Guest commentary from PlanetRetail.net…
Last week it belatedly became public knowledge that French retailer Auchan opened its first, somewhat unconventional, hard discount format in the Pas-de-Calais region. The store opened in September last year, and represents a departure for an operator that traditionally specialises in hypermarkets and supermarkets. According to Auchan, the store is a test outlet and the retailer will not decide on further expansion plans until the end of the trial phase.
In France, the hard discount concept is increasing its penetration year on year, representing nearly 7 percent of modern grocery distribution in 2002.
Given the promising development of this format, some French retailers have been launching their own discount concepts like Carrefour’s Ed, of which it opened more than 20 outlets in 2002; Casino with Leader Price (Leader Price nearly accounts for 10 percent of Casino’s sales in France) and ITM with Netto (in 2002, Netto opened 32 outlets).
However, other French retailers like Auchan, Leclerc, Cora or Système U are not really present in the hard discount segment of the market, and any further progress by hard discounters is likely to entail a loss of market share for these businesses.
Since September 2002, Auchan has been testing a discount space devoted to the sale of loose (i.e. non pre-packed) products called “Au Marché Vrac”. To its 18,000 square metre hypermarket, Auchan has added 400 square metres, offering product lines that are not available in the rest of the store. Around 220 of a total of 500 of these product lines are sold loose. The slogan of the Au Marché Vrac section is "des économies en toute liberté", which translates as “feel free to save” and visiting shoppers can fill paper bags with lines such as cereals, coffee or washing powder. Even wine is sold loosely, meaning that customers can bottle it themselves.
The rest of the assortment is devoted to low price brands, unbranded products (much cheaper than Auchan’s own low price range) and bulk packs (e.g. 25 kg potato bags). A refrigerator with products with a short shelf life offers fresh products at a 50 percent discount. The products have been taken out of the hypermarket’s fresh food department but have not yet reached their expiry date. The unique system in this store concept is that the customer is able to mix his/her buying repertoire, choosing premium-priced products in the hypermarket plus products with basic lines from the hard discount section.
Auchan has already been piloting a hard discount concept of sorts. Since 1999, it has been operating a 4,500 square metre hybrid concept in Chelles called “Les Halles d’Auchan”. This concept is a mixture of hypermarket (national brands, delicatessen products like sushi, service counters), hard discount (low prices, products stacked in cardboard boxes) and cash & carry. Two thirds of the store space is devoted to fresh products.
Thanks to Auchan’s customary reticence, it is hard to judge if it plans to extend either of these hard discount concepts. Only time will tell if Auchan’s hard discount concepts are the right strategy to counter the inexorable march of the French hard discounters.
Last week it belatedly became public knowledge that French retailer Auchan opened its first, somewhat unconventional, hard discount format in the Pas-de-Calais region. The store opened in September last year, and represents a departure for an operator that traditionally specialises in hypermarkets and supermarkets. According to Auchan, the store is a test outlet and the retailer will not decide on further expansion plans until the end of the trial phase.
In France, the hard discount concept is increasing its penetration year on year, representing nearly 7 percent of modern grocery distribution in 2002.
Given the promising development of this format, some French retailers have been launching their own discount concepts like Carrefour’s Ed, of which it opened more than 20 outlets in 2002; Casino with Leader Price (Leader Price nearly accounts for 10 percent of Casino’s sales in France) and ITM with Netto (in 2002, Netto opened 32 outlets).
However, other French retailers like Auchan, Leclerc, Cora or Système U are not really present in the hard discount segment of the market, and any further progress by hard discounters is likely to entail a loss of market share for these businesses.
Since September 2002, Auchan has been testing a discount space devoted to the sale of loose (i.e. non pre-packed) products called “Au Marché Vrac”. To its 18,000 square metre hypermarket, Auchan has added 400 square metres, offering product lines that are not available in the rest of the store. Around 220 of a total of 500 of these product lines are sold loose. The slogan of the Au Marché Vrac section is "des économies en toute liberté", which translates as “feel free to save” and visiting shoppers can fill paper bags with lines such as cereals, coffee or washing powder. Even wine is sold loosely, meaning that customers can bottle it themselves.
The rest of the assortment is devoted to low price brands, unbranded products (much cheaper than Auchan’s own low price range) and bulk packs (e.g. 25 kg potato bags). A refrigerator with products with a short shelf life offers fresh products at a 50 percent discount. The products have been taken out of the hypermarket’s fresh food department but have not yet reached their expiry date. The unique system in this store concept is that the customer is able to mix his/her buying repertoire, choosing premium-priced products in the hypermarket plus products with basic lines from the hard discount section.
Auchan has already been piloting a hard discount concept of sorts. Since 1999, it has been operating a 4,500 square metre hybrid concept in Chelles called “Les Halles d’Auchan”. This concept is a mixture of hypermarket (national brands, delicatessen products like sushi, service counters), hard discount (low prices, products stacked in cardboard boxes) and cash & carry. Two thirds of the store space is devoted to fresh products.
Thanks to Auchan’s customary reticence, it is hard to judge if it plans to extend either of these hard discount concepts. Only time will tell if Auchan’s hard discount concepts are the right strategy to counter the inexorable march of the French hard discounters.
- KC's View:
