Current trends in

food distribution

in Europe

Claire Eychenne
Benjamin Le Roux
Jonathan Rastel

• European background
• Present situation
• Trends and perspectives

– Aging of consummers
– New technologies

•E-commerce
•Virtual goods
•RFID

• Format wars
• International expansions

SUMMARY

European background

 Business related services :

- largest sector of the economy
- employing 55 million people in EU 15 in 2001
- > 13 % of the GDP

 Service sector :

- micro-enterprises = 33% of total
employment

Present situation

 Because of the history :

- diversity of retail sector (reflects the
fragmentation of the market)
- coexistence of traditional retail format and out of
town hypermarkets
- discounters near the downtown

 Raise of new retail format : connected with the

advent of internet madiated and virtual goods

Present situation

Hypermarket lifecycle : +++ growth and

saturation

– Introduction, innovation (5): Baltic countries
– Growth, accelerated development (10): Poland,

Tcheck Republic, Grece, Slovenia, Slovakia

– Maturity and saturation (8): Sweden, Finland,

Irland

– Decline and degeneration (3) : France, United

Kingdom

Present situation

Discouter lifecycle : +++ introduction and

growth

– Introduction, innovation (10): Baltic

countries, Belgium

– Growth, accelerated development (11):

Poland, Tcheck Republic, Grece, France,
Unitek Kingdom

– Maturity and saturation (4): Danemark,

Hungria, Nederland, Austria

– Decline and degeneration : not yet

Trends and perspectives

 1960s/70s : Desertification of inner-city areas  exodus

of retailers for lower rent, larger surface and out-of-town
locations
 Success of the hypermarkets, supermarkets and
discounters (lower price level)
 Decreasing of the specialist shops in inner city centres
(accessibility by car and delivery lorry, price …)
 Increasing concentration of department stores

Trends and perspective

 Planning permission constraints in the West

 Hypermarket boom in the East

 Building permits for large retail outlets will become
more difficult to obtain in suburban than in urban
locations in order to protect inner city retailers

 rapid aging of european population will shape the retail
landscape :

- necessity of retail possibilities in inner cities

- necessity of adequate public transport

infrastructures

In the future :

 rise in the number of elderly citizens will require higher
density retail areas, close to residential areas
 absence of cheap inner city retailers and city centre
supermarkets will make it difficult for older people to
shop
 Future : ‘city of short distances’

Aging consumers

Technological

innovations

 In competitive environments, technology can allow
retailers to

- generate efficiency gains

- coordinate logistics

- control procurement and sales

 2 ways of exploration :

- Radio Frequency Identification tagging (RFID)

- E-commerce

Technological

innovations

 E-commerce

 Concerns Fast Moving Consumer Goods (FMCGs)

 E-commerce in groceries and foodstuffs previously
dominated by larger players

 Now retailers traditionnaly operating in different
segments of retail trades are on the market

 Successful implementation of e-commerce : travel and
hotel sectors (no physical handling of goods offered)

Technological

innovations

 Opportunity for small retailers and niche specialists to
inform of their offers as many people as large scale
retailers

 However consumers prefer security of large retailers
and after sale service

 Security and service : crucial factors for the success of
this new trend

 Will unable smaller retailers to extend their catchment
areas
Production and packaging of goods will change with the
shift to internet trade
We will have to solve the credit card accessibility
problems

Technological

innovations

 2 major drawbacks :

- Internet equipment and credit card required
- well functioning logistic required

 Because of longer working time the trend towards
home delivery services

 E-commerce concepts of hyper and supermarket
multiples will have to include perishable and food goods
into their assortment

 Wider use of e-commerce will entail a greater need for
delivery services and an optimised logistical chain

Technological

innovations

 Virtual goods and auction

 Retail sales of virtual goods are increasing
 Examples :

- documents
- mp3
- music files ...

Technological

innovations

 RFID



Automatic

identification method, relying on storing and

remotely retrieving data using devices called RFID tags or
transponders

 Will replace barcodes

 Direct communication between supermarket shelf and
supplier warehouse

 Tagging will have to be widely standardised

 Implication for the producers : forced to integrate the
RFID tags to penetrate the market

Technological

innovations

 RFID

 First tags expected within the next 10 years



Hope of efficiency gains for the larger retailers if issues

of data protection and consumer privacy are organised

 Controversy surrounding issues of privacy and tracking

 A regulatory framework needs to be established

- Peaceful co-existence against

competition

- Format supression if one better suits

more to consummer

- Few reasons for new format :

New technology
Liberalisation of regulated format (ex:
tobacco)

Format wars

From hypermarket to dicounter

- Hypermarket development slowed down by

planing permission

=> Branded goods

- Discounter expected to continue to gain

market share

=> Exclusive contract with retailers

Stagnation in the retailing sector

- Retails turn over are growing
=> « price premium » trade off against

quality gain

Medium term outlook

Future Trends

Blurring of the format

- Wider diversity and coexistence of retail

formats

- Combination of entertainment and dining

facilities with shopping

- « Opportunity shopping » => « fuel station

supermarket »

Scenarios for future

- Hypermarkets nearing saturation
- Increase of discounter place
- Shopping centre and gallerie success

=> increasing leisure time / pleasure

shopping

International expansion

- Explained by saturation of domestic market
- Helped by few changes

- Homogenisation of consumer demand across the

border

- Introduction of the Euro
- New technologies => Fast reaction to demand

Medium term outlook

- Renovations in countries with high maturity retail format
- Expension in countries where markets are not satured
- Global expension outside EU

Future

international

trends

Limits to expansion

- Countries with highest potential often present :
- inflation / corruption / safety risks
- New regulations and urban planning rules
- Anti trust law

Scenarios

- 13 out of 25 biggest retailers have European

origin
=> conflict with competion law

Challenges

 Transparency as a key for trust building
 Use of trustworthly operating methods (Ex:

ISO)

Replacing desertification of inner city
Ex : Redefin place of municipal market

Acceptance of virtual retail store

THANK FOR YOU ATTENTION…