5 C&C Truths to Ponder From French Grocers

Although click-and-collect is still in its infancy in U.S. grocery, especially compared with many chains abroad, it has seen some robust recent growth: The percentage of grocers offering such programs rose from 15 percent to 23 percent between 2015 and 2016, according to Progressive Grocer’s 84th Annual Report of the Grocery Industry. Additionally, recent research from Chicago-based data and analytics firm IRI reveals click-and-collect to be a "core driver" of  ecommerce growth  – one strongly favored by consumers.

So if New York-based firm Kantar is correct in its recent research showing that annual spending online for food and alcohol in the United States is anticipated to rise from $22 billion to $55 billion between now and 2021, then click-and-collect likely has a bright future ahead of it.

"Based on the growth curve in Europe — particularly in France, which has similar demographics and geography as the U.S. — the next few years are expected to be when online grocery models evolve and retailers innovate," said a new report from Kantar, "Retail in Motion: What U.S. Retailers Can Learn from France."

In France, the Drive model – a "more sophisticated" version of click-and-collect where users order online, set a pickup window, and drive to a store or dark site to have the order loaded into the car – has gained “significant traction over the past few years,” despite a slow start. The model, used by such French grocers as Auchan and E. Leclerc, contributed 45 percent to CPG market growth in France in 2015, and is anticipated to reach 6.5 percent market share by 2018. Further, with an expected average annual growth rate of 12 percent, it's forecasted to reach 10 percent market share within a decade.

Such a model and its performance have been an inspiration to U.S. supermarket chains such as Kroger and Walmart, which have been expanding similar operations under their click-and-collect programs. While these and other U.S. grocers already have jumped into the click-and-collect waters, many are still dipping their toes or not even that far yet.

As online grocery expands in the States, new and seasoned U.S. grocers can derive several learnings from the evolution and maturation of online grocery and the Drive model in France. According to the report, they should know that:

• Competition drives innovation: Being the only kid on the block isn’t necessarily a good thing with an ecommerce program, as new models in this space take off when two top retailers battle it out.
• They must differentiate between urban and non-urban shoppers: The Drive model isn’t winning in France’s big cities, but in non-urban areas, where cars play a big role in people’s lives.
• Choice is key: Convenient time slots and locations are critical to the Drive model’s success, as shoppers want to choose. When done correctly, Drive provides the "ultimate customer experience."
• Supply chain management is critical: It’s easiest for shoppers to pick up at the store, but it’s only a short-term solution, and disruptive to inventory forecasting. Although it’s pricey, grocers need a dedicated supply chain as a more scalable solution for click-and-collect.
• It’s important to explore new performance metrics: Since gross margin can be confusing when applied to ecommerce, retailers must use different metrics from the ones they use in store. Items with similar gross margins can have widely different picking/distribution costs.