The hard discount market - France (2024)

1.2 The global supermarket market: overview and main characteristics.

Research and Markets estimates the global supermarket and hypermarket market at $*,*** billion in ****. This market is expected to grow at a CAGR of *.*% between **** and ****.

Global food retail market size World, ****-****, in billions of dollars Source: ****

This is a dynamic market that should see continued growth over the coming years.

Ranking of the largest supermarket groups by sales figures World, ****, in billions of dollars Source: Deloitte In terms of sales, the global food retail market is dominated by American companies (***), which includes Lidl, in *th place worldwide.

World's leading discount retailers by grocery sales World, ****-****, in billions of dollars Source: ascentialedge In the global hard discount sector, the two leaders are the Schwarz Group , which owns the Lidl and Aldi banners.

1.3 The French food superstore market

The food retail market is worth around*** billion eurosin France. Some **,*** French towns have a food store.

The French market isoligopolistic marketa few major groups share the bulk of the market:

Market shares of food retailers France, **** (***), in % and points Source: ****

E.Leclerc remains the market leader, with market share up *.* points. This is an oligopolistic market, with the top * groups (***) than integrated integrated stores. Hard discounters Lidl and Aldi are also present.

Growth in hypermarket and supermarket sales France, ****-****, Billions, € Source : INSEE This graph shows sales trends for hypermarkets and supermarkets in France from **** to ****. Since ****, sales have increased by more than* billion euros. This chart does not include sales from convenience stores and drives, which may explain the difference in results with the overall market sales figure mentioned above (***).

Number of discount stores in France France, May ****, number of stores Source: Ouest-France In May ****, the discount store market in France will be dominated by Lidl and Aldi, with *,*** and *,*** stores respectively. Action follows close behind with *** stores, consolidating its market position. Brands such as Netto, Colruyt, Norma and others also contribute to the sector's diversity, each bringing its own strategy and product range to the table. This intense ...

2.1 French household food consumption habits

How often do the French go to the supermarket? France, ****, %, % source: opinionWay

The majority of respondents visit supermarkets once a week(***), underlining the prevalence of regular visits to make essential food purchases. Also, **% of respondents say they never visit a supermarket, which may reflect the use of alternative purchasing channels such as local markets, convenience stores or online shopping.

Average monthly food budget per French household France, ****-****, € Source: ****

The average monthly food budget is fairly stable in Francestabilityover the years, with little variation. However, there was a marked decrease in ****, followed by an increase in ****, which will continue until ****.

Preferred locations for food shopping in France France, ****, % (***) Source: ****

In ****, French consumers' food shopping habits reveal a marked preference for hypermarkets and general supermarkets, which come out on top with **%. This preference for traditional superstores is complemented by a notable interest in discount hypermarkets and supermarkets, chosen by **% of respondents. This trend highlights the importance of value for money in the purchasing decisions of French consumers, with significant demand for discount offers.

Criteria for choosing a food retailer France, ****, % of respondents Source : Opinionway In ****, consumers attach great importance to several criteria when choosing a food retailer. The results show thatproduct price ...

2.2 The French perception of discount

The qualities of hard discount chains France, ****, %, %, %, %, %, %, %, %, %, %, %, % Source: ****

The graph above shows that **% of respondents perceive these chains as offering good value for money, underlining the importance of the economic factor in their purchasing choices. Similarly, **% consider these brands to bethe least expensive, confirming their reputation as suppliers of competitively priced products. Other appreciated qualities include being close to people's lives(***), reflecting their role in consumers' daily lives.

Visits to hard discount chains France, ****, % Source: ****

In ****, visits to hard discount chains in France will vary from one chain to another, with distinct trends observed for Lidl, Aldi and Action. For Lidl, a majority of respondents(***) say they visit about once a week, confirming its popularity and high level of regular use.

The majority of Aldi customers visit * or * times a month(***) visit around once a month.

Sense of loyalty to hard discount brands France, ****, % Source : LSA/Becoming In ****, the feeling of loyalty to hard discount brands varies among French consumers, with different positive response rates for different chains. Lidl and Action stand out with the highest rates of positive responses, **% and **% respectively, indicating strong brand loyalty among consumers. Aldi follows closely with a rate of **%, also reflecting a significant level of ...

2. 3 Inflation makes hard discount stores more attractive

Inflation rate trend France, ****-****, %, %, %, %, %, %, %, %, %, %, %, %, % Source: ****

Inflation will rise sharply in ****, to*.*%. **** was also a year of high inflation, despite a slight decrease compared to ****. This inflation has had a major impact on supermarket prices.

Impact of inflation on French consumer behavior France, ****, %, % Source: ****

With the rise in food prices, consumption habits have changed for all French people, even the most affluent. The main consequences of inflation are a move downmarket in food purchases and a decline in consumption of certain food products.

With inflation, do you prefer discount food stores? France, ****, % Source: Opinionway In ****, a survey in France reveals that a significant proportion of French people (***) favor discount food stores, with **% strongly favoring them and **% somewhat favoring them. However, **% do not favor them and **% not at all. These results underline the diversity of consumer attitudes to inflation, and the interest of a large proportion of the population in discount stores.

Discounters since price increases France, ****, % Source : LSA/Becoming The majority of respondents (***) report a slight increase in their use of discounters, while **% say they frequent them much more often. These figures suggest an increased use of discount stores as a solution to rising prices in other chains.

3.1 Value chain

Source: ****

Hard-discount food chains are fairly autonomous in terms of sourcing, with most of the products available in stores being the chain's own brands. Once the products have been produced, they are sent to the group's warehouses and logistics platforms before being distributed to the chain's stores and finally sold to French consumers.

Hard discount stores carry few national brands, but they do carry more than they did when they started out in France. To supply these products, the chains have to turn to central purchasing agencies.

3.2 Number of companies and number of employees

Number of food stores by format France, ****, by value Source: ****

As the graph shows, the majority of stores in France are convenience stores. Moreover, the hypermarket format is the least represented in France. However, it should be noted that the hypermarket is much larger in terms of sales area, ranging from *,*** to **,*** m*, whereas the sales area of a convenience store varies from *** to *** m*. It is therefore less difficult to set up more convenience stores than hypermarkets.

The number of food discounter stores is expected to reach *,*** by ****.

Trend in the number of hard discount stores France, ****-****, in number of stores Source: ****

There has been significant growth in the number of stores over time, from just * store in **** to *,*** stores in ****. This increase is gradual until the ****s, then accelerates in the following years, with a notable increase between **** and ****. This trend reflects the growing popularity of hard-discount stores in France, probably due to growing consumer demand for lower-priced products and the diversification of the offer by these chains.

The difference in the number of hard-discount stores in **** between the two graphs is due to the fact that the first graph only takes into account food discounters, while the ...

3.3 Will the discount market soon be saturated?

The growing popularity of hard-discount stores in France has aroused keen interest among suppliers looking to enter this lucrative market segment. However, this positive momentum could soon come up against a major obstacle: market saturation. Indeed, despite the attractive opportunities offered by the small-price sector, competition is intensifying as new brands continue to emerge in this niche. This trend raises questions about the long-term viability of the hard-discount craze in France. While the market remains buoyant, impending saturation could bring significant challenges for industry players.

Opening of the first TEDi in April ****:

TEDI is a German discount chain founded in **** in Dortmund, Germany. With almost *,*** out lets in ** countries, TEDI is present primarily in Eastern Europe, Spain and Portugal. The company offers a wide range of products, from cosmetics to home decoration and DIY, at affordable prices, often around one euro. It employs over **,*** people and has sales approaching * billion euros, with steady growth thanks to the regular opening of new stores. TEDI recently entered the French market, opening its first store in Évreux, Normandy, on April **, ****. This first opening is followed by ambitious plans for the brand's expansion in the country, with the aim of opening a dozen new stores ...

4.1 The hard-discount food chain business model

The traditional hard-discount business model is based on a number of criteria:

A very low diversity of products on offer, focusing on the basic products that consumers buy on a daily basis. So, * product = * need, i.e. one - well-chosen - reference is offered for each type of product. This enables hard-discounters to buy these products en masse at low prices (***).

A high proportion of low-price own-brand products (***).

The aim - increasingly - is to offer a low diversity of products, at low prices, while maintaining a high level of quality, thus playing on the quality-price ratio.

Make processes efficient and inexpensive, which requires a small number of highly-skilled employees. Costs are also generally limited to marketing and communication expenses. Last but not least, applying the same store concept everywhere helps to standardize processes. [***]

The main differences between hard-discount and classic food chains :

Source: ****

4.2 Non-food discounters

In the French hard discount landscape, the diversity of chains is not limited to food discounters. In fact, alongside food giants such as Lidl and Aldi, a multitude of non-food discounters are also thriving, offering a varied range of products from household goods to DIY, home decoration and fashion.

These non-food chains are playing an increasingly important role in the purchasing habits of French consumers, testifying to their growing appeal. In ****, this trend was clearly illustrated by Action's ranking as France's favorite retailer(***), underlining the significant rise of non-food discounters in the French retail landscape.

While food discounters have fairly similar concepts, this is not really the case for non-food discounters.

The various non-food discounters present in France:

Action

Action, which arrived on the French market at the end of ****, has enjoyed a remarkable rise since its inception, and by **** will hold**% of the market. At the start of ****, the chain had *** stores in France, having opened ** new branches in **** alone. Development ambitions remain high for ****.

Action continues to expand, maintaining its faithful business model: stores ofbetween *** and *,*** square meters, offering an average of *,*** product references, including *,*** items for less than * euro. Every week, the brand introduces between *** and *** new products ...

4.3 Discounters launch first-price product ranges

Lidl is currently undertaking a revolution in its offer by launching a range of first-price products on its shelves. This move is designed to fill a gap in its assortment compared with competitors such as Leclerc, which already has an extensive range of first-price products with its Eco+ brand, for example. In effect, Lidl was only offering a single product range with its private labels, and without first-price products, Lidl was "constraining" its customers to a single range level, preventing those who wanted (***) to switch to the cheaper product in a few categories that were less important to them.

This new strategy aims to offer cheaper alternatives in key categories, where Lidl was struggling in times of inflation. in the short term, these products do not yet have a common identity, but in the medium term Lidl plans to establish a single charter for its first-price range. This initiative involves adjustments to the volume per unit of requirement and to the specifications in order to reduce prices. For example, the new first-price lardons are **% less expensive per kilo than the Saint Alby private label, but with a slight difference in quality.

Similarly, first-price chicken breast offers similar savings, but with a ...

4.4 Discounters looking to modernize and enhance their image

The shift to smart and soft discount was launched by Lidl in ****

In ****, at a time when hard discount was losing market share, Lidl launched a vast plan to modernize its stores, making them more welcoming - and putting an end to the concept's "downmarket" and austere image - as well as improving shopping comfort. In addition, Lidl's product range has been upgraded to include more fresh, seasonal, organic and quality produce, in particular the fruit and vegetables often found at the entrance to stores. The chain has also added a bakery and butchery service. This new positioning corresponds to the expectations of consumers, who now prefer value for money to low prices alone, and is helping to boost the average shopping basket. The use of social networks is also interesting, to give the brand a "cooler" image. For example, the launch of limited-edition Lidl sneakers in ****, widely relayed on social networks, was an incredible success, creating a positive buzz for Lidl's image. Other promotions on non-food products also attract consumers and create traffic in stores. Lidl has thus caught up in terms of communication and advertising, and now invests almost as much as groups like Intermarché or Leclerc in this ...

5.1 The law on the modernization of the economy, an advantage for discounters

The French Law on the Modernization of the Economy, commonly known as the LME, was officially promulgated on August *, ****. Its main aim is to remove obstacles hindering the development of certain sectors, thereby promoting job creation and lowering prices.

The provisions of the Law on the Modernization of the Economy cover a wide range of areas, with a significant impact on trade. Among the most notable measures is the abolition of authorization requirements for the creation or extension of stores of less than *,*** square meters. In addition, the LME introduced new regulations aimed at reducing business payment times, protecting the personal assets of sole traders, and controlling excessive annual price increases. excessive annual increases in commercial rents, and to facilitate business transfers within the family by reducing or exempting transfer duties.

One of the aims of the Law on the Modernization of the Economy(***) was to facilitate the establishment of hard-discount stores, with the threshold for prior authorization raised from *** to *,*** square meters. A hard-discount store is one with a surface area of between *** and *,*** square meters, the majority being between *** and *** square meters.

Source: ****

5.2 Anti-waste law for a circular economy (Loi AGEC)

The mass retail sector is impacted by the AGEC law on several points: food waste with unsold products and the use of plastic with the reduction of single-use plastic packaging.

Management of unsold goods:

The mass retail sector is responsible for nearly **% of food waste in France. in France, ** million tonnes of edible foodstuffs are wasted every year, equivalent to around *** kg per person per year (***)

Unsold food and non-food items must not be thrown away or disposed of at the risk of a heavy fine for the retailer. There are several ways to recycle unsold products:

Distributors donate their unsold products to charitable associations, which redistribute them to people in difficulty. Installation of short-dated bins Sale of anti-gaspi baskets via specialized applications

Reducing plastic use

The AGEC law sets * targets for the use of plastic in supermarkets:

Achieve a **% reduction in single-use plastic by **** Work towards ***% elimination of single-use plastic overpackaging by the end of **** Achieve ***% recycling of single-use plastic packaging by January *, ****.

5.3 Loi Descrozaille

The Descrozaille law (***).

As soon as it comes into force, promotions for non-food products may not exceedexceed **%. Initially presented as a measure to protect manufacturers in their negotiations with supermarkets, this law has not met with unanimous approval.french people rely heavily on promotions to reduce their spending.

Although our study focuses on food retailing, it should be noted that this new law, which affects non-food products, could also have an impact on the food sector. Indeed, with fewer promotions on non-food products, household spending on food products could fall.

Source: ****

6.1 Player segmentation

• Lidl France
• Aldi
• E.Leclerc
• Intermarché ITM Les Mousquetaires
• Système U
• Auchan groupe
• Action France
• Gifi France
• Netto (Intermarché les mousquetaires)
• Aldi France
• Miniso
• Hema
• Normal
• Stokomani (Zouari Groupe)
• La Foir'Fouille
• Noz Arrivages
• B&M France
• Centrakor Stores
• Maxi Bazar (Zouari Groupe)
• Le Marché aux Affaires