The ongoing evolution of grocery retailing in France poses many questions, reports Jonathan Thomas
After years of stagnant growth, the French economy now appears to have turned the corner, with annual growth increasing from 1.2% to 1.4% in 2017. The election of Emmanuel Macron in 2017 appears to have had a positive effect upon the country, having contributed towards an upturn in business confidence (and hence investment), with reforms to the labor market having been passed. The French government remains committed towards measures such as restrictions on public spending and cutting taxes – for reasons such as these, domestic consumption is growing and unemployment levels have begun to fall.
The Retail Grocery Market
Food currently accounts for around 20% of overall consumer expenditure in France, although this figure has fallen from over a third (35%) in the early 1960s. Nevertheless, the country has one of Europe’s largest retail grocery markets. Leclerc has recently overtaken Carrefour as the market leader – in 2017, these two companies accounted for a combined 41% of overall sales. Other leading grocery retailers in France include Intermarche, Casino, Systeme U and Auchan.
The presence of hard discount chains such as Lidl and Aldi remains more modest compared with elsewhere in Western Europe, although they continue to grow and the market has also witnessed the arrival of Costco from the US. In recent years, many of the leading operators have chosen to invest in smaller convenience-style stores in city and urban locations. Much of this has been driven by the increased tendency of shoppers (especially younger consumers) to undertake more frequent but smaller shopping trips. Specialist frozen food stores are also becoming progressively more popular with many French consumers.
One feature of the market at present is the growing number of partnerships being struck between former rivals. One of the most recent took place in July 2018, when Carrefour announced a joint tie-up with Tesco to purchase own-label goods via a collaborative arrangement. Carrefour has also formed a purchasing alliance with Systeme U, whilst Casino has entered into a global strategic partnership with Auchan, covering purchasing of both foods and non-foods.
Also worthy of note is the growing presence of technological and e-commerce firms within the industry. Carrefour has entered into partnership with Google France, which entails opening a joint innovation laboratory in Paris and is intended to enable consumers to shop via Google interfaces by 2019. Meanwhile, Casino has entered into partnership with Amazon to supply Monoprix groceries via e-commerce in the Paris area, leading to speculation that Amazon plans to launch a full-scale delivery service in France as part of its plan to expand within the retail grocery industry. It has run Amazon Prime Now in the Paris locality since 2016, with ‘click and drive’ services proving increasingly popular with French consumers.
You can find the full article on this topic in the September-October print issue of Frozen Food Europe.
