Discounters losing ground in French market
Bord Bia research shows market share decreasing following legislation changes
Print16 July 2013
In 2012, Lidl closed more stores in France than it opened
New research, conducted by Bord Bia shows that discount retailers Lidl and Aldi are losing ground in the French retail market. The discounters’ market share in France peaked at 15% of the total retail market in 2009, but has progressively lost ground since, now accounting for only 11.9% of the market in April 2013.
France was the first foreign market that German discounter Lidl entered in 1988 and it went on to become the leading discounter in the market. However in 2012, Lidl closed more stores in France than it opened and the situation has continued to deteriorate in 2013, with turnover in quarter one back 5% and sales volumes back 8%.
"The overall decline in the French discount market is primarily attributed to two factors, firstly the changes in retail legislation in France in 2009, which gave the mainstream multiples more freedom to negotiate with suppliers and subsequently gave rise to more frequent price wars; and, secondly, the growth in the ‘Drive – click and collect channel’," notes Bord Bia’s Paris office manager Noreen Lanigan, writing in the latest edition of Bord Bia’s trade magazine Food Alert. "And contrary to French consumer behaviour during the 2008 recession, when consumers turned to the discounters’ value propositions, today’s consumers are indulging in ‘at-home dining’ to compensate for budget sacrifices on holidays and dining-out," adds Lanigan.
As the price gap closed between the major multiples and the discounters in France over the last number of years, the discounters responded by introducing branded products, which now account for approximately 20% of turnover. However, this had a significant impact on profitability. If the current trends continue, the discount channel is forecast to retract further and the drive – click and collect channel is forecast to become a force to be reckoned with, with Europanel predicting this segment will represent 8% of the French retail market by 2015.
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