Hyper markets responding to challenge by discount chains

70 per cent of French retail trade in food is concentrated in the hands of the five biggest companies. The largest European chain, Carrefour has its HQ in France and plays a dominant role in the market. France is also the second largest market in Europe, after Germany, with over 60 million consumers.
According to the British research institute M+M Planet Retail, French consumers have become more price-sensitive than before. Discount chains have gained ground at the expense of hyper markets, since prices are the main consideration for many people.
Why have hyper markets become a typically French channel? Because there were hardly any restrictions on building very large stores in France, up till the mid 90’s. Discount chains are not only popular because of their low prices. Many consumers prefer to go shopping more frequently and nearer to their homes, which means they spend less in distant hyper markets. Hyper markets responded by offering more economical products and simplifying their assortment. At the same time, they started aggressive marketing campaigns. Since legal restrictions on store size had come into effect, hyper markets have been fighting to maintain their positions and no longer hope to expand radically.
What is the market strategy of Carrefour in a big country like France? They operate stores in several channels, but hyper markets account for over 50 per cent of total revenues. Net revenues totalled EUR 35,57 billion last year. The biggest adversaries among discounts are Aldi and Lidl. The new Carrefour marketing concept focuses on prices and on targeting marketing campaigns at the 8 million loyalty card holders rather than all consumers. Private labels with 25 per cent of total revenues are also an effective weapon in this war.
Small food stores abound in downtown Paris. The number of discount stores with store space usually below 1.000 square meters is also increasing in the central area. The hyper markets like Carrefour and Auchan are located in the suburbs, where parking space is sufficient.