I would like to take the opportunity of this writing to wish you a very good 2019.
I am sure that the economic trend and lessons taken from the previous year about managing inflation will be favorable factors to the success of your plans and different ventures.
I had the opportunity to travel to France during the holidays. During my stay, I visited a lot of supermarkets and hypermarkets, two favorite French retail formats.
We have been hearing a lot of news about the degradation of the French economy and the action and impact of the gilets jaunes on the business during year end. This is probably true but I also saw a lot of customers in the stores buying profusely for the celebrations period.
I was impressed by the volume of merchandise available, the quality of the displays and the modernity of the concepts. Stores are not driven by a real estate approach, selling space to suppliers. You hardly find a brand signage, it is very clear that the store belongs to the retailer.
The goal which is selling more and more items to more and more customers is extremely felt in the outlets. The economic model is mainly based on volume sold. Quantity on display is not questioned and the depth of the range is not compromised, proposing a wide selection of regional products. Promotional displays for every end cap are massive with a large yellow signage, very often hand written. Dedicated discounts for loyal customers are available for each category.
Fresh displays are also impressive through volume, range, display quality as well as freshness of the products that transpires everywhere in the area. Stores are obviously equipped to maintain the cold chain. Street market ambiance is being preserved. We commonly say that we buy with our eyes, this will be held particularly true in the Fish, Delicatessen and Cheese sections. Similarly, you can hardly resist to the smell of the bread and “viennoiseries” section. You will also be amazed by the wide offering of pre-packed fresh food, so convenient for every family size.
Services proposed by retailers are convenience oriented. The “drive” concept (your order and pick goods) is largely developed. Customers are also now used to self-scanning options. Electronic labels are on every shelf, guaranteeing price accuracy.
We could argue that the French food culture is unique, the climate very favorable to Freshness, the hypermarket concept that started in 1960 is already mature: these are all true.
However I see this concept as an opportunity for inspiration in many ways. It starts with the principle of the concept: complete control approach by the retailer instead of being real estate oriented or vendor oriented, risk taken on the stock and promotions, commitment to promote regional sourcing, creating a sense of authenticity for the customers, specifically but not limited to the fresh sections. True and large benefits granted to loyalty card holders.
Advanced technology is only brought to enhance the customer’s shopping experience. Most of the solutions for faster payment are based on trust. Are retailers ready to give it to customers? Should the focus be on the process to progressively educate the customers?
With the online business development, physical stores are actually challenged. There is a trend to reduce big boxes assuming that a part of the business is and will be taken online. Convenience stores or smaller grocery formats are also seen as a threat. But in reality, they catapulted to growth as they occupied the space not covered by larger formats.
In fact, I see the size concern differently for the food retail business, particularly in countries wherein the size has been commonly compromised. Based on my experience, larger size stores with well-chosen locations provide retailers the opportunity to entirely express their commercial concept, and most often become the flagship(s) of the retail chain with a very superior sales level and an enviable profitability over time.
This might be perceived as counter trend but the “applicability” of the trend is a question of maturity in the retail business. Let us take this new year as a chance to seize the true opportunities awaiting us in the retail industry!