Blog: Dean BestAmazon strikes deal with French retailer Casino

Dean Best | 28 March 2018

Amazon has announced another deal in the grocery sector, with the e-commerce titan teaming up with French retail giant Casino in and around Paris.

The tie-up sees Amazon add groceries to a Prime Now service first launched in the French capital in 2016.

Amazon is joining forces with Casino's upmarket Monoprix chain, which will offer a range of products - which Casino described as "store brand, fresh products, exclusivities, etc." - through Prime Now.

Frédéric Duval, country manager for Amazon's business in France, said: "This commercial partnership, which further enlarges Prime Now service selection, will enable Amazon Prime customers to benefit from ultra-fast deliveries for their Monoprix orders."

Régis Schultz, Monoprix's chairman, said: "Monoprix further differentiates and increases its unique position as urban omni channel leader. Monoprix will benefit from the most comprehensive grocery delivery service in Paris."

France's largest food retailers have been paying more attention to how they can improve their online services.

In January, Carrefour set out plans to invest EUR2.8bn in the digital sphere over the next five years.

E. Leclerc launched its own delivery service in the French capital earlier this week.

It is the second online partnership Casino has announced in five months. In November, Casino unveiled a tie-up with Ocado, which is to see the French group use the UK online grocer's technology to set up online platforms for its own chains, including Monoprix.

Jean-Charles Naouri, the chairman and CEO of Casino, added: "This commercial partnership is a new milestone in Casino Group strategy to innovate ever more for tomorrow's urban commerce."

Equity analysts covering Casino said the new deal with Amazon was small in scale but was another sign of the French retailer's commitment to digital and put it in a good position should online grocery become more mainstream in the country.

"We see these two deals as being sensible, strategic options on potential change. The scale of either deal is unlikely to make them game changing to the business over the next three to five years. However, should online growth inflect and the channel become more mainstream, Casino now has two agreements in place to respond to change, agreed on, we believe, reasonable terms," HSBC European retail analyst Andrew Porteous said today.

Bruno Monteyne, an analyst covering European food retail for Sanford Bernstein, said the size of the deal between Casino and Amazon was "unlikely to be game changer to French competitive dynamics", pointing to the impact on the UK market (so far) of an existing tie-up between the US behemoth and Morrisons.

"In the UK Amazon Prime Now has been selling Morrisons products for two years and is hardly measurable - 0.07% of UK market and growing at the paltry 50%," Monteyne said.

However, the rise of e-commerce more generally and the inroads it has made in other sectors, combined with the challenges of developing a profitable online food retail service has led to a growing number of deals like those signed by Casino in recent months.

"The benefits for both parties in an alliance between a food retailer and a technology company. For the technology company, the retailer has three things that they need and don't have: one, product supply, in particular to fresh food; two, brand and legitimacy with the consumer in food and fresh food; and, three, locations close to the customer. For the retailer it provides access to capital light growth in fast growing e-commerce market with little risk," Monteyne said.

However, he did hint at one possible risk to a retailer teaming up with Amazon.

"For Monoprix, this seems to be all about 'learning'. In their view, food is still a very small part of Prime Now. However the obvious question is: could that change? How? By partnering with Amazon, they get a prime seat at this table. However in our view, this is a high stakes poker table: are they providing Amazon with all the learning they need, to become a much bigger threat than they are today?"

More to follow

Sectors: Multichannel, Retailers

Companies: Casino

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