France is famous for its culinary expertise and love of food, but what is its grocery retail sector like, and what type of products are on offer? Bruce Hoggard provides an overview of the sector and his own observations from visits to several different Paris grocery stores. He also has tips for exporters looking for a foothold in the French market.
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France, with more than 61 million inhabitants, is the world’s fourth-largest economy in terms of its Gross Domestic Product and its people have a love affair with their food. This by itself is not unique, as similar traits exist in countries such as Singapore and Italy; however, it is several of the choices of foods that may make people rather queasy.
France is best described as Paris and then the rest of the country as there is a distinct divide. Paris is the “centre” where people try new and innovative products while the rest of France tends to shun new trends and innovation. This may actually be a trait recognisable in all rural regions as it is similar in the rural areas of Canada, China and Russia.
The French food industry, at €136bn (US$180.6bn), is the country’s leading industrial sector ahead of automobiles and chemicals. It is the largest in Europe ahead of Germany at €128bn and the second-largest in the world behind the United States. France is also the largest exporter of processed food products to the world, exporting an annual €28.6bn. Between 1980 and 2003 the food industry’s turnover increased by 155% moving from €53.4bn to €136bn and exports have increased four-fold.
In the fight to combat obesity, the French government has recently enacted new laws prohibiting vending machines in schools. It has also taken up the fight against salt, sugar and fat and has stricter restrictions on additives and colorants than the rest of Europe.
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By GlobalDataChanging eating patterns
Consumers are also driving new trends. Exotic foods are growing in popularity and there is less time for lunch, as many offices no longer close from midday until 2pm. The increased number of woman working outside the home (45% of working population) is also contributing to eating and food preparation trends. These trends offer convenience and timesaving, issues being demanded and rewarded, and include an increased frequency of eating out or using catering services. Greater urbanisation and ageing, a common occurrence in most developed countries, favours ready-to-eat meals and catering. Teenagers, not just in France, seem to prefer fastfood, ethnic food and/or snack food. The interesting relationship is that eating habits are more common across age demographics than cultural similarities, so teens are more apt to enjoy the types of foods worldwide.
With eating patterns changing, an increasing number of French people do not respect the traditional three meals a day. They are now eating more frequently and in smaller quantities. This does not mean the French are enjoying any less their love affair with food; it means they are also finding new ways to enjoy the pleasure and tradition, while being more concerned about the environment, ethics, safety and health.
The French consumer also has less loyalty than its European neighbours, the UK and Germany. With 23% market share for private labels versus 42% for the UK, French consumers are more interested in price and the convenience of store location.
In recent years, the problems plaguing the meat industry have affected the entire food industry. Consumers are demanding more accountability in food safety and traceability. Recently the French government released a “how to eat healthily” booklet aimed at children from six to twelve years of age. With this initiative and the removal of vending machines, new opportunities have presented themselves for food companies. Schools are now looking for healthy alternatives and health products to replace the products restricted from vending machines. The demand for healthy safe food is being spurred along by another important trend and expectation. Consumers are expecting quality recipes, selected ingredients and respect of the traditional production process, all hallmarks of nostalgia.
Shopping scene
The retail sector in France is concentrated, with six major retail buying groups controlling 95% of the market and each retail buying group managing several different store types. These store types make up several types of distribution channels catering to the diverse price and quality expectations of the French consumer. The main divisions are based on store size and product selection.
There are approximately 1,260 hypermarkets holding 51.8% of the retail market share in France. The stores in this category tend to be larger than 2,500m². However, a 1996 law restricting the further growth of these types of stores in France has halted any further development. The current government legislation supports neighbourhood convenience stores. These have grown to approximately 6,615 stores (1.3% market share) and are less than 400m² in size.
Conventional supermarkets with 5,800 stores and 35% market share are the second largest grocery retail type in France. The outlets tend to be greater than 400m². However, the fastest growing retailers are the hard discounters, also known as bulk warehouse stores, including Aldi (German: 584 stores), Lidl (German: 1,116 stores) and ED (Carrefour: 588 stores). With 3,394 stores in this category and 12% market share, it is the fastest growing sector. Much of this growth is coming in downtown Paris, where the limited space available lends itself to the smaller-sized stores.
Overall trends seem to indicate a decline in the hypermarket sector and increased usage of supermarkets, convenience stores and hard discounters. Further price pressures from the hard discounters have also meant hypermarkets have launched their own label foods and value line ranges of products in order to maintain their price competitiveness.
In the battle to win customers, Carrefour is the current market leader, with a 26.9% market share and 216 Hyperstores, 1005 Champion supermarkets, 588 Europa Discount stores {ED} and 1550 convenience stores under the Shoppi, 8a huit, or Marche+ banners. In second place is Intermarché with a 14.5% market share and 1535 supermarkets, 307 Netto hard discounter outlets and 500 Ecomarché convenience stores.
Close behind in third and fourth places are the Auchan Group and Casino. Auchan has a 13.2% market share, distributing products through 123 Auchan hypermarkets and 382 Atac supermarkets. Casino has a 12.9% market share and operates 117 Géant hypermarkets, 334 Casino supermarkets, 370 Leader Price hard discounter stores, 584 Franprix stores, and more than 4,000 Eco Service, Express and Petit Casino convenience stores.
Retailers develop own-label ranges
The own label sector in France, at 23%, is developing, although it is still light years behind the UK and Germany. The own label can be categorised according to price range.
For premium and theme own labels (regional specialties, ethnic, organic, healthy-eating), innovation and quality come first. Retailers look for real manufacturing expertise such as ethnic cuisine, healthy-eating products.
Core own label ranges aim to compete with national brands and are priced at around 25% less while Value line own label products, developed in France since 2000 and particularly active, aim to compete directly with the hard discounters. These products are priced at a minimum of 50% less than brand products.
Own label ranges are becoming increasingly innovative in an effort by retailers to compete with national brands and gain consumer loyalty by providing a recognisable difference.
In the hard discounter sector, Lidl is the market leader with 1116 stores, followed by ED with 588 locations, and then Aldi with 584 stores. The final big player in the hard discount category is Leader Price with 370 locations. One good way to get a feel for the different French retail banners is to visit their stores. The following section contains an overview of a number of grocery retail outlets, observed during a recent visit to Paris.
Auchan
The Auchan store, at 26 Avenue General de Gaulle, had 52 checkouts on each of two floors for a total of 104 cashiers. Its own deep discounter brands were recognisable as they had a green thumb pointing upwards. This brand was the cheapest in the store and designed to compete with Aldi and Lidl.
The special offer of the day, stacked at the entrance in huge displays, was duck (canard) packaged in either glass containers or tins. Considered a favourite food, the display was receiving a tremendous amount of attention from shoppers.
The fish market within the store was truly impressive with the counter top running at least 25 metres in length. On display was a large assortment of fresh seafood, including perch from Tanzania and Uganda, shrimp from Brazil, salmon from Norway and Scotland, squid and octopus, and at least another 40 to 50 varieties of seafood.
The cheese, produce, juice and dairy sections also offered shelves and shelves of selection. It was easy to see why Auchan is noted for its product selection as almost all food categories were well represented with choice.
Several interesting comparisons to North America were also noted within the store. The egg section, unlike in Canada, was almost 95% brown eggs and they were not refrigerated. The opposite is true in Canada where it is predominantly white eggs on display and they are in coolers.
The milk was predominately (95%) UHT (ultra-high temperature) and displayed on the shelves. In contrast, 99% of the milk in Canada would be displayed in coolers and be heat pasteurised.
In the frozen food section, there were also numerous pizza choices. However, the “regular” pizzas and the thicker crusted “north American” style pizzas were particularly noticeable, given the thickness of the box..
Regarding prices, in many cases they were cheaper than the equivalent products in Germany and the UK as well as in North America. This was surprising only in that in the restaurants and small cafés in Paris the prices were twice to four times as high.
Lafayette
This store, located at 40 Boulevard Haussman, is similar to Harrods in England. To judge by sartorial appearances, the clientele was definitely high-end. The store also had its own “sushi bar” and up-market restaurant. This was the first store with American products in any quantity and they were stocked in an American section within the store. The store also had a respectable assortment of UK and other foreign products.
Fauchon
Started in 1886, this store, at 26 Place Madeleine, is very much like Harrods as well, but as a private label-only food store with tremendous variety, selection and range. This store was also the first to offer different and unique jam varieties. These included: apricot with jasmine flower, pumpkin and vanilla rum, and peach with Szechwan pepper. Other flavours included St Nicholas (pears, clementines, oranges and lemon) and Christmas (cinnamon and ginger, pumpkin and orange). They had a special on at this time that, for France, is unique given that it usually only has “sales” twice a year.
As a price comparison the cost of a 425ml can of cream of tomato soup was €5.50 versus the equivalent Campbell’s product in Lafayette selling at €2.70.
Hediard
Founded in 1854 this store is a stone’s throw from Fauchon, at 21 Place Madeleine, and has an understated elegance and old-world class. The perception is that it is smaller and has less selection than Fauchon, but part of this is due to the physical layouts of the two establishments. The other part is that they have a greater selection in several other areas such as tea and coffee.
They too have all private labelled products and an exotic selection of blends and stand-alone jams. Flavours included orange tree petal jelly, Jasmin petal jelly and violet petal jelly. The store also had 22 types of fruit turned into candied fruit and on display. Just looking at them made your teeth ache, but they were delicious.
A unique item in this store was a new way to serve and enjoy champagne. Four small 20ml bottles of champagne were packaged in a specially designed and decorated yellow paint can along with a special funnel that allowed you to drink each of the bottles directly without glasses. The ultimate “on-the-go” party container.
La Grande Epicerie de Paris
The strength of this store, located at 38 rue de Sevres, was more to the takeaway deli style as there were more than 50 ready-to-eat items in single packages ready to be consumed. However, it did have a large selection of groceries, but was more a daily visit type of store with upscale products and selection. The layout and style of cashiers and the lack of shopping carts would make it near impossible to buy a large quantity of groceries at any one time. The store had items from Lafayette, Fauchon, Hediard and Maxims as well as the standard grocery type products. Products from Kraft also made an appearance for the first time.
These represent just a brief overview as there are also numerous smaller stores such as Monoprix and Franprix where the average person does their daily shopping. In fact, Monoprix with its 295 supermarkets and a growing number of Daily Mono stores throughout Paris and France is becoming the leading choice with reasonable prices and, depending on location, a fair selection of products. Casino’s Leader Price hard discount banner and Franprix with 4,000 stores were also reasonable and, given the smaller size of the facilities, on almost every block.
In search of something new
In closing, companies seeking to enter the French market should remember that every buyer and retailer is looking for the next new “hit” product, something really new and different, not just another cosmetic change. The products will need to be adapted to and packaged specifically for the French market, this being true for most markets.
The potential new and probable winners in the French food market will fit into the following growing and popular categories:
- Ready-to-eat meals, where all that is needed is to warm the product up and serve it;
- New frozen foods based on old recipes and home cooked meals;
- Ethnic and exotic foods, with the leaders being from Asia and Latin America;
- Products quickly and easily eaten everywhere for the person on the go;
- Natural and safe products with labelling that reassures the consumer about the product’s safety;
- Foods grown organically or in controlled settings.
