Invented by Auchan in the early 2000s, pick-up grocery services have expanded exponentially in France. There are now more than 3,230 pick-up sites operational. The sector has already generated more than €2 billion in net sales in 2014 (source: Nielsen). The concept’s success lies in the undeniable advantages it offers to consumers: time savings, convenience, peace of mind and budget control. No more “chore shopping” or impulse buys.
This new food distribution method represents a formidable tool for chains’ geographic and commercial expansion. Taking advantage of a favorable regulatory environment, they have embarked in an absolute race to open new sites. There are three models of pick-up sites: solo, attached or in-store picking. Launching a pick-up service requires a real investment: €2 to 4 million for a solo or attached pick-up structure and €150,000 to €300,000 for an in-store picking service. This makes the choice of location vital to attaining a satisfactory level of profitability. There are two strategies in choosing a model, each with its advantages and disadvantages.
On the one hand, some distributors adopt a defensive position. Their goal is to consolidate market share. Although it expands the catchment area, the defensive pick-up service – whether attached or offering in-store picking – tends to cannibalize clientele from the point of sale with which it is associated, at a rate of 30% to 50%. This means it encroaches on the revenue of nearby supermarkets and hypermarkets.
On the other hand, the offensive approach aims to win new market share. Chains set up shop in areas that are already saturated with competitor points of sale. This tactic reduces cannibalization and offers the potential to capture new consumer flows. However, a chain that decides to open solo grocery pick-up sites faces far more sustained and well-established competition.
How can you become a long-term market leader without bleeding your own stores dry? First and foremost, the economic viability of a grocery pick-up service means adapting to new consumption patterns. Digital has become a crucial part of the buying process: 88% of shoppers do research online before buying, and 50% of in-store visitors are cross-channel users (Avanci and Selligent study). Consequently, this means understanding, attracting, satisfying and retaining a young, active, online clientele that practices ROPO (research online, purchase offline).
Nevertheless, food e-commerce still accounts for less than 2% of all online sales. The online buying experience is not always up to par. Consumer goods brands need to establish a coherent digital strategy, with a more fluid, more consistent multi-channel path for e-shoppers.
The challenge is to adapt consumer goods frameworks to distributors’ digital tools. For brands and chains, this involves encouraging impulse buys, promoting products (especially fresh goods) and orchestrating sales campaigns, all via digital platforms.
With this in mind, services like Shoptimise have appeared on the scene to improve the consumer buying experience. Shoptimise is completely independent and allows its users to fill their shopping carts online, providing visibility to all of the products and prices available at each point of sale. In this way, distributors can effortlessly generate sales, because the carts are then sent directly to their stores. As for brands, they can promote their products and specials, regardless of distributor or geographic zone.
Today, e-commerce is a vital lever for growth in the mass retail sector. It is in the best interest of every player to complete their digital transformation, without which their more opportunistic adversaries will quickly overtake them.