Consumers/Distribution modes turned upside down by a winning combination: Drive-in and Digital Apps

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Pioneered by the Auchan supermarket chain back in the early 2000s, this concept experienced a boom in France starting in the early 2010s.

This growth is supported by numbers. As written in an article in Challenges (in French), “the system generated more than €3 billion in revenue in 2013, compared with €2 billion the previous year.”

This expansion can be explained by a sky-rocketing number of pick-up grocery sites (which tripled in the space of two years, for a total of 3,000 in 2013). Their market share also increased tremendously, the author of the article continues, rising from a “0.7% market share in January 2011 to 3.9% in January 2014” (KantarWorldPanel*). This new concept is particularly appealing to young couples, as well as families with children, among whom the penetration rate is higher than 20% (as of 2013).

I- Why is it so successful?

Although these statistics speak largely in its favor, what are the real advantages of pick-up groceries for customers?

Consumers use this service for three main reasons:

Time savings: With a reputation for having the highest stress levels of all Europeans, the French are always looking for ways to save time. According to a Keyneosoft study (in French), 95% of users in France report that they have become regular users of the practice because it frees up time in their schedules. By cutting their grocery shopping time by close to 50%, French consumers save an hour each time they place a grocery order online.

Grocery budget control: During this crisis period, budget management is a key concern. With this “Click & Drive” system, customers are no longer tempted by impulse buys as they wander the aisles of their local supermarket or hypermarket. 83% of pick-up users confirm that the service makes it easier for them to control their budgets (Keyneosoft).

Access to information: Curiosity isn’t such a bad thing. It is understandable to want to be well-informed, especially when it comes to our food. A graphic produced by Kiwapp (in French) shows that consumers are eager for more information about products in general. What could be more frustrating than a salesperson who has only the vaguest ideas about the products they sell? With e-commerce – and this is all the more true with the advent of the Hamon Consumer Law in France – product information is now far more readily available and legible.

For stores, pick-up groceries provide a way to catch up with the digitized world. The shopping experience and consumer behaviors have changed over time, and large chains are adapting to this through pick-up services. The multi-channel approach of pick-up grocery services allows distributors to be “connected” without abandoning the physical side of their customer relations. E. Leclerc, the leader in pick-up groceries, along with Carrefour and Auchan (to name but a few), have each launched and developed their pick-up business in a race to open new sites. As a result, there has been significant (quantitative*) growth in pick-up sites in recent years.

The attitudes of consumers and stores alike explain the concept’s success, to a large extent. Nevertheless, external factors also need to be taken into account. From a technological perspective, continuous progress in this domain and the widespread use of smartphones have both contributed to the development of pick-up services. Socioeconomically speaking, consumer aspirations shifted with the onset of the crisis in 2008 and the ensuing drop in buying power in France. Lastly, when paired with operators developing the pick-up concept, the environment also enabled the appearance and expansion of this new consumer model.

II- Limitations on growth: Improving the services offered

While the concept has been an unquestionable success, a number of limitations have interrupted its further development. One of these is the fact that pick-up customers often find the selection of products insufficient. According to one Nielsen study, the number of products available for pick-up is roughly one-third that of a physical hypermarket.

Another trend that has been harmful to pick-up services concerns the phenomenon of “cannibalization.” Again according to Nielsen, 80% of Click & Drive sites are attached to one of the chain’s physical stores. “Some store managers are undoubtedly recording […] high cannibalization rates, even up to 30%,” as expressed in an article published in Les Echos (in French).

However, these limitations still leave room for hope for the future. In terms of the breadth of product offerings, we must remember that more and more products are becoming available online each day. In addition, the pick-up service’s positioning in the mass retail market will be revisited to fight cannibalization. From this perspective, 2014 looks to be a year of consolidation and improvement of the pick-up concept, with customer retention as a major objective.

III- Digital expansion: Keeping up with progress

The pick-up model has engendered new prospects and new challenges for players involved in consumer goods. With the development of pick-up sites, customers have begun adopting new ways of grocery shopping. In response to their new expectations, applications like Shoptimise (website in French) allow users to fill their shopping carts online, while offering them price visibility, a broad selection of products, and deliveries to the pick-up points most convenient to them.

Along with changes in consumer buying behaviors and in major chains’ conceptions of distribution formats, consumer goods brands have had to engage more directly with their customers and, as a result, now have a better understanding of their expectations. New technological tools have been made available to them, like those developed by Swaven, such as Where to BuyData ProductCampaign and Shopper.

Finally, pick-up groceries represent a real innovation in the world of mass retailing/consumer goods. For those players, the days of the corporate early adopter are over. Now is the time for development and mass application, supported by new digital applications based on big data, that allow distributors to make the most of the concept and that offer the best outlook for the future.

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