When you think about the retail industry in France your mind probably veers to thoughts about world-renowned designers, stunning runway models, exclusive boutiques, high fashion, and the press buzz that accompanies the Paris Fashion Week festivities. In reality, the French retail industry is more practical than that and is actually dominated by some of the world's largest grocery retail chains which lead the retail industry in overall sales in France.
Luxury Is Down While Necessity Is Up
Non-grocery retail sales have experienced a continued decline in the recent past, reflecting a struggling recessionary economy that even took a toll on upper-class luxury shoppers. Grocery retailers like Leclerc were able to capitalize on the shifted consumer focus to offer essentials while non-grocery retailers like Conforama were not able to adjust as well and, consequently, suffered a decline in sales.
French Grocers: A Success Story
The success of the grocery sector of France's retail industry is due in part to a lack of competition from international companies. In addition, grocers have offered a higher value to the consumers who have eliminated unnecessary expenses and have focused more on the dynamic offerings of hypermarkets, discounters, and supermarkets.
Carrefour Leads the Pack
French hypermarket Carrefour, the number two retailer in the world, witnessed signs of improvement since 2016 due, in no small part, to the Olympic Games in 2016 that served to support general consumption, notably of drinks and chilled processed food. Also, the end of a decline in sales through discounters was good news for grocery retailers as a whole. With a 17% value share, Carrefour remained the leading player in grocery retailing according to the “2017 Global Powers of Retailing” report compiled by Deloitte Touche Tohmatsu, which ranks retailers from all over the world. Carrefour came in number seven on the worldwide list that year, but in 2019 they requested to be excluded from the report.
Carrefour's Competitive Edge
Beyond the boost from the Olympics, Carrefour's strong position is also attributed to the progressive remolding of its outlets and revamping of Carrefour City and Carrefour Express convenience stores. Finally, Carrefour supermarkets and hypermarkets are enjoying a better image in terms of low prices to meet consumer demand.
Growth via the Web
Of the non-grocery retailers that have grown, most of their growth is due to their Internet presence. Overall, online retail sales in France skyrocketed 24% in a single year, according to Reuters. The French retail chains that have experienced double-digit growth most recently are the retailers with the strongest Internet presence and focus.
An Influx of American Retailers
Despite those encouraging growth numbers, non-grocery retailers have also seen their biggest competition come from the Internet, particularly from foreign companies. Many U.S. companies like Abercrombie & Fitch, Michael Kors, and Ralph Lauren are doing business in France and others like Costco and Banana Republic have announced plans to open retail stores there in the future. Despite the perceived culture clash between the U.S. and France, in general, the political and business environment in France is favorable for U.S. retailers.