Distribution

What will work in retail stores tomorrow

Published on by SIAL Paris - updated on

To find out about the growing trends in this ever so crucial sector, the SIAL newsletter has a complete panorama for you with plenty of food for thought... Interview with an expert and analysis from the Nielsen Consultancy to help you fill your basket of good ideas. 

After location, its preference that counts

Interview with our Mass Retail expert, Olivier Dauvers

Olivier Dauvers
  • Olivier, why do innovations take time to penetrate the retail sector?

OD: Quite simply because food is not a sector where audacity is quickly rewarded. For consumers, habits are deeply rooted. It is difficult for them to change. This is especially true for online shopping where customer behaviour is often very routine. You have to be patient...

  • On the subject of online shopping, what new trends are emerging?

OD: Firstly, when we talk about online shopping, there are two models. There’s the home delivery model which works very well in the United Kingdom and the United States for example, but which has been slow to take off in many other Western countries and the click and collect model which has been a great success in France. How can we explain this difference? In France, and more generally in Latin countries, we don’t give services a financial value... Delivery is always described as “free” but the cost is inevitably passed on to consumers in one way or another.

  • Given this success, would you say that online shopping could replace traditional food shopping over time?

OD: Absolutely not and for a specific cultural reason... We need a buying experience with food. Not forgetting the price-weight-volume ratio which reduces the convenience of home delivery for some products like bottles of mineral water.

  • Between online shopping which is having trouble getting going and the "flatness” of certain traditional markets, the retail sector seems somewhat frozen...

OD: You are right in some ways... Western countries, Japan and South Korea have reached market maturity. Which means what? Well, a price war and a highly competitive market with even more square feet for customers. This product over-capacity is a godsend for customers and, let’s not mince our words, a real challenge for supermarkets. One positive point: there are many channels for moving forward...

  • You must have a few tips for us...

OD: Of course! For decades, you needed to have your store in the right location to be successful. There was only one rule: location, location, location! But today that’s no longer the case! The key element is preference. Why do they prefer me and my store? And what are the catalysts for consumer preference?

  • Customers are so very varied... And several studies have revealed that they are ready to spend more money per calorie...

OD: You are absolutely right! This is a strong trend and one that has lasted despite the recession. So, to conclude, I would say that the food industry’s resilience is fantastic as it creates fabulous business opportunities!

Online food shopping

In France

  • 5 billion euros in sales for click and collect
  • Growth between 15 and 20% per year
  • 400 million euros in sales for home delivery online shopping

Around the world (in market share)

Preference

To the question “where did you last do your shopping?” how many consumers answered “Where I normally shop”?

Indicator of consumer trust levels in 2015
  • India: 131
  • USA: 107
  • China: 107
  • World: 97
  • Western Europe: 79

Discover the latest trends in the retail sector, zone by zone...

Asia

CHINA

  • A comfortable middle class of 350 million people
  • A 1,500 billion dollar market growing 20% per year
  • The number of supermarkets grew by 9.2% in 2016

INDONESIA

  • A comfortable middle class of 45 million people
  • Modern retail only represents 1% of the market
  • The world’s leading market for halal goods

PHILIPPINES

  • 3rd biggest food market in the ASEAN region
  • Market estimated at 600 million dollars by 2020
  • Fast modernisation of the retail market with a significant drop in the share of traditional shops: 56% in 2012 compared to 43% in 2020

Europe

Discount stores continue to grow...

Market share

  • 17.19% in 2004
  • 20.6% in 2014

Superstores are putting up a fight...

Market share in Germany

  • 44% in 2010
  • 46% in 2014

Market share in Spain

  • 62% in 2010
  • 63% in 2014

Market share in the United Kingdom

  • 79% in 2010
  • 80% in 2014

Market share in France

  • 77% in 2010
  • 79% in 2014

Middle East

  • A food market worth 50 billion dollars
  • A 27% increase in retail food sales since 2012
  • A food market worth 50 billion dollars
  • A 27% increase in retail food sales since 2012

North America

CANADA

  • A market worth 5 billion dollars in 2017
  • 27% of independent stores of which 14% are ethnic food stores
  • A market very sensitive to price (36% of products bought are special offers)

New operators: the era of disintermediation

“Disintermediation” is a business model where the supermarket only plays an intermediate role. And yet, it is still the supermarket that solves the issue of supplying food.
Here are two examples...

  • Google Express shopping

The customer buys from several different online stores and Google takes care of all the logistics to deliver the orders in one go.

  • Instacart

The customer shops online using an app. The list is then sent to an Instacart employee who goes to the shops chosen by the consumer and delivers the order in one go.