Grocery Retailers in France
While 2014 was a year to forget for store-based retailers in France, grocery retailers witnessed signs of improvement in 2015 and 2016, according to most experts. Firstly, slightly stronger GDP growth in 2015 and 2016, the warm summer weather and the Rugby World Cup in 2015 and the European Football Championships and Olympic Games in 2016 served to support general consumption, notably of drinks and chilled processed food. Next, the end of a decline in sales through discounters was good news for grocery retailers as a whole. Nevertheless, according to some marketers, the general performance of modern grocery retailers was so modest over the 2011-2016 period that operators are now satisfied with sluggish growth and the channel is accustomed to poor progression.
With a 17% value share, Carrefour remained the leading player in grocery retailing in 2016. The company’s strong position stems from the progressive remodelling of outlets under its ageing chain of 8 à Huit convenience stores and the revamp of Carrefour City and Carrefour Express convenience stores. In supermarkets, the company also continued to convert its Shopi outlets into Carrefour Market and Carrefour Contact stores. Finally, Carrefour supermarkets and hypermarkets seem to be enjoying a better image in terms of low prices. However, Carrefour’s sales growth slowed in 2016 due to a weaker performance in the hypermarket channel and the negative “Dia effect”. After being sold by Carrefour to Distribuidora Internacional de Alimentación (Dia), the ED and Dia discounter chains never really made their mark in France and were thus returned to Carrefour in 2014. In 2015, the leading French grocery retailer had begun to transform some of these outlets into small supermarkets instead of retaining them under the discounter format, with disparate results in 2016.
Modern grocery retailers could find life difficult in the short term. In order to offset their sluggish profitability over 2013/2014, many became embroiled in a race to extend the selling space of their existing hypermarkets or transform their supermarkets into hypermarkets. The risk now is a decline in sales and profitability per square metre and the weakening of the “all-in-one and under the same roof? hypermarket model. Such one-stop shopping outlets have always offered the greatest convenience and the widest choice to French consumers but nonetheless could bear the brunt of the cannibalisation from drive-through click-and-collect stores. Two players could particularly pay for this, namely Auchan and Carrefour, being the operators of giant hypermarkets. However, the hypermarket format has not had its last word and will continue to be supported by in-store foodservice corners, the aforementioned Promo C-Où and new merchandising concepts. Hypermarket sales should also continue to be boosted by Leclerc, the most dynamic chain which generally focuses on small and medium outlets in this channel.
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