can find everything they want in one place. The aisles flow directly into an ‘organic’ area in the fresh department.
Carrefour has also opened a new store under its City banner, which is ‘dedicated to well-being and everything that’s good and beautiful’, and it has acquired an eight-store organic specialist based in south-west France, called So.bio.
Other developments include Intermarché’s parent organisation taking a minority stake in Les Comptoirs de la Bio, which operates 141 stores and generated sales of €220 million in 2016. Organic-focused stores have also been launched by Auchan under the Auchan Bio brand, while Leclerc has also said that it wants to open 200 stores dedicated to organic products.
Online Solutions Developing Quickly
Stores are evolving quickly, with shopper demands being one reason and the expansive roll-out of online and digital solutions another. Retailers in France have been at the forefront of grocery e-commerce, with IGD research showing that the channel accounts for over 5% of total sales in 2018, but the pace of growth could quicken in the short term, given renewed impetus from several retailers.
Amazon’s partnership with Casino-owned Monoprix has enabled it to launch Prime Now in the country. Prime Now customers will be able to order a range of groceries sourced by Monoprix, including private-label products. Set to be launched later in 2018 for shoppers in Paris and the surrounding region, the service will add significant competition to the city.
Separately, Casino has also signed an agreement with Ocado to use its Smart Platform, to develop its online business. By partnering with Ocado, Monoprix can use the Smart Platform to deliver bigger baskets than it already does.
Look To The Capital
Paris is increasingly looking like the city to watch for companies wondering how e-commerce could develop in the medium term, given the focus of many retailers there.
Leclerc has launched a food delivery service in Paris, and despite the added costs thereof, the retailer plans to maintain prices that are 15%-20% below those of competitors. The service, called E.Leclerc Chez Moi, will be launched initially as a trial in specific neighbourhoods before being extended across the city over the next three years.
The service could lead to the addition of many collection points across Paris. To keep costs as low as possible, Leclerc will use the technology it has developed for its Drive stores in France. Orders will be prepared centrally and then delivered to city centre Drive points, which then relay orders onwards.
French retailers are also adding Pedestrian Drive outlets, enabling shoppers to order online and collect their orders at click-and-collect counters in neighbourhood-based stores. The initiative mirrors steps taken by Cora and Leclerc, and it has encouraged others to increase the pace of roll-out.
The solutions enable retailers to offer a hypermarket-like proposition to city centre shoppers. While this service doesn’t meet shoppers’ needs in an emergency, the stores will provide strong competition for supermarkets and large convenience stores that meet shoppers’ weekly needs.
Retailer Alliances Evolve Further
Another reason to keep a close eye on France is its retailers’ willingness to work together to improve buying and sourcing. At a local level, Carrefour and Système U have entered a purchasing partnership, while Francap Distribution has announced that Intermarché Alimentaire International will conduct the buying of brands from January 2019 on its behalf. These add to several existing agreements between retailers in the country.
Adding further scale to these agreements, Auchan, Casino, Metro and the Schiever Group have announced the formation of various purchasing alliances. These initiatives have been brought together under the name Horizon, which will see the four companies coordinate across three areas in France and globally.
Most recently, Carrefour agreed a strategic alliance with UK-based Tesco, which will become operational in October 2018 and focus on three areas: strategic relationships with global suppliers, the joint purchasing of own-brand products, and the joint purchasing of goods not for resale.
These alliances are set to support retailers’ aims to compete in the market, while also helping them enhance their offers with new products and private labels, and improve the quality of items by working with others.
Retailers in France will continue to compete forcefully and evolve their offers to put more focus on organic and healthy ranges, while driving format developments even further in the short term. With this in mind, if you’re looking for inspiration on innovative store concepts and fulfilment options, France remains a great country to visit.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.