New alliances for the grocery sector
For the French market, the past year has seen a rapid increase in the number of partnerships between retailers and pure online players. From the collaboration of Monoprix and Amazon, Casino and Ocado to Carrefour’s alliances with Glovo and Google; the list goes on. But what is behind this new style of trading relationship within the grocery sector?
As well as stocking grocery products on their sites, many online players have placed lockers at the sites of retailers, whereby consumers can collect products that they have ordered online. Regardless of if they are grocery related or not. With the likes of Casino, Match, E.Leclerc, Intermarché, and G20 all participating in this new system, it appears to be quickly changing the appearance of the market.
For the retailers, this is bringing an influx of new consumers to their stores, but with purchases already made online, the challenge is directing this influx into stores to purchase goods. So far there has been no evidence to support that this has been successful. Currently, the lockers are simply serving as a convenient collection point for online players. Nevertheless, being partnered with giant companies such as Amazon has been favourable for the stock market price of these retailers.
In contrast, pure online players are offering retailers new expertise in terms of data management, client interface, artificial intelligence (AI) and so on. Retailers already hold an abundance of data surrounding consumer purchasing habits (predominantly collected from customer loyalty schemes), but do not yet have the expertise to utilise it effectively. The technological advances given by online players contribute to quick and precise delivery times, personalised product recommendations and seamless online transactions for consumers.
The proof of this can be seen with Monoprix and Naturalia – both subsidiaries of CASINO – who now offer delivery of 2000 products to Paris and its surrounding areas in less than two hours. All thanks to their partnerships with Amazon. This type of activity is helping retailers to respond to the needs and expectations of customers, whilst increasing their competitiveness by diversifying their activities and at the same time helping to drive brand loyalty. So, what’s in it for the online players?
As with any online marketplace, a commission will be received by the online partner from the sales of goods on their sites, generating profit for them whilst reducing it for retailers. As food shopping accounts for almost 50% of consumer spending in developed countries, access to this market provides online players with steady, continuous revenue. Knowledge surrounding consumers and their purchasing habits, products and the associated logistics of supplying them is also transferred to online players, broadening their scope of expertise without taking any risks.
With non-food retailers now following in the footsteps of these brands (e.g. Boulanger with Amazon), retailers are playing a dangerous game as they risk supporting the creation of what could become unstoppable competitors.
SOURCES: LSA Conso, European Supermarket Magazine, Carrefour.com