Electrical Goods Retailing - France - February 2016

“The retailing of electricals in France is extremely challenging. The market is sluggish, with the main growth area, telecoms, subject to ongoing price deflation. Online retailers, notably Amazon, are increasing their market share and two major players, Darty and Fnac, are about to embark on a defensive merger. Store-based retailers need to work hard to remind consumers that shopping is about more than just price.”
– Natalie Macmillan, Senior European Analyst

This report answers the following questions:

What does the Fnac/Darty deal mean?
How can store-based retailers respond to the rise of Amazon?

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Overview
- What you need to know
- Areas covered in this report
Executive Summary
- The market
- Spending and inflation
  - Figure 1: France: Consumer spending on electrical items (annual % change in volumes, 2010 prices), 2010-14
- Channels of distribution
  - Figure 2: France: Estimated distribution of spending on electrical/electronic goods, 2015
- Sector size and forecast
- Leading players
- Key metrics
- Market shares
  - Figure 3: France: Leading specialist electrical retailers: Shares of spending on electricals items, 2015
- Online
- The consumer
- Where they shop
  - Figure 4: France: Where they bought electrical goods in the last 12 months, in-store versus online/catalogue, January 2016
- Levels of satisfaction
  - Figure 5: France: Levels of satisfaction with last electricals retailer purchased from, January 2016
- What we think
Issues and Insights
- What does the Fnac/Darty deal mean?
- The facts
- The implications
- How can store-based retailers respond to the rise of Amazon?
- The facts
- The implications
The Market – What You Need to Know
- Economy weak but spending picking up
- Electricals market impacted by falling prices
- Specialists dominate distribution, with the big players growing share
- Hypermarkets losing non-food sales but online expanding fast
- Specialist electricals retailers standing firm
- Countering competition from online
Spending and Inflation
- France’s economy a weak spot in the eurozone
- Consumption and purchasing power regaining momentum
- Electricals market buoyed by telecommunications
  - Figure 6: France: Consumer spending on electrical items (incl. VAT), 2010-15
- - Figure 7: France: Consumer spending on electrical items (annual % change in volumes, 2010 prices), 2010-14
- Inflation
  - Figure 8: France: Consumer Prices, Annual % change, 2011-15
  - Figure 9: France: Consumer price inflation on electrical items, annual % change, July 2014-December 2015
- Unit volumes
  - Figure 10: France: Main Electricals markets, spending (inc VAT) 2011-19
Channels of Distribution
- Specialists dominate
- Grocers important, but in decline
- Online taking market share
- Department stores most significant in Paris
  - Figure 11: France: Estimated distribution of spending on electrical/electronic goods, 2015
Sector Size and Forecast
- Specialists have proven resilient
- Standing up to the threat from online players
  - Figure 12: France: Electricals retailers’ sales, excl VAT, 2010-15
- Subdued growth on the horizon
  - Figure 13: France: Electricals retailers’ sales, Forecasts, excl VAT, 2016-20
- - Figure 14: France: Electricals retailers’ sales as % of all spending on electricals, 2010-15
Leading Players – What You Need to Know
- A mature market, with consolidation on the cards
- Darty the market leader
- Top groups growing combined share
- French online market at a medium stage of development
- Amazon leads, but Fnac, Darty and Boulanger all big online
Leading Players
- The triumvirate of Darty/Boulanger/Fnac
- The Darty/Fnac merger
- Integrating online, with marketplaces a key driver
- Expanding physical stores too
- Furniture/electricals combo retailers also strong
- Independents in decline
  - Figure 15: France: Leading specialist electrical retailers: sales, 2012-15
  - Figure 16: France: Leading specialist electrical retailers: Outlet numbers, 2012-15
- Sales per outlet
  - Figure 17: France: Leading specialist electrical retailers: sales per outlet, 2012-15
Market Shares
- Fnac has larger sales but Darty is leader in electricals
- Top groups growing combined share
- Conforama and BUT also important
  - Figure 18: France: Leading specialist electrical retailers: shares of spending on electricals items, 2012-15
Online
- France at a medium stage of development
- Online activity
  - Figure 19: France: Online buyers of electrical items in last three months, 2011-15
- Online sales
- Leading online players
  - Figure 20: France: Top retail sites by number of unique visitors, October-November 2015
- - Figure 21: France: Estimated sales of electricals online by leading retailers, 2014
The Consumer – What You Need to Know
- Men and younger age groups most likely to buy
- Specialists most popular, but online catching up
- Amazon and Darty lead the market
- Consumers are satisfied with product-related issues
- But less satisfied with services
Who is Buying?
- More men than women
  - Figure 22: France: Purchasing of electrical goods in the last 12 months, by gender, January 2016
- More younger people than older
  - Figure 23: France: Purchasing of electrical goods in the last 12 months, by age, January 2016
Where they Shop for Electrical Goods
- Specialists popular but online now ahead of the grocers
- Amazon and Darty now level-pegging overall
  - Figure 24: France: Where they bought electrical goods in-store or online in the last 12 months, January 2016
- Amazon dominant online
- - Figure 25: France: Where they bought electrical goods in the last 12 months, in-store versus online/catalogue, January 2016
- Average age and affluence
  - Figure 26: France: Where they bought electrical goods, by age and income, January 2016
Levels of Satisfaction
- Satisfaction higher on product than service related aspects
  - Figure 27: France: Levels of satisfaction with last electricals retailer purchased from, January 2016
- Satisfaction with specific retailers
- Darty
  - Figure 28: France: Those agreeing they were satisfied at Darty relative to electrical retailer average, January 2016
- Fnac
  - Figure 29: France: Those agreeing they were satisfied at Fnac relative to electrical retailer average, January 2016
- Amazon
  - Figure 30: France: Those agreeing they were satisfied at Amazon relative to electrical retailer average, January 2016
Amazon Europe
- What we think
- An evolving offer
- Amazon Prime extends its breadth and reach
- A sense of occasion
- Product development continues
- Delivery gets quicker, but pushes fulfilment costs higher
- Click & Collect points limited to US universities
- Looking ahead
- Company background
- Company performance
- Growth slows in Europe
  - Figure 31: Amazon.com Inc: Group financial performance, 2010-15
- Sales mix
  - Figure 32: Amazon: Composition of net sales, 2015
- Retail offering
Apple Retail
- What we think
- It’s all about the iPhone
- The importance of innovation
- Apple stores an important to success of the brand
- Company background
- Company performance
- Worldwide
  - Figure 33: Apple Retail: sales and operating profit, 2011-15
  - Figure 34: Apple Retail: Outlet data, 2010/11-2016
- Apple Retail UK
  - Figure 35: Apple Retail UK: Group financial performance, 2009/10-2014/15
  - Figure 36: Apple Retail UK: Outlet data, 2010/11-2016
- - Figure 37: Apple Retail: European stores, 2014-16
- Retail offering
Boulanger/HTM Group
- What we think
- Targeting high population urban locations
- Latest stores adapted to the digital age
- Adapted well to online
- Company background
- Company performance
  - Figure 38: HTM (Boulanger): Group sales performance, estimated, 2011-15
  - Figure 39: HTM (Boulanger): Outlet data, 2011-15
- Retail offering
Darty Group
- What we think
- Fnac takeover deal
- Digital strategy
- First-to-market edge over rivals
- Marketplace widens product offering and enhances price perception
- Rolling out bespoke fitted kitchens offer into more stores
- Capitalising on consumer demand for connected technology
- Customer services offer
- New store card with upgraded credit offering and loyalty benefits
- Company background
- Company performance
  - Figure 40: Darty Group: Group financial performance, 2010/11-2014/15
- - Figure 41: Darty Group: Outlet data, 2010/11-2014/15
- Retail offering
Euronics International
- What we think
- Company background
- Company performance
- - Figure 42: Euronics International: Group financial performance, 2010-14
  - Figure 43: Euronics International: Outlet data, 2010-14
- Euronics membership
  - Figure 44: Euronics: Members, countries and trading names, 2016
Expert Europe
- What we think
- The up-sides
- The downsides
- Company background
- Online
  - Figure 45: Expert International, online shopping availability, 2016
- Company performance
  - Figure 46: Expert Europe: Estimated sales at retail, excl. VAT, 2011-15
- - Figure 47: Expert Europe: Outlet data, 2011-15
- Expert Germany
- Expert Italy
- Expert Spain
- Expert France
- Retail offering
- Store formats
Fnac
- What we think
- Darty deal
- Fnac Kids roll-out completed
- Aiming for market leadership in the fast-growing connected devices sector
- Expanding its digital cultural offering
- Enhanced marketplace offering puts it in direct competition with Amazon
- Company background
- Company performance
- 2015
  - Figure 48: Fnac: Group financial performance, 2010-15
- - Figure 49: Fnac: Outlet data, 2010-15
- Retail offering
Appendix – Data Sources, Abbreviations and Supporting Information
- Abbreviations
- Data sources