No. 17 August 2013 Network Support Department Communications, Planning and Economic Monitoring Sub-Directorate Economic and Price Monitoring Bureau Local food retailing Market analysis and changes in consumer complaints Benjamin Arnaud 1 Local food retailing has met with considerable success beginning in the early 2000s. Although the turnover of convenience stores has fallen off since 2005 (-5% between 2005 and 2012), the number of such outlets grew by 76% between 2001 and 2010. The local food retailing market is highly dispersed, with nearly 20,800 grocery stores and 3,370 convenience stores in 2011. However, it is dominated by the major food retailers (particularly Casino and Carrefour), who control most of these outlets either directly or through franchise networks. At 254 complaints in 2012, consumer complaints concerning local food retailing represent a very small share of total complaints (between 0.2% and 0.3%). Most (55%) have to do with consumer safety, particularly with compliance with food safety regulations. Local food retail outlets consists of grocery stores (sales areas of less than 120 m²) and convenience stores (sales areas of between 120 and 400 m²). These outlets, which offer a less extensive selection than either supermarkets or hypermarkets, are often located near residential areas, whether in city centres, suburbs or rural areas. In France, 176.3 billion were spent on food and beverages (both alcoholic and nonalcoholic) in 2011. Hypermarkets and supermarkets dominate the marketing channel with a 65.2% market share. The market share for grocery stores and convenience stores remained unchanged between 2009 and 2011 accounting for 7.3% of food sales in 2011. Notwithstanding, they have less clout than specialty food stores (such as bakeries, confectioners, butcher shops, delicatessens, etc.) which enjoy an 18.6% market share. 2 1 Chargé d études at the Economic and Price Monitoring Bureau, DGCCRF 2 INSEE: La situation du commerce en 2011, Report drawn up for the meeting of the National Trade Accounts Commission of 21 December 2012. 1
1. The local food retailing sector is booming The major food retailing firms have stepped up their presence in city centres. In the greater Paris region, the number of convenience stores increased by more than 76% between 2001 and 2010 3. The success of these outlets can be attributed to socialdemographic trends: an aging population has a positive effect on local retail outlets, which can meet high expectations both in terms of services (accessibility, ease of use and friendliness) and a higher-quality offer. Moreover, changing lifestyles has meant that the number of members of a household has been on the decline for the past five decades. The number of households consisting of a single person has risen substantially in recent years. Such changes are conducive to the growth of local means of distribution, which are particularly favoured by single-parent households and people living alone, whereas outlets located outside urban areas, such as hypermarkets, tend to target families. In addition, grocery stores and convenience stores in city centres meet the needs of urban consumers by offering later opening hours and added-value services such as mail order pick-up. Turnover for both grocery stores and convenience stores experienced similar changes between 2005 and 2013. There was a period of decline between 2005 and 2009, which was somewhat sharper for grocery stores than four convenience stores (-2% and -1.3% per year on average, respectively), followed by a year of gains in 2010 (+3%). Starting in 2012, food retail professionals have been adversely affected by the falloff in household consumption. French households have been forced to make trade-offs, and the category of food spending has been the most affected. In 2012, turnover fell by 2% for grocery stores and by 2.6% four convenience stores. During the first quarter of 2013, convenience stores saw their turnover stabilise, whereas those of grocery stores appear to pick up by 0.3%. Turnover indices for convenience stores and grocery stores (in volume, base = 2010) 106 105 105 104 103 102 101 99 98 96 102 103 102 99 98 99 98 95 2005 2006 2007 2008 2009 2010 2011 2012 T1 2013 Tunrover index for grocery stores Turnover index for convenience stores (Source: INSEE; Chart: DGCCRF) 3 Xerfi: Les épiceries et supérettes, March 2013. 2
When it comes to large predominantly food retail outlets, we can observe a healthy state of affairs for supermarkets, whose turnover grew by 6% between 2008 and 2012 (with the exception of 2009, the year of the subprime crisis). Supermarkets were the only category of food retailer whose 2012 turnover was above that of its 2005 level. In contrast, hypermarkets saw their turnover declined by 2.5% between 2010 and the first quarter of 2013. This appears to show that consumers are becoming less interested in this form of retail. 106 Turnover indices for supermarkets and hypermarkets (in volume, base = 2010) 105 104 103 102 101 99 98 96 95 103,1 103,0 102,5,3,0 98,8 99,1 98,4 99,8,1,0 98,4,5 98,0,5 98,2,2 96,3 2005 2006 2007 2008 2009 2010 2011 2012 T1 2013 Turnover index for supermarkets Turnover index for hypermarkets (Source: INSEE; Chart: DGCCRF) 3
2. The local food retail market is both highly dispersed and dominated by a few major groups The local food retail market is highly dispersed; in 2011 there were nearly 20,800 grocery stores and 3,370 convenience stores 4. With the exception of the Relais des Mousquetaires chain (owned by ITM Entreprises) and a few retailers focused on high-end products such as fine foods, France is devoid of chains of grocery stores, which are generally family-owned. In contrast, most convenience stores are run by independent merchants who are franchisees of the major food retailers, which dominate the sector. With more than 6,517 local retail outlets, Casino is incredibly well-positioned in this market, with chains such as Petit Casino, Vival and Monop'. The Carrefour group has 3,342 retail outlets in Metropolitan France (Proxi, 8 à Huit, etc.). Other players in this market, whose activity is more limited, include Francap (Coccimarket) and Coop Atlantique (Coop). Other brands are absent from this market, in particular Système U, whose stores are primarily hypermarkets and supermarkets, although it plans to catch up. To do so, in May 2012, the firm acquired a chain of 139 convenience stores from the German firm Schlecker. These outlets are located in southern France. Système U's local retail chain, U Express, currently has 18 stores. Most of the major networks of convenience stores and grocery stores have been constituted via membership, affiliation or franchise systems, which are much more advantageous for the major players than simply opening branches. 7 000 6 517 Number of local points of sale in France by firm 6 000 5 000 4 000 3 342 3 000 2 000 1 1 000 350 167 325 210 0 Groupe Casino Groupe Carrefour Francap Distribution ITM entreprises Coop Atlantique Biocoop La vie Claire (Sources: company websites, June 2013) 4 Xerfi: Les épiceries et supérettes, March 2013. 4
3. Evolution and breakdown of complaints concerning local food retailing a) Complaints concerning local food retailing have declined more slowly than the total number of consumer complaints The complaints register used by the General Directorate for Competition Policy, Consumer Affairs and Fraud Control (DGCCRF) tracks complaints made by consumers to DGCCRF agents in the various regional agencies, i.e. to the Directions Départementales de la Protection des Populations (DDPP, French consumer protection agency), the Directions Départementales de la Cohésion Sociale et de la Protection des Populations (DDCSPP, French social cohesion and consumer protection agency) and the National Call Centre (CNA) in Montpellier that fields calls for the Info Consommateurs help desk on 3939. Consumer complaints concerning local food retailing represent a very small share of complaints (between 0.2% and 0.3% of all complaints for the period 2008-2012). The number of complaints concerning local food retailers has fallen off sharply in recent years, falling from 347 in 2008 to 254 in 2012 a drop of 27% (or -7.5% per year on average). Complaints concerning local food retailing 2008 2009 2010 2011 2012 Average Total number of complaints 139,148 110,701 92,254 90,125 87,351 103,916 Number of complaints concerning a local food retailing Share of complaints concerning local food retailing relative to total complaints (in %) 347 266 239 232 254 268 0.25 0.24 0.26 0.26 0.29 0.26 Change in the number of complaints concerning local -23.34-10.15-2.93 9.48-7.50 food retailing (in %) (Source : DGCCRF Consumer Complaints Register, June 2013) The share of complaints concerning local food retailing in the total number of complaints grew from 0.25% in 2008 to 0.29% in 2012. The number of complaints concerning local food retailing has thus fallen less quickly than the total number of complaints. 5
b) Consumer complaints concerning local food retailing have to do with, on the one hand, consumer safety, and on the other hand, economic protection for consumers Consumer complaints concerning local food retailing basically revolve around consumer safety (55.1% of complaints on average). Of these, 42.7% had to do with general regulations concerning food hygiene, 38.5% had to do with respecting use-by and best-by dates, and 6.5% had to do with general hygiene regulations in stores. At 33.2%, the second-largest type of complaint had to do with economic protection for consumers, particularly the lack of information given to consumers about prices (34%), deceptive marketing practices (17.8%) and deception (15.1%) 5. Finally, the three other main categories of complaints (contractual disputes, everyday life and competitive regulation for markets) represented, respectively, 4.7%, 4.4%, and 2.5% of complaints concerning local food retailing. Complaints filed with the DGCCRF concerning commercial food retailing 2008 2009 2010 2011 2012 Fiveyear average Consumer safety 181 131 128 145 148 147 Share of total in % 52.2 49.2 53.6 62.5 58.3 55.1 Consumer economic protection 122 106 84 62 74 90 Share of total in % 35.2 39.8 35.1 26.7 29.1 33.2 Contractual disputes 18 9 11 8 18 13 Share of total in % 5.2 3.4 4.6 3.4 7.1 4.7 Everyday life 18 13 8 13 8 12 Share of total in % 5.2 4.9 3.3 5.6 3.1 4.4 Competitive regulation of markets 8 7 8 4 6 7 Share of total in % 2.3 2.6 3.3 1.7 2.4 2.5 Total 347 266 239 232 254 268 (Source : DGCCRF Consumer Complaints Register, June 2013) 5 Deceptive marketing practices are covered by Articles L.121-1 to L.121-7 of the Consumer Code, and deception is defined by Articles L.213-1 to L.213-2-1 of the Consumer Code. 6
Breakdown of complaints filed with the DGCCRF concerning commercial food retailing Five-year average (268 complaints per year on average) 13 12 7 Consumer safety 90 147 Consumer economic protection Contractual disputes Everyday life Competitive regulation of markets (Source : DGCCRF Consumer Complaints Register, June 2013) 4. Consumer behaviour and attitudes 6 : consumers prefer local solutions According to the Crédoc, in 2012, local food retailing (grocery stores and convenience stores) were in sixth place among distribution networks. 47.9% of those surveyed stated that they shopped at grocery stores (+0.3% over 2005) and 47.5% stated that they shopped at convenience stores (-0.2% over 2005). Retail food distribution is very much dominated by hypermarkets and supermarkets, with a 90.5% visitation rate for the former (+2.6% over 2005) and 80.2% for the latter (-0.3% over 2005). We can see a sharp rise in specialty food outlets (+9.6%) and frozen food retailers (+7.4%), which speaks to consumers' needs for local outlets. In addition, online food sales have multiplied by 2.5 in seven years. Finally, drive-through retail is eclipsing online sales. 6 Crédoc: Enquête commerce 2012 Comportements et attitudes des consommateurs à l égard du commerce alimentaire, drawn up for the meeting of the National Trade Accounts Commission of 28 June 2013 7
90 80 70 60 50 40 Visitation rates to various retail food outlets in 2012 in % of individuals having stated that they shopped at the outlet (regardless of frequency) 91 88 81 80 76 76 70 61 61 67 48 48 48 48 40 47 43 30 20 10 11 3 7 0 Hypermarkets Supermarkets Markets Specialty food outlets Hard-discount Grocery stores Convenience stores Frozen food outlets Neighbourhood shops Drive-through retail Internet 2005 2012 (Source: Crédoc) When it comes to criteria for choosing an outlet, consumers made more informed choices in 2012 than in 2005. The criterion of "low prices" increased by 6.6% to 39%, and practical criteria (parking, able to shop quickly) also increased. Moreover, more than 50% of consumers felt that proximity was a determining factor in their choice, both in 2005 (56.6%) and in 2012 (55%). 60 55 56,4 Criteria for choosing a retail outlet (first and second criteria in %) 50 40 39 32,4 32,9 31,4 30 24,2 20 19,8 20,6 20,5 18,5 15,1 14,8 10,8 10 0 Closest Least expensive Largest selection Parking 2005 2012 Able to shop quickly Friendliness Least amount of people (Source: Crédoc) 8
The Economic and Price Monitoring Bureau (1B) of the DGCCRF (Directorate General for Competition Policy, Consumer Affairs and Fraud Control) establishes and introduces measures to bolster economic transparency of the manufacturing and marketing processes for goods and services. This means that it is able to base its analyses in this area on objective and common factors. Its work involves price analysis and monitoring formation mechanisms for prices and margins, in conjunction with other relevant monitoring centres. It also produces economic studies for the Directorate and is tasked with its in-house documentation and economic monitoring responsibilities. Lastly, it carries out statistical analyses of the consumer complaints register. Address Ministère de l économie et des finances - DGCCRF Bureau de la veille économique et des prix (1B) Teledoc 052 59 boulevard Vincent Auriol 75703 PARIS CEDEX 13 FRANCE Email: Bureau-1B@dgccrf.finances.gouv.fr 9