No. 11
December
2012
Network Support Department
Communications, Planning and Economic Monitoring Sub-Directorate
Economic and Price Monitoring Bureau
The mass food retail sector and economic growth in France
Olympe Tarteret1, Hugo Hanne2
This paper offers an analysis of the position of the mass food retail industry in the
French economy, as well as the effects this sector has on the main aggregates and
domestic economic indicators such as GDP and inflation. We have taken both a
macro- and a microeconomic approach. For practical reasons, we have limited the
scope of our study to the period between 1995 and 2011.
Starting in 2008, the economic crisis brought about a steep decline in sales in mass
food retailers. Around this time, the hypermarket model began to show signs of
weakness. On the other hand, supermarkets held up rather better: turnover in
volume shrank over four successive years, but picked up again in 2011, in line with
rises in food and fuel prices caused by volatility on the international commodity
markets.
There were several reasons for the falloff in sales in mass food retail outlets. These
included the hypermarket model crisis, the rise of hard discount, e-commerce and
drive-through retail, the expansion of stores specialising in appliances and
consumer electronics, the maturation of the retail food sector, as well as the
economic crisis. Starting in 2008, the crisis affected the purchasing power of French
households, primarily through more moderate salary increases as well as job losses
at a time of rising unemployment.
Although it is difficult to quantify the contribution of the mass food retail sector to
France's overall economic growth, there is often a positive correlation between the
two variables. Moreover, the rise in new types of retail outlets (e-commerce, mobile
commerce, drive-through retail, specialised shops) represents an engine for growth
in consumption and thus for economic activity.
1
Student at the Ecole Normale Supérieure at Cachan, intern at the Economic Monitoring and
Pricing Unit (1B), DGCCRF
2
Head of the Economic and Price Monitoring Bureau (1B), DGCCRF
1
1. Retailing and the mass food industry in France: history and definitions
Retail trade, which consists of the purchase, sale and exchange of goods, is made up of
the distribution sector, which covers all activities and transactions for the purpose of
making goods and services available to consumers, including supermarkets and
hypermarkets, which fall within the so-called mass food retail sector.
The origins of the mass food retail sector go back to 1957, with the opening of the first
self-service food store by Edouard Leclerc. The post-war boom years witnessed the
arrival of new patterns of consumption and a model that was gradually adopted by all
industrialised countries.
Edouard Leclerc, creator of the hypermarket and of the movement to defend
consumer purchasing power
Starting from a grocery store in Landerneau in 1949, Edouard Leclerc became the
founder of the association of E. Leclerc distribution centers (ACDLec), a group of
independent retailers using the Leclerc name. His original goal was to reshape society by
overhauling commercial channels with an eye to protecting consumers and defending
their purchasing power. By shortening distribution circuits, Leclerc wanted to
considerably reduce retail prices. Today, the "Mouvement E. Leclerc" is France's secondlargest retailer3.
Starting in the 1960s, two mass food retail models appeared:
- The independent banners, such as Leclerc, Intermarché and Système U. In this
model, each store is independently owned but shares, through its use of the name,
a common philosophy (in the case of Leclerc, a downward pressure on prices as
part of the defence of consumer purchasing power), a commercial approach and a
trading group.
- The non-independent banners, which include Auchan and Carrefour. In this
model, all stores are owned by a single (often family-owned) firm and are
managed in a highly centralised fashion.
Definition of retail trade
According to INSEE, retail trade "consists of selling merchandise in the state that it is
purchased (or after minor transformations), generally to a customer base of private
individuals, regardless of the quantities sold."
The large-scale retail food sector, according to INSEE, "consists of hypermarkets and
large specialist stores".
More generally speaking, it includes hypermarkets, supermarkets, small neighbourhood
grocery shops, hard discount stores and, finally, large retail stores and large specialist
stores.
3
Source: www.e-leclerc.fr
2
Supermarkets and hypermarkets
A supermarket is an establishment for self-service retail sales with more than two-thirds
of its turnover in foodstuffs, and a sales area of between 400 and 2,500 m². These can be
divided into small supermarkets (sales area between 400 and 1,000 m²) and large
supermarkets (sales area between 1,000 and 2,500 m²).
A hypermarket is a self-service retail store deriving more than one-third of its sales from
food and having a sales floor area of 2,500 m² or more.
In France, experts view the mass food retail market as either oligopolistic or competitive.
It is dominated by a small number of large firms, and by an equally small number of
trading groups that act as intermediaries between producers and retailers. A total of five
firms are responsible for 90% of purchases in large retail outlets4. All are owned by major
retailers within parent companies, which tends to bolster the oligopolistic nature of this
market. The trading groups are, for example, Galec (Leclerc), ITM (Intermarché) and
Interdits (Carrefour).
The major food retail firms in France include Carrefour, Auchan, Leclerc, Casino,
Intermarché (Groupe les Mousquetaires) and Système U. These six firms represent 90%
of the market. Other banners include Match and Cora.
Several factors – including the economic situation since 2008, increased competitive
pressure brought about by the Economic Modernisation Act and the arrival of hard
discount stores and e-commerce – have forced the major firms to innovate and to regroup.
Growth in Internet sales, drive-through retailing (which consists of making purchases
online and then picking them up from a site either next to a retail centre or from an
independent warehouse) and the expansion of hard discount chains from other countries
(notably the Lidl and Aldi banners from Germany) mean that traditional retailers are
obliged to overhaul their offer in terms of flexibility and competitiveness.
4
Source: LSA
3
2. The mass food retail sector in France
2.1. Turnover in the mass food retail sector between 2002 and 2011
Turnover (including VAT) in value and volume in mass food retail outlets (2002–
2011)
In
value
In
volume5
Turnover
including tax
(%)
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Large-scale
non-specialist
food
retail
outlets
3.0%
3.8%
1.7%
1.2%
2.0%
3.8%
3.8%
-2.9%
1.3%
3.0%
Supermarkets
3.6%
3.3%
-1.8%
-0.8%
0.6%
3.5%
5.2%
-2.0%
3.2%
4.7%
Hypermarkets
3.0%
4.3%
4.3%
2.8%
3.0%
2.9%
2.8%
-3.3%
-0.2%
1.6%
Large-scale
non-specialist
food
retail
outlets
1.4%
1.9%
0.6%
0.1%
0.5%
2.4%
-0.5%
-0.9%
-0.4%
0.0%
Supermarkets
1.9%
1.0%
-3.4%
-2.6%
-1.5%
2.2%
-0.2%
-0.2%
0.9%
1.1%
Hypermarkets
1.5%
2.6%
3.4%
2.1%
1.9%
2.5%
-0.8%
-1.2%
-1.5%
-0.9%
Source: INSEE, Comptes du commerce 2011, published in 2012. Calculations: DGCCRF
Since 2002, real growth (in volume) was much weaker than nominal growth (in value) in
mass food retail outlets, with the rate of inflation outstripping that of consumer growth .
Between 2002 and 2005, average annual growth of turnover slowed in both value
and volume, falling in value from 3.0% in 2002 and 3.8% in 2003 to a mere 1.2% in
2005, and in volume from 1.4% in 2002 and 1.9% in 2003 to only 0.1% in 2005.
After a sharp upturn in 2007 (+3.8% in value and +2.4% in volume), and following
the 2009 recession in which turnover plummeted (-2.9% in value and -0.9% in volume),
turnover in value recovered starting in 2010. Higher fuel prices (+14.1%) and a rise in
food prices (+1.9%) contributed to this, as did the economic rebound, raising hopes that
the economic and financial crisis was coming to a close. Turnover in volume, after three
years of negative growth, stabilised in 2011.
Overall, supermarkets have fared better than hypermarkets since 2007. Turnover in
hypermarkets in volume terms fell for four straight years, but picked up in 2011 in value
for the reasons cited above (higher prices and a return to economic growth).
Turnover in value is, at a time of positive inflation, stronger than turnover in volume.
This can be seen in the following chart, which shows the logs of turnover indices in value
and in volume in non-specialist predominantly food retail outlets (major food retailers).
5
Growth taking into account consumer price inflation for the period. Turnover in volume is the
turnover in value corrected for inflation.
4
2,05
Log of
des
indicesindices
de chiffre
d'affaires du commerce
de détail
Logs
turnover
in non-specialist
predominantly
food en
retail outlets
magasin non spécialisé à prédominance alimentaire
2
log indice
en valeur
1,95
log indice
en volume
1,9
1,85
1,8
1995
1997
1999
2001
2003
2005
2007
2009
2011
Source: INSEE, 2012. Calculations: DGCCRF
Turnover in the mass food retail sector has risen continuously since 1995, which explains
the growth in this sector.
The curve of the log of the value index is greater than the curve of the log of the volume
index, which indicates that there was an increase in the average price.
Wherever the value index is greater than the volume index, it is partly attributable to a
price effect, but this is not the only cause.
Generally speaking, the difference between the two curves can also be due to price
changes in certain stores but not in others, to a rise in prices or to changes in consumption
– i.e. consumers who prefer other types of food products between two or more periods
and who thus make relatively different purchasing decisions. These substitutions have a
significant impact on prices, since there is no reason that the old and the new products
consumed should have similar or linked prices.
5
2.2. Comparison of GDP and turnover in major food retailers in France (2002–2011)
Mass food retail is a major sector that contributes to wealth creation, but its share of
French GDP varies depending on the time period.
The following comparison has to do with growth in France's GDP – i.e. the market value
of all goods and services produced and value added – and growth in turnover in the mass
food retail sector. Our hypothesis is that the two shift in a relatively parallel manner with
the added value of this sector. Moreover, household consumption, which is an element in
GDP, includes the consumption of households in the mass food retail sector, which is, in
accounting terms, equal or nearly equal to turnover in the sector.
The accounting equation between the economy's resources (GDP) and employment in an
open economy can be described as follows:
GDP + M = C + I + X + (G – T)
GDP is equal to the sum of the final domestic use of goods and services, i.e. final
consumption (C), investment (I) (also referred to as gross fixed capital formation –
GFCF), trade balance (X – M: exports – imports) and the government's budget balance (G
- T: public expenditures and transfers – tax revenues). The positive relation between
growth in consumption and GDP growth can be calculated as follows: ∆ GDP = ∆ C + ∆ I
+ ∆ (X – M) + ∆ (G – T).
From this we can see that the parallel shifts between GDP and turnover in the mass food
retail sector provide proof of the positive contribution of the sector to French GDP.
Comparison of turnover in the mass food retail sector
and French GDP between 2002 and 2011 (%)
in current euros, % change
Turnover
(incl. VAT) of
large-scale
retail food
outlets
10.0%
8.0%
6.0%
4.0%
GDP
2.0%
0.0%
-2.0%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
-4.0%
Source: Macroeconomic data – 2011 GDP and trade accounts, INSEE
6
Growth in turnover in the mass food retail outlets and French GDP (%)
and spreads in percentage points, between 2002 and 2011
In current euros, growth in %
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Turnover (incl. VAT) in large-scale general
food retail stores (GSA)
3.0% 3.8% 1.7% 1.2% 2.0% 3.8% 3.8% -2.9% 1.3% 3.0%
Gross Domestic Product (GDP)
3.2% 2.9% 4.3% 3.8% 4.7% 7.9% 2.5% -2.5% 2.7% 3.1%
Percentage point spread between GDP and GSA 0.2 -0.9 2.6 2.4 2.7 3.1 -1.3 0.4 1.4 0.1
Source: Macroeconomic data – 2011 GDP and commercial accounts, INSEE
Between 2002 and 2007, prior to the subprime crisis and the global recession, GDP grew
more rapidly than turnover in mass food retail stores.
Between 2002 and 2003, turnover and GDP went in opposite directions (from 3.0% to
3.8% for turnover in mass food retail stores and 3.2% to 2.9% for GDP), but between
2003 and 2007, the two evolved in the same direction (growth).
Starting in 2008, GDP growth slowed significantly, due to the financial and economic
crisis that began in the United States and spread to the rest of the world. Since that time,
the French economy has been plagued by weak investment, low domestic demand and
sluggish foreign trade. Turnover in mass food retail stores also reflects the slowdown in
demand.
Between 2008 and 2011, turnover in mass food retail stores and GDP shifted in parallel.
2009 was marked by a very sharp drop in consumption, which had a significant effect on
the mass food retail sector, as turnover fell by 2.9% (household consumption in the mass
food retail sector is equal to turnover in the mass food retail sector).
More specifically, throughout this period, the market share of mass food and non-food
retail stores alike fell in the retail sector. In 2004, 68.1% of retail food turnover was
earned in large-scale retail food stores, whereas in 2010, it was only 66.8%, i.e. 1.3 points
lower. In the non-food retail sector, market share fell from 18.7% to 17%6, which
represents a drop of 1.7 points.
6
Source: Le Commerce en France, 2011, INSEE.
7
Share of turnover net of tax for non-spacialist food retail
stores in 2009
1%
17%
small grocery stores
supermarkets
hypermarkets
58%
23%
General food stores
Others
1%
Source: INSEE, 2012. Calculations: DGCCRF
Please note: INSEE defines other types of stores as follows: specialist stores (foodrelated: butcher shops, delicatessens, bakeries, fish mongers, fruit and vegetable stores,
etc.), fuel, equipment, cultural goods, shoes, clothing, pharmacies, etc.
Source: INSEE, Fiches sectorielles pour le commerce.
2.3. Starting in 2008, the economic crisis brought about a steep decline in turnover
in mass food retailers.
Volume growth rates in turnover in mass food retailers were quite low:
Volume growth rates in turnover in mass food retailers, 2003-2011
2003
2004
2005
2006
2007
2008
2009
2010
2011
Mass food retail outlets
1.9%
0.6%
0.1%
0.5%
2.4%
-0.5%
-0.9%
-0.4%
0.0%
Supermarkets
Hypermarkets
1.0%
2.6%
-3.4%
3.4%
-2.6%
2.1%
-1.5%
1.9%
2.2%
2.5%
-0.2%
-0.8%
-0.2%
-1.2%
0.9%
-1.5%
1.1%
-0.9%
Source: INSEE, Comptes du commerce 2011
Between 2008 and 2010, turnover dropped in mass food retail outlets (i.e. all
supermarkets and hypermarkets), just as they did in hypermarkets, where the falloff in
turnover was even sharper (-0.9% in 2011).
Nevertheless, supermarkets, where turnover fell between 2004 and 2006, held up better
than hypermarkets (+0.9% in 2010 and +1.1% in 2011). Hypermarkets were more
exposed to changes in French consumers' behaviour since they are less specialised in food
sales. On the other hand, supermarkets held on to their customer base, since food budgets
were tight and consumers focusing on food products kept them from being tempted by
other types of products.
The falloff in turnover at hypermarkets can be explained by several factors. These include
the hypermarket model crisis, the expansion of stores specialising in appliances and
consumer electronics, the maturation of the retail food sector, as well as the economic
crisis.
The crisis affected the purchasing power of French households, primarily through more
moderate salary increases as well as job losses.
Only supermarkets saw slight growth in turnover in volume in 2010 and 2011.
8
In 2010, turnover in the retail sector, excluding automobiles and motorcycles, grew by
4% in value, reaching €419 billion. By comparison, turnover in large-scale predominantly
food retail stores came to €181 billion. The turnover in value for supermarkets rose by
3.2%, while that of hypermarkets fell by 0.2%7.
Thus, growth in this sector since 2009 was primarily driven by supermarkets, whose
turnover increased by 4.7% in value in 2011, whereas that of hypermarkets was only
1.6%8.
Overview of the market and of the major banners
Number of stores (hypermarkets and supermarkets) by group in 2011
Group
Hypermarkets
E. Leclerc
485
Carrefour
377
ITM Entreprises
266
Système U
252
Auchan
146
Casino
217
Source: Panorama Tradedimension 2011
Supermarkets
91
1387
1498
695
411
853
Growth in France's mass food retail outlets
2007
2008
2009
2010
Number of
1,526
1,594
1,667
1,745
hypermarkets
Average sales area of
5,573
5,561
5,535
hypermarkets (in square 5,617
metres)
Number of
5,501
5,478
5,437
5,381
supermarkets
Average sales area of
supermarkets (in square 1,256
1,271
1,284
1,288
metres)
Source: Panorama Tradedimension 2011
2011
1,880
5,416
5,591
1,304
3. The role of competition in the growth of the mass food retail sector
3.1. The growth in the number of mass food retail stores and expansion of their sales
areas
We can observe two trends in the mass food retail sector since the 1990s. The number of
stores has increased, and their average sales area has also grown. These trends, however,
should be nuanced. Whereas the fleet of hypermarkets has expanded since 2005, their
average surface area continues to decrease. On the contrary, whereas the fleet of
supermarkets shrank between 2004 and 2010, it increased in 2011 by 210 stores (a 5%
7
Source: La situation du commerce en 2011, INSEE
8
Source: La situation du commerce en 2011, INSEE
9
increase), and the average sales area reached 1,300 m² (an increase of 1.2% between 2010
and 2011, after a 5.9% jump between 2005 and 2011).
This shift in balance from hypermarkets to supermarkets probably contributed to growth
in turnover and to the expansion of this consumption model.
There may be several reasons for higher turnover, including higher sales, higher prices in
existing stores, or the arrival of new stores.
Opening new stores attracts a new clientele, which creates demand and thus additional
turnover for the incoming store. However, it is not certain that the overall effect is the
same, as several other stores may lose customers or even close their doors, which over
time may have a negative effect on competition and price levels. Opening new stores in a
given catchment area also increases competition in this zone, which could result in lower
turnover in some less competitive stores.
A catchment area is the accessibility zone of a store, a mall, a city or a region.
3.2. Expansion of competition
Competition gives consumers the possibility to choose between existing and new stores in
a given catchment area. This increases competitive pressure and leads to rival stores
introducing more aggressive sales and pricing policies and attempting to distinguish
themselves from their competitors.
At the microeconomic level, where consumer gains are balanced against the retail store’s
gains and then added algebraically, the issue is the following: is the growth in sales in the
new store greater than the negative effect of lower prices on turnover? Does the opening
of new stores bring about a net increase in turnover for the various firms or an overall
loss? Does the increase or the creation of earnings in certain stores result in
decreased earnings, or even losses, for other stores? From the store's point of view,
this has an effect on the share of turnover in GDP, but also on employment. From the
consumer's point of view, this has, upon initial examination, an effect on consumption
and thus also on GDP, but the effect on employment may have a retroactive effect on the
consumer who loses his or her job and can no longer consume, hence a negative effect on
GDP (with a probable snowball effect).
It is very difficult to answer this question, since one needs to carry out very precise
comparisons of price changes, number of new stores opened and changes in turnover, all
at a local level. However, local data for the various banners is not available, and it is very
difficult to gather local data on every single price.
Nevertheless, one could assume that if a chain opens a new store it is because there is a
demand and growth potential in the catchment area, since the expansion of the chain's
fleet is no doubt the result of serious strategic discussions.
10
Market shares of France's major large-scale food
retail firms in 2011
4.70%
2.40%
9%
23%
Carrefour
Leclerc
ITM entreprises
10%
Auchan
Casino France
Système U
11%
17%
Lidl
Aldi
13%
Source: Xerfi, Les grandes surfaces alimentaires 2011, Calculations: DGCCRF
In 2011, Carrefour maintained its lead in the large-scale non-specialist predominantly
food retail sector, but lost market share from 2010 (-0.3 percentage points). This is due to
a differentiated pricing policy. On the contrary, the Leclerc model is expanding rapidly,
no doubt due to its policy of lower prices, which is very welcome at a time of crisis. Its
market share increased by 0.5 points in 20119. Leclerc is thus strengthening its position.
Moreover, the expanding popularity of hard discount stores, introduced by the Lidl
Group, is the source of additional competitive pressure, and has led the other firms to
continually lower their prices, which they have done by devoting additional shelf space to
private label products. This domination by a few firms is likely to create a situation of
significant market power vis-à-vis suppliers.
When there is a great deal of competition on the market, firms become price takers.
Atomicity is a key element in perfect competition, the model developed by classical
economists such as Adam Smith, according to which when there is competition, firms
should be like "atoms" in a molecule or in the universe, i.e. numerous and without
individual power. Alone, firms have no power over the market, which partly explains the
competitive situation observed in this particular case. This is why prices can be adjusted
based on supply and demand.
If a firm's prices are too high with respect to its competitors, consumers will not patronise
it and the resulting drop in profits will force it to lower its prices.
On the other hand, when a firm has a monopoly, it becomes a price maker since it can
impose its prices on consumers without fear of price competition. Clearly, the
monopolistic firm must be open to a certain price elasticity to avoid losing customers.
In the mass food retail sector, competition with respect to non-food items between
specialist stores and large food retail outlets offers an explanation for the drop in demand
for these products in hypermarkets. For the same price or less, specialist stores offer
products similar to those found in large retail outlets, and can offer more and better
9
Source: Xerfi 700, Les grandes surfaces alimentaires 2011
11
services since they are specialised. They therefore are in competition with hypermarkets
for these types of products.
4. New consumer trends: e-commerce and drive-through retail
4.1. The growth of e-commerce
In 2011, the French e-commerce market was estimated at €38.7 billion, an increase of
24% over 2010. This figure represents 7.3% of retail purchases in France.
However, online clothing and travel purchases are much greater than purchases of food
products10.
For several years now, consumer habits have been shifting. Shopping trips to large retail
outlets are perceived as chores rather than pleasurable experiences. To combat this, and to
reach more consumers, the sector's leading firms are rolling out new e-commerce-based
strategies such as home sales, click-and-collect and in-store picking.
Under the "click-and-collect" concept, customers select items on the Internet and then
collect their orders from a warehouse. In-store picking involves customers entering the
actual store to collect their purchases, a model that is more appropriate for urban centres.
Today, Internet-based food shopping accounts for less than 1% of the mass food retail
market, but drive-through retail is becoming increasingly popular.
10
Source: study by the Kurt Salmon consulting firm.
12
4.2. Drive-through retail and its impact on mass food retailers
There are several advantages to drive-through retail. Price positioning is identical to
brick-and-mortar stores, and the service is free and quite practical for consumers. In
addition, it allows retailers to move into areas where they were not previously present
without having to occupy large spaces or open new points of sale. Nevertheless, the
selection of location is crucial to the success of this model, and productivity and payroll
costs need to be carefully controlled.
On the other hand, home delivery is a model that never achieved real popularity because
it is billed to the consumer, which raises the price of food shopping and was thus shunned
by consumers.
Nevertheless, in terms of transport costs, home delivery involves the food retailer's
vehicles, whereas drive-through retail means that consumers must use their own vehicles.
This is why individuals tend to choose the drive-through retail point closest to them.
It appears that consumers believe that the cost of using one's own vehicle is lower than
the supplement one pays for home delivery, whereas in reality – given the distance one
needs to travel to reach the collection point – this is not always the case.
In addition, the drive-through retail model was introduced in response to the changing
needs of consumers, and the reasons that consumers change their behaviour are most
often psychological.
Drive-through retail is a very new concept, and it is too early to know if the model will be
profitable and feasible over the long term. Furthermore, studies have not yet shown
whether drive-through retail creates employment in the mass food retail sector or if firms
are merely reallocating production factors.
A 2012 study by the Kantar consultancy revealed that 5.8% of households have already
made a drive-through retail purchase (2.3 million) and that 50% of drive-through
consumers are regular customers.
This model will not, however, eliminate classic store-based consumption methods, since
it represents 30% of consumers' annual expenditures. In terms of consumer profiles, 40%
of drive-through customers are between 40 and 54 years old; the majority are families (25
to 39 years old) with children. Managers represent 22% of customers.
Questions remain whether there is a substitution effect between standard in-store
purchases and those carried out via home delivery or drive-through.
We might also question the overall microeconomic effect – granted, it is a success
with customers, but how do businesses feel about it? Finally, does drive-through
retail actually increase turnover for mass food retail outlets?
There is a substitution effect with the expansion of drive-through retail. With constant
income levels, households must choose between the two modes of consumption, since
they both meet the same need and are thus interchangeable.
Assumptions and scenarios on clauses that could represent gains or losses for mass
food retail outlets following the introduction of drive-through retail
13
Gains -
The drop in visits to hypermarkets is more than made up for by the new client base
that gave rise to the drive-through model
- Drive-through customers also continue to make purchases in stores --> overall
increase in turnover
- Drive-through outlets help retain customers' loyalty or can help steer them back to
the brand
- Drive-through is addressed to different segments of the population than those who
visit stores
- The value of the average shopping cart is higher for drive-through than for in-store
(€69)
- The cost of installing and operating a drive-through service is lower than what it
brings in
- The cost of installing and operating a drive-through service makes these types of
purchases more profitable than when the customer visits a hypermarket to make
purchases
Losses - The drop in visits to hypermarkets is not made up for by the client base of drivethrough outlets
- The two sales models encroach on each other, and an increase in customers for one
means a loss of customers for the other. This may occur if both models target the
same segments of the population
- The cost of installing and operating a drive-through service is higher than what it
brings in
- The cost of installing and operating a drive-through service makes these types of
purchases less profitable than when the customer visits a hypermarket to make
purchases
Source: authors, DGCCRF study, September 2012
Drive-through outlets earned an estimated €500 million in turnover in 2010, a figure that
is expected to top €3.5 billion in 2015. This, according to the Salmon consultancy, marks
the beginning of a revolution in the retail food industry. However, since the 2011
turnover from mass food retail outlets was estimated at €178.7 billion (INSEE), drivethrough retail represents less than 0.3% of these outlets' earnings, which is a rather
negligible share.
Nevertheless, we still do not have enough statistics to assess the precise share of drivethrough retail in the earnings of mass food retail outlets, and in the activity of the major
groups.
Today, drive-through retail outlets may seem like an important means of reinvigorating
the mass retail food industry by meeting new needs of households, and as a new source of
income for the sector's firms.
The banners are already positioned in these new markets, including Auchan with its
Chronodrive concept, Leclerc with its click-and-collect model and the in-store picking
service offered by Intermarché and Système U.
Leclerc has a goal of 500 drive-through outlets by 201511, a huge increase over the 65
outlets it had at the end of 2010. Carrefour included the expansion of the drive-through
model among its objectives, and the other major food retail firms are following suit.
11
Source: Xerfi 700, Les grandes surfaces alimentaires 2011
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Given the success encountered in this sector, the best locations will be taken by those
quickest off the mark.
4.3. Models for winning back hypermarket customers: e-commerce, quality private
label products, low prices, location, re-sizing, mobile commerce, etc.
Along with drive-through retail, Auchan and Carrefour are promoting e-commerce
through websites such as Auchandirect and Ooshop. Leclerc, on the other hand, has
decided to focus its efforts on drive-through retail.
In this way, the three groups are expanding their brands, through both higher-quality
products (via innovation in private labelling) and by aggressively moving into the hard
discount segment in order to keep up a low-price image.
They are rethinking the large-scale, out-of-town hypermarket, which is coming under
increasing competition from both hard discount and neighbourhood stores.
Each group is adopting its strategy to fall into step with the new expectations of
consumers, who are turning to neighbourhood outlets and stores that are on a more
"human scale". Casino has shown itself to be a pragmatic player in this respect. With the
takeover of Monoprix, it is seeking to expand its influence on the neighbourhood market
by spotlighting the advantages of horizontal integration.
Finally, there is the arrival of mobile commerce, although it is still early days. Purchasing
via smart phones and tablets is a growing phenomenon and could prove to be a promising
way for brands to renew their image.
The Economic and Price Monitoring Bureau (1B) of the DGCCRF (Directorate General for
Competition Policy, Consumer Affairs and Fraud Control) establishes and introduces measures to
bolster economic transparency of the manufacturing and marketing processes for goods and
services. This means that it is able to base its analyses in this area on objective and common
factors. Its work involves price analysis and monitoring formation mechanisms for prices and
margins, in conjunction with other relevant monitoring centres. It also produces economic studies
for the Directorate and is tasked with its in-house documentation and economic monitoring
responsibilities. Lastly, it carries out statistical analyses of the consumer complaints register.
Address:
Ministère de l'économie et des finances - DGCCRF
Bureau de la veille économique et des prix (1B)
Teledoc 052
59 boulevard Vincent Auriol
75703 Paris Cedex 13
France
E-mail: Bureau-1B @dgccrf.finances.gouv.fr
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