Never mind Amazon Fresh, here comes Google’s online grocery play

Stuart Lauchlan Profile picture for user slauchlan June 12, 2018
Summary:
French conglomerate Carrefour needs to get its e-commerce act in order and that’s an opportunity for Google to get into groceries.

Monoprix store
A common aspect of all of diginomica’s extensive coverage of the rapidly-hotting-up online grocery wars has been a basic assumption shared by most supermarket chains - Amazon’s coming to get you, ready or not.

But maybe it’s not just Amazon. This week saw French conglomerate Carrefour announce that it’s signed up to an online grocery gambit with none other than Google, making it the first retailer in the country to team up with the tech firm.

From the start of next year, shoppers in France will be able to buy Carrefour products via Google Assistant and Google Home, as well as a new dedicated area on Google Shopping. The orders placed via these channels can either be delivered to the door home or picked up in-store.

Carrefour will also open an innovation lab with Google Cloud in Paris this summer which will focus on developing new AI-based services. And in a case of eating your own dog food, Carrefour will also be committing to internal use of Google offerings, training up 1000 staffers over the next six months as well as rolling out G-Suite to its 160,000 employees.

Hotting up

But it’s the grocery angle that’s the most interesting aspect of this as the French supermarket sector gets online. Earlier this year Casino Guichard Perrachon, owner of the Monoprix chain, signed a deal to sell groceries via Amazon’s Prime in the Paris region, a move which complements a deal last year between Casino and UK e-commerce technology provider Ocado.

The Google/Carrefour venture is another twist in the transformation efforts of Alexandre Bompard, who took over as Carrefour CEO last year. After the French firm turned in a net loss of more than €500 million in 2017, Bompard has determined that 2018 has to be a “turning point” with e-commerce at the heart of his Plan Carrefour 2022.

Speaking earlier this year, Bompard outlined his thinking:

Our clients want better, faster cheaper and new products. Today, this trend is actually gathering speed because of the development of new technologies and new distribution channels. Customer loyalty to a particular brand is actually no longer automatic. It is getting weaker and the customer path is not as linear as it used to be. It is more fragmented.

There’s a big problem here, he added:

Carrefour is active on every format, but it is not a multi-format group. Carrefour is active on every distribution channel, but it is not an omni-channel group.

The intent then is to create “an omni-channel universe for our customers..the indispensable condition for success”, said Bompard:

Our customers must find themselves in the same universe, whether they are purchasing online or in stores; this is how you build customer loyalty. For this to happen, we have to strengthen each single format, but most importantly, include them in an omni-channel strategy.

When we have reinforced all our physical contact points, our 12 000 stores will become an incontrovertible point of our omni-channel model. Today in France, a customer can find a Carrefour store less than 8 minutes away from home. These stores serve our digital strategy. There will be places where orders will be prepared and delivered, but there will also be pick-up services, places where items can be returned and refunded.

Cash and Carrefour

All of this is going to cost, of course, and Bompard is ready to spend the cash:

In order to be omni-channel, our e-commerce offer must be powerful everywhere; Carrefour cannot be successful in years to come unless it has a powerful omni-channel strategy. This is our priority and we will put all of our efforts into this. We will invest massively in digital commerce, we will be spending 2.8 billion euros by 2022: 560 million euros a year – that is 6 times as much as we are doing today.

Such capital expenditure will enable us to gear up our efforts to go into a new dimension and offer our customers an unprecedented experience. Right now, the digital offer is neither homogeneous nor satisfactory. It is quite understandable: we have as many as eight e-commerce sites that are not connected and 14 applications. Our customers can’t find their way through this.

So, we are going to revamp the entire set of Internet sites, so we have a single merchant website in each country. In France, Carrefour.fr will be offering, as early as this year, a simplified, single access to all our offer, both in stores and online. Carrefour will have a single general-purpose brand that will be readily identifiable: Carrefour.

And Bompard isn’t afraid to argue that despite its size Carrefour can’t go alone in all this and will need to partner. He points to a deal with Sapient, the technology arm of Publicis, to develop the e-commerce business as a good example:

This is a new expression of our new approach: we want to find the right partners for the right issues.

Which is where Google comes in. Bompard says:

This alliance makes Carrefour the first partner of Google on grocery e-commerce in Europe, creating a strong bond between the two companies. It also marks an important step in the new story written by Carrefour since the announcement of the Carrefour 2022 plan. It allows us to accelerate our digital evolution and get a head start in deploying the omni-channel approach we want to offer our customers.

Outside of France, Carrefour has digital ambitions elsewhere, not least in China where it’s opened its first hi-tech store in Shanghai, with plans for two more in Shenzhen in the coming months. These stores include digital capabilities such as cashierless check outs that use facial recognition tech supported by the WeChat app from Tencent. Bompard has been keen to play up this direction of travel for Carrefour in China:

Tencent is a fantastic technology leader, Chinese leader in social networks, media, online payment, digital leader as well. They are well known for WeChat, the leading social network in China, with nearly 1 billion users per month. This partnership shows Tencent’s trust in Carrefour Chine’s assets. Tencent will allow us to play a major role in China, in the e-commerce food sector, we will better use our data, we will better tailor our offering, we will increase traffic to our applications, and we will also organise a transition toward mobile use.

My take

An interesting roll of the dice by Carrefour and one that will clearly get a lot of support from Google as an exemplar of what it might build for itself in terms of a stake in the online grocery market. Definitely one to keep an eye on as a new front on the digital grocery wars.

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