After booming 2010 Internet shopping results, the French hypermarché chain tries to reinvent the superstore
PARIS – There isn’t always a link between cause and effect, but there sure are signs of it in 2010 shopping sales. On the one hand, the largest superstores, magnets of mass consumerism since the 1970s, have lost ground. By contrast, e-commerce has witnessed exponential growth.
As of mid-November, FEVAD (France’s e-commerce and digital sales federation) estimated that over the course of 2010, the country’s online business market would surpass 30 billion euros in sales. In 2005, internet-based sales stood at only 8.5 billion euros.
An increasing number of online businesses (73,200, and counting) — and more online shoppers (27.2 million) — are fueling the growth of a sector that began to hit its stride before the global financial crisis. In 2009, the industry posted 26 percent growth, up from 25 percent in 2008. The steepest growth of cyber-shopping is within older demographics, with an increase of 73 percent in new shoppers over the age of 65 and 82 percent among retired people in the last three months alone. In total, the 61 percent of older Internet users who do some shopping online is a figure edging closer to that of the 72.8 percent of French internet users who engage in e-commerce.
Christmas shopping figures seem to confirm this trend. Analysts projected ahead of Christmas that 2010 would be a good year for online businesses. More than 15 million consumers said they wanted to buy their gifts online. For 62 percent of shoppers, their online purchases would amount to 100 euros.
As shopping sites such as eBay, Amazon and PriceMinister watch their sales numbers steadily climb in France, the traditional superstores are facing some sobering statistics. According to Kantar’s mid-year 2010 annual report, Carrefour lost 0.3 percent of market share in 12 months, Géant Casino 0.2 percent while Auchan held its position. It is a tendency that confirmed subsequent findings by the companies themselves – results that showed fewer visits across the board to these stores.
New strategy
Are “locavores,” ecologically minded shoppers who prefer to stock up close to home, a potential game-changer for the megastores, or yet another short-term weakness? Carrefour, the world’s second largest store chain, is betting on the former. Last year, Carrefour decided to break with the traditional model of “everything under one roof” by launching two pilot projects called Carrefour Planet in the Lyon suburbs of Ecully et Vénissieux.
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The premise is simple: in certain areas, the superstore cannot compete even price-wise with specialty stores and online sites. The goal is therefore to concentrate the power of the brick-and-mortar store in specific sectors, often with the aid of name brands – clothing, housewares, beauty with L’Oréal for example, or pop culture with Virgin.
With regards to food, that means innovative efforts towards fresh produce as well as frozen and organic products. It is topped off with new services including eateries, hair dressers and child care within the stores.
A budget of 1.5 billion euros will be invested this year in transforming 500 superstores in Western Europe, 245 of which will become full-fledged Carrefour Planet stores. The year to come will tell us much about whether Carrefour can succeed in reinventing and reinvigorating the superstore.
Read the original article in French