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French retailers invests in digital strategy

By Dave Howard

Last week the E. Leclerc group announced plans to invest over €1 billion, notably  to transform its digital operations over the next three years.

It is hoped that the investment will accelerate Leclerc’s  “digital transformation” and increase online revenue which currently only accounts for €2bn of a €44bn turnover.

Michel-Edouard Leclerc, leader of the E.Leclerc group, believes that this investment will mean that “in five years, my rival will no longer be Hyper U or Auchan, but Amazon” (KamCity.com).

Initially, online retail showed slower signs of growth in France than other parts of Europe. For instance, in Great Britain 91 million online trips were made to purchase fast-moving consumer goods in Q1 2014, as opposed to 42 million in France.

However, there are positive signs that shoppers are adapting and popularity of online channels is growing with 10 million more online shopping trips in Q1 2014 than the previous year (Nielsen, Global E-commerce Report, 2014).

M-E Leclerc’s confidence that his movement will compete with Amazon is perhaps well-founded. While clearly the online leader in the US and many European countries, Amazon’s position in France is not as secure. LSA-Conso reported that Amazon know it needs to improve its image in France, after mass media reports of tax avoidance.

The LSA-Conso report also surmises that Amazon’s lack of physical stores, and therefore lack of sales personnel, is also a barrier to further growth in France. LSA-Conso describe Amazon as a “faceless trade” and that without this human element Amazon may find it difficult to improve the brand’s image in France.

To counteract this potential issue, Amazon will be attempting to put a human face to the brand by opening the Lauwin-Planque distribution centre for public tours from 12 June.

Amazon warehouse, feature

If Amazon’s lack of bricks and mortar stores is in a fact a barrier to growth, then a physical store presence may actually enable its growth online. Retaining a strong reputation in physical stores could prove as important as heavy investment in digital channels.

Taking an omni-channel view of the marketplace and focusing on in-store and online presence concurrently could lead to the growth of online channels for French retailers, such as E.Leclerc.