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Five years into the global economic downturn and price remains a key word for French consumers. According to a recent study, some 80% of French consumers compare prices before purchasing non-grocery items, while for groceries some 42% use price comparison engines to determine the cheapest retailer. Grocery retailers have therefore started a price war both in stores and through their communication campaigns. Hypermarkets, the most dominant format in French grocery retailing, have adapted their strategies over the years, aiming to attract consumers through their widespread presence and strong promotion of lowest price guarantees on private label and national brands. Some retailers, such as Simply Market (Auchan Group SA) and Géant Casino (Casino Guichard-Perrachon SA), even reimburse their customers up to 10 times if they can find the same products cheaper in other stores.
France leads online grocery retail thanks to the rapid development of order-and-collect services in the country. Grocery home delivery remains marginal in France due to high delivery charges, thus encouraging consumers to instead collect their shopping themselves. Order-and-collect services, including both click-and-collect and drive-through, are free of charge while also allowing consumers to benefit from hypermarket prices. Many hypermarkets offer click-and-collect facilities whereby consumers order their groceries online and collect them from a dedicated counter in a hypermarket. However, French grocers have also pioneered a parallel system in the form of a drive-through, whereby consumers can stay in their car while their groceries are loaded into their boot.
While French consumers have been purchasing fewer luxury goods in recent years, the luxury goods market in France continues to nevertheless post 2% value growth thanks to tourist purchases. Visitors from Asia and China in particular have had a significant impact on the French luxury goods market. As stated by a travel agency in Shanghai, “Most Chinese tourists consider shopping for luxury goods the main purpose of a trip to France”. That said, retailers point to a slowdown in the number of visits from Chinese tourists in 2013, consequently hampering the growth of the luxury goods market in France.
Following the rapid growth of discount parapharmacies in France, competition has intensified in recent years within the chemists/pharmacies and parapharmacies/drugstores channels in the country. Independent pharmacies are having to adapt their strategies in order to remain competitive, thus resulting in a number of them choosing to work as a group in order to benefit from bulk buying and offer the best prices to consumers as well as save on communication costs. Compared to traditional pharmacies, discount formats have a limited product offer, although they do benefit from private label lines and also reach a wider consumer base thanks to their online presence. Discount formats are expected to continue to gain share from traditional pharmacies and parapharmacies over the 2013-2018 period.
With a 5% value share of overall internet retailing in 2013, m-commerce remains limited, although some categories such as clothing and footwear are posting significant sales growth via mobiles or tablets thanks particularly to ‘flash sales’, upon which consumers have to act quickly. There are over 19 million smartphone users in France and this number continues to rise, although studies show that in France most m-commerce sales are generated via tablets, which have a lower penetration rate in households than smartphones. As shopping through mobile devices becomes increasingly popular, value sales through smartphones and tablets are expected to triple by 2016, providing huge opportunities for retailers offering this facility.