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January 4, 2012

French Online Retail Overview, 2012by Martin Gillfor eBusiness & Channel Strategy Professionals

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For eBusiness & Channel Strategy Professionals

ExECutivE SuMMaRyFrance is the third largest online retail market in Europe; although it will continue to mature and grow at a pace outstripping overall retail growth, there are significant changes in store for French shoppers and eBusiness executives alike. As the economy tightens, French shoppers are increasingly price conscious — they are hunting hard for deals, they are less influenced by merchandising or peer opinion than they were, and they are highly conscious of shipping costs. In response, French eBusiness executives are experimenting with a range of multichannel approaches — from engaging shoppers via social media to planning “click and collect” schemes. eBusiness executives in France have a clear opportunity to accelerate online growth by embracing multichannel shopping to deliver flexibility, convenience, and most of all value to their shoppers.

taBlE OF COntEntSA Multichannel Approach Holds The Key To Driving More Online Sales In France

as the Economy tightens, Price is King For French Online Shoppers

a Multichannel approach is Emerging But is Far From the norm

a Credit-Cautious Culture Means that Debit Cards Rule For Online Payments in France

Despite Some Flexible Delivery Options, French Retailers are Missing Opportunities

RECOMMEnDatiOnS

The Multichannel Revolution Is Coming

Supplemental Material

nOtES & RESOuRCESthe body of this research is based on Forrester’s European technographics® surveys and Forecastview projections. We also conducted a Webtrack of 23 major French online retailers.

Related Research Documents“Case Study: How Marks and Spencer uses Online video to Boost eCommerce” June 8, 2011

“European Online Retail Forecast, 2010 to 2015” February 28, 2011

“untangling the attribution Web” December 3, 2010

“European Social technographics® 2010” September 28, 2010

January 4, 2012

French Online Retail Overview, 2012French Online Retail is On the Brink Of a Multichannel Revolutionby Martin Gillwith Patti Freeman Evans, amelia Martland, and Myriam Da Costa

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© 2012, Forrester Research, inc. Reproduction ProhibitedJanuary 4, 2012

French Online Retail Overview, 2012 For eBusiness & Channel Strategy Professionals

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A MulTICHAnnel AppROACH HOlDS THe Key TO DRIvInG MORe OnlIne SAleS In FRAnCe

With a projected 62% of French online adults shopping on the web by the end of 2011 — more than 27 million consumers — France is the third-biggest online retail market in Europe, after the UK and Germany.1 Forrester forecasts that the overall French online retail market will be worth €12.8 billion in 2011, which represents 3.4% of the overall national retail market.2 In France the acceptance of online shopping lags behind that in the UK and Germany; online holdouts are primarily concerned about retailers’ shipping and returns policies and pricing, as well as about the security of their financial information.3

As The economy Tightens, price Is King For French Online Shoppers

French shoppers make fewer online purchases than the average European; 53% of French online shoppers purchase monthly or more frequently compared with an EU-7 average of 62%.4 As the French economy suffers along with the rest of Europe, the online retail market will continue to grow at a pace that outstrips overall retail growth, as French buyers turn to the Web to save money across most online categories (see Figure 1). French shoppers show some particular behaviors that will continue to shape the market as follows:

· Above all, they need to know they are getting the best price. French shoppers are significantly more price-conscious than the average European online shopper. Fifty-one percent of French online shoppers are influenced by low price guarantees compared with 43% across Europe.5 French eBusiness professionals have responded by hosting permanent sale sections on their websites, while some retailers like Pixmania are taking the approach further by managing their own flash sales (see Figure 2).

· They are paying less attention to merchandising and are focusing on what matters. French shoppers are becoming more price-sensitive and less influenced by merchandising and ratings and reviews. In 2010, 52% of French shoppers were influenced by peer reviews — in 2011this figure has dropped to 44%.6 Retailers such as Darty have focused on making the most of this influence (see Figure 3). However, in a tight economic climate retailers in commoditized categories face an online price war if they want to retain their customers or grow their market share.

· They rely on exclusive loyalty clubs for discounts. After product reviews, price kicks in as an influencer to French online shoppers. French eBusiness professionals offer opt-in discount schemes that range from full-blown private membership shopping clubs such as Vente Privee to subscription-based loyalty schemes such as the one Fnac offers, which charges a regular subscription fee to unlock discounts, private sections of its website, and bespoke offers.

· Their use of search engines for research is more complex than in many other countries. As in many European countries, ComScore ranks Google as the No. 1 website in France7. However, the search landscape is more complex in France than in many other countries, with both Microsoft and Yahoo ranking more highly in France than in most other European countries, meaning that retailers must work on search optimization across multiple search engines.

© 2012, Forrester Research, inc. Reproduction Prohibited January 4, 2012


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Figure 1 Consumer Electronics and Clothing are Strong Online Sellers in France

Source: Forrester Research, Inc.59800

Source : Forrester Research Online Retail Forecast, 2010 To 2015 (Western Europe)

Percentage of total online spend by category, 2011 forecast

Consumer electronics 28%

Clothing 17%

Computers 10%

Household goods and furniture 7%

Car parts 6%

Event tickets 6%

Beauty and cosmetics 3%

Videos and DVDs 3%

Household appliances 3%

Food and drink 3%

Other 16%



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Figure 2 Pixmania Hosts Flash Sales to appeal to Price-Conscious French Shoppers


Source: Pixmania.com

Pixmania hosts its own �ash sales,appealing to price-consciousFrench online shoppers.



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Figure 3 Darty Provides Multicategory Ratings and Reviews


Source : Darty.fr

Darty’s shoppers can create ratings andreviews with multiple review criteria.However, shoppers can’t narrowproduct selection or search for high-rated products.



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A Multichannel Approach Is emerging But Is Far From The norm

Many of the most frequently visited French websites such as Sephora or Carrefour are all part of broader multichannel brands, although many of these retailers are yet to present their shoppers with any more than a basic level of channel integration. Despite operating large online operations and extensive store chains, retailers such as Yves Rocher offer nothing in the way of either shipping to or collecting from stores. The disparity of multichannel approaches can be seen in that:

· Multichannel approaches are still limited in scope and number. Pixmania is one of a small number of multichannel retailers that offers in-store pickup on web orders, although even it falls short of offering in-store returns. But in a market where shoppers are highly conscious of delivery costs, French retailers are waking up to the opportunities that a multichannel delivery approach creates — online retailer Cdiscount is rolling out a free in-store pickup scheme in Paris with its sister stores in the Casino chain and identifies this as a strong driver of online sales.8

· Grocery giants are experimenting with multichannel options to drive sales. Despite its offline market strength, Carrefour has yet to make online grocery shopping mainstream in France, in part due to its complex and expensive delivery pricing structure (see Figure 4).9 E.Leclerc and Auchan are both innovating with multichannel concepts such as drive-through pickup (see Figure 5). The distributed nature of the French population leaves grocery retailers struggling to find a delivery model that is cost-effective for them or their shoppers. But with strong competition in this sector these experiments will continue to grow as grocers focus on the enhanced value that multichannel shoppers bring to other non-food categories.10

· Emerging touchpoints demand an approach that is uniquely French. French web users have a distinct way in which they engage with social media, turning to social networks to discover, collect, and consume content rather than for conversation.11 In addition to more traditional social media activities such as Facebook, Fnac engages tech-savvy shoppers across a range of more unusual touchpoints, including RSS feeds, desktop widgets to consume content and “Aide Fnac,” an avatar based live chat help (see Figure 6). This approach is tuned to embrace the way in which French web users want to engage and drives tangible value as Fnac’s multichannel shoppers are 30% more valuable than single-channel shoppers.12



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Figure 4 Carrefour Has a Complex Delivery Price Structure Based On How Much Shoppers Spend


Source : www.ooshop.com

Carrefour’s grocery shoppingsite o�ers customers lowerdelivery charges the morethey spend — though €9 forthe �rst shipment is a highbarrier to entry for price-conscious French shoppers.



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Figure 5 leClerc Drive allows Customers to Order Purchases Online and Collect them By Car


Source : E.Leclerc website

E.Leclerc Drive allows customersto shop for groceries online attheir local store and pick up theirorder 2 hours later at specializeddelivery bays.



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Figure 6 aide Fnac Presents avatar-Based Online Chat to answer Shoppers’ Questions


Source: Fnac.fr

Aide Fnac’s Video Avatar invitesshoppers to engage in onlinechat regarding products or otherfrequently asked questions. Thisengagement is just one small partof a multitouchpoint engagementwith shoppers.

A Credit-Cautious Culture Means That Debit Cards Rule For Online payments In France

More than many other European shoppers, French online shoppers lean heavily toward a single preferred payment method — debit card. But despite the strong consumer preference, Forrester’s European Technographics Retail, Customer Experience, and Travel Online Survey, Q3 2010 reveals that many retailers feel the need to offer alternate payment methods (see Figure 7):

· Extensive debit card availability has not been the key to online growth. As in the UK, debit cards are not only a popular choice with consumers but also can be used to pay online. Despite this readily available payment method, the French market has taken longer to grow than in



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the UK or Germany where other payment methods have evolved to compensate for the lack of online debit card payments. As online shopping holdouts are not unduly worried about sharing their financial data online, French eBusiness executives must look to other influencers — in particular price and shipping cost — to drive further online growth.

· PayPal is beginning to build a stronger presence. Major French online retailers like Cdiscount, Fnac, and La Redoute offer alternative payment options such as PayPal. Just over a quarter of French shoppers regularly use PayPal, making it the second-most commonly used online payment method.13 PayPal’s presence is driven to a large extent by the popularity of eBay. Although eBay is not strictly a B2C website, Fevad (the French eCommerce federation) ranks it as the most popular retail website in the country, and its popularity with French shoppers has led other major retailers to offer PayPal to their customers.14

· Credit cards are a close third choice online. Credit cards are considerably less popular in France than in the UK or Germany. Obtaining a credit card in France is relatively difficult when compared with other European countries, with stringent standards applied to age, credit referencing, and income levels. France is not a credit-heavy culture, and this is reflected in online shoppers’ preferences.15

Figure 7 Debit Card is By Far the Most Popular Online Payment Method in France


Source: European Technographics® Retail, Customer Experience, And Travel Online Survey, Q3 2010

Debit/payment card 72%

PayPal 26%

Credit card 24%

Cheque (asked to UK, FR, IT) 10%

Gift card 4%

Cash (on delivery) 2%

Online banking transfer 2%

Prepaid card 1%

Microbilling system 1%

2%Other payment method



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Despite Some Flexible Delivery Options, French Retailers Are Missing Opportunities

French online shopping holdouts remain skeptical about delivery costs, and it’s a prime concern even for those who currently shop online. If retailers want to convince more shoppers to shop online, or for current online shoppers to reach the frequency levels of their UK and German neighbors, retailers must do more to enhance an already fairly flexible range of options:

· Multichannel delivery and returns options are largely untapped. Although some multichannel leaders are beginning to offer an integrated approach to buying online and offline, they are in the minority. Some retailers such as Decathlon are actively planning to launch click and collect schemes. Leading retailer Carrefour’s recent decision to migrate its non-food online range to the Pixmania platform will potentially allow it to take advantage of Pixmania’s integrated multichannel fulfilment capability. Where Carrefour leads, other French retailers will no doubt follow.

· Collection points offer shoppers more control. Although home delivery is a commonly used option, Point Relais (local collection points) are popular. There are numerous chains; the two largest, Mondial Relay and Relais Colis, operate around 4,000 pickup points each. Retailers commonly establish distribution deals with a chosen chain of delivery points to give them national reach.16 According to Fevad, more than half of French online shoppers have used a collection point.17 Retailers that don’t offer a collection service risk being disadvantaged by those that do.

· Flexible delivery and returns are critical for fashion retailers such as La Redoute. Shipping costs are a major concern for online shoppers in France — 56% of online shoppers are influenced by shipping costs, and 39% of online shopping holdouts say they would consider shopping online if shipping costs were lower.18 La Redoute is responding to these concerns by offering a flexible range of free delivery services — to home, office locations, or Relais Colis pickup points. It also offers a flexible and free returns policy and it offers loyalty cardholders additional time to return products.

· Planned EU regulatory changes will have less impact in France than in the UK or Germany. The Châtel Act (2008) attempts to protect consumer choice, allowing shoppers to return products without penalty and without justification. Unlike many other EU countries, the act is already in line with planned changes to the EU Distance Selling regulations in that the merchant must refund all money paid by customer, including the price of the item and shipping within 30 days, meaning that French retailers should see less impact than other countries as the EU-wide regulations are enforced.



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R E C O M M E n D a t i O n S

THe MulTICHAnnel RevOluTIOn IS COMInG

French online retail stands poised to undergo a similar transformation as we’ve seen in the uK over the past few years. Many of the eBusiness and channel strategy executives Forrester spoke with are actively planning to launch more multichannel services. traditional brick-and-mortar businesses are beginning to understand the opportunity that an integrated approach to their online and offline channels can bring, and even pure-play online businesses are looking to create fulfillment deals with retail chains that offer their customers flexibility and convenience. French retailers can’t ignore this trend but must respond to the tightening economic climate by understanding how French shoppers search for products, discover deals, and compare prices by:

· Offering integrated multichannel delivery and returns options. Shipping costs and returns policies are not only a major inhibitor to online shopping holdouts, but also heavily influence current French web shoppers. Retailers have an opportunity to address their shoppers’ fears by offering services such as “click and collect” or in-store returns. Retailers with store chains must work to integrate the shopping experience or risk getting left behind as their competition offers an increasingly flexible service. this is not a simple task, so eBusiness and channel strategy executives with French retailers should look to their uK counterparts for best practice — many uK retailers such as B&Q, argos, and French Connection have invested heavily in stock management and supply chain integration and can now measure the value that their multichannel customers bring to their businesses as a result.

· understanding the influence of the Web on offline sales. Shoppers’ offline purchases are increasingly influenced by their online research, and with French shoppers’ trust in the information that retailers provide online lagging behind what they find on search engines, managing this is a challenge. With a complex search landscape, retailers must understand the subtleties of each of the search providers, but must also work to attribute clicks and sales in an increasingly complex multichannel environment using an attribution model such as Forrester describes in our report “untangling the attribution Web.” 19

· Getting the basics right before investing in flashy merchandising. the influence of both retailer merchandising and peer opinion (via ratings and reviews) have slipped in the eyes of online buyers in France. Harnessing the potential of reviews through tightly integrated, multicriteria peer reviews (such as Darty) and social networks will still have an influence on web shoppers, although a focus on price and promotion (and shipping costs) is likely to deliver more benefit in the short term. eBusiness professionals should prioritize any current plans to implement ratings and reviews or enhanced merchandising alongside investments in SEO, deals, and multichannel delivery options and should seriously scrutinize the business case.

· Building coherent multitouchpoint strategies that are uniquely French. While engaging shoppers on emerging touchpoints such as mobile and social media is of growing importance, French retailers should consider the nuances of how their shoppers use these tools. Mimicking uS or uK “best practice” examples may not be the right approach



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here — an approach that caters for the unique way in which French web users approach these touchpoints is necessary. look to examples such as Marks and Spencer, as outlined in Forrester’s case study, for ways to engage shoppers via social media that allow them to discover and share product and brand-focused content rather than focusing on engaging shoppers in discussion.20

SuppleMenTAl MATeRIAl

Methodology

This report uses data available in the Forrester Research Online Retail Forecast, 2010 To 2015 (Western Europe), which includes detailed information on 20 categories by all of the EU-17 countries. The full model is available to Forrester ForecastView subscribers.

Forrester developed this forecast using a proprietary model from Forrester’s ForecastView product. The model uses a mix of publically available information about anticipated demand and pricing from third-party organizations, including government, trade associations, and company financial data. Forrester then incorporates information gathered in confidential industry executive interviews, our ongoing industry research, and Forrester data regarding topics like anticipated consumer technology adoption to create the forecast model.

For more information on Forrester’s ForecastView offering, including access to details and metrics not included in this report, please contact us at [email protected].

The European Technographics® Retail, Customer Experience, And Travel Online Survey, Q3 2011, surveyed 13,063 respondents in the seven markets of France, Germany, Italy, the Netherlands, Spain, Sweden, and the UK. This survey is based on online adults ages 16 and older who are members of the Ipsos-MORI online panel. Ipsos weighted the data by age, sex, online frequency, and hours spent online to demographically represent the online adult European population per country. Ipsos fielded the survey in June and July 2010 and motivated respondents with various incentives. For results based on a randomly chosen sample of this size (N = 13,063), there is 95% confidence that the results have a statistical precision of plus or minus 0.9% of what they would be if the entire online adult population of Western Europe had been polled. This confidence interval can widen up to 3.1% when the data is analyzed at a country level. The sample used by Ipsos is not a random sample; while individuals have been randomly sampled from the Ipsos panel for this survey, they have previously chosen to take part in the Ipsos online panel.



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enDnOTeS1 Source: Forrester Research Online Retail Forecast, 2010 To 2015 (Western Europe).

2 Source: Forrester Research Online Retail Forecast, 2010 To 2015 (Western Europe).

3 Twenty-seven percent of French online shopping holdouts say they would consider shopping more online if there was “Better security for my credit card and/or personal information” versus an EU-7 average of 24%. When it comes to returns, 30% of French holdouts say they would consider shopping more online if they perceived an “Ability to return merchandise easily” versus 28% of EU-7. Source: European Technographics Retail, Customer Experience, And Travel Online Survey, Q3 2011.

4 Source: European Technographics Retail, Customer Experience, And Travel Online Survey, Q3 2011.


6 French online shoppers are less influenced in 2011 than they were in 2010 by a wide range of online influencers. When answering the question, “Which of the following types of information did you use when considering buying products on retailer’s website (e.g. Amazon)?” only “Low price guarantees” showed an increase in influence from 2010 to 2011. All other influencers, including “Product information from the retailer,” “Product information from the manufacturer,” “Detailed product descriptions,” and “Product reviews and ratings from other customers” are viewed as less influential than they were in 2010 by French online shoppers. Source: European Technographics Retail, Customer Experience, And Travel Online Survey, Q3 2011 and European Technographics Retail, Customer Experience, And Travel Online Survey, Q3 2010.

7 Source: ComScore Europe Digital Year in Review, 2010 (http://www.comscore.com/Press_Events/Presentations_Whitepapers/2011/2010_Europe_Digital_Year_in_Review).

8 Source: “2011 First-Half Results,” Groupe Casino presentation (http://www.groupe-casino.fr/IMG/pdf/Presentation_H1_2011_Results_-_VGB-vdef.pdf).

9 Carrefour offers free delivery for grocery shoppers who spend more than €180 every three weeks. But with an initial charge of €9 for a customer’s first order (compared to UK pricing of less than £5, just under €6 in August 2011) this presents a high initial barrier to shoppers considering a first order.

10 The urban population is 77.6% of the total population in France in 2010. This is not significantly less than in the UK; however, the French population is clustered into a large number of smaller conurbations when compared to the UK population, which centers around a small number of highly populated urban areas. This geographic distribution of cities presents a challenge to an online grocery delivery model when compared to the UK and has driven French retailers to experiment with different approaches. Source: La Banque Mondiale (http://donnees.banquemondiale.org/indicateur/SP.URB.TOTL.IN.ZS/countries/1W-FR-GB?display=graph) and Online Geography Resources (http://www.geographyalltheway.com/igcse_geography/population_settlement/population/population_distribution.htm).

11 Forrester defines Collectors as social media users who most commonly use RSS feeds, vote for websites and add tags to photos, etc. French online users show a strong tendency to be Collectors — 22% of French social media users are Collectors compared to an EU-7 average of 10%. Additionally, French social media



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users are less likely than most other Europeans to use social networks to engage in conversation or create content — their focus is more commonly on using networks for discovery. Please see the September 28,

“European Social Technographics 2010” report.

12 Source: Fevad (http://www.fevad.com/uploads/files/DocArticle/etude/fevad2011__malineaecommerce2020.pdf).

13 Source: Technographics Retail, Customer Experience, And Travel Online Survey, Q3 2010.

14 C2C Second hand sales sites eBay and PriceMinister rank above La Redoute, although for the purposes of this research Forrester have concentrated on B2C eCommerce. Source: “Chiffres Clés,” Fevad (http://www.fevad.com/uploads/files/Publications/chiffrescles2010.pdf).


Additionally, please read this article. Source: “French Hold Out Against Credit Crunch,” BBC News, September 26, 2008 (http://news.bbc.co.uk/1/hi/world/europe/7635327.stm).

16 Source: Mondial Relay (http://www.mondialrelay.fr/) and Relais Colis (http://www.relaiscolis.com/).

17 Source: “Chiffres Clés,” Fevad (http://www.fevad.com/uploads/files/Etudes/fevad2011_chiffres.pdf).


19 In an environment where media fragmentation is the status quo, traditional one-to-one, last-touch methods of allocating demand to marketing efforts are outdated and lead to a suboptimal marketing mix. Customer Intelligence (CI) professionals must adopt a cross-channel attribution model in order to optimize marketing budgets, accurately calculate customer value and acquisition costs, and develop a holistic view of the marketing ecosystem. Failure to embrace this new standard is expensive — firms will be plagued with continued channel conflict and an inefficient marketing budget. See the December 3, 2010, “Untangling The Attribution Web” report.

20 Next to the usage of social networking sites, watching online videos is one of the most used social media tools. Many companies have wondered how they can tap into the online video audience. While most brands focus on using online video to create brand awareness, UK retailer Marks and Spencer has also successfully improved its online sales. eBusiness and channel strategy professionals can learn from Marks and Spencer about which product videos have the most potential to drive online sales and whether video content on Facebook and YouTube can bring buyers to their website. See the June 8, 2011, “Case Study: How Marks And Spencer Uses Online Video To Boost eCommerce” report.






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