This content was originally published Dalila Bouaziz.
The manager at the head of the 4th distribution group reflects on this first half year and on the latest news of the cooperative including the launch of "U Occasion". The opportunity to discuss the changes in the consumer market and the acceleration of e-commerce food.
What is your assessment of the past few months?
The first half of the year has been very special, marked by the healthcare crisis. From a financial point of view, Système U is one of the two companies that made significant progress during the lockdown, due to our close geographic positioning in the territories. Also, when consumers had to do their shopping as close to their homes as possible, they naturally went to one of our 1,600 sales outlets. The lockdown period was exceptional.
Since the end of this period, activity has remained very sustained. Since the virus is still present, consumers continue to eat a lot at home - and therefore to do a lot of shopping - for various reasons: teleworking, closed school canteens, etc. This new school year seems to be following the same pattern, as the health situation remains fragile. Food consumption is doing extremely well, as is the bazaar, the non-food market. During the lockdown, the French wanted to refurbish their interiors: since the end of the lockdown, we have seen a growth in this sector of decoration and household appliances. We will end the year positively in the non-food sector, contrary to the declining textile activity.
What are the categories in the food sector that are the most purchased by consumers?
The best progress since the beginning of the year has been in the butcher's department. It is spectacular and almost unexpected at this level. Consumers have been doing a lot of cooking at home in recent months, and this continues, they have also been going out to restaurants less. Barbecue season is also traditionally a time when customers consume meat in large quantities. Organic food has also gained tremendous popularity, a symbol of confidence and quality for many consumers, including fruit and vegetables. Often wrapped up, consumers saw it as a better sanitary measure. Frozen foods also worked well.
The economic crisis puts the question of purchasing power back at the center of consumer concerns, how does this translate in your stores?
During the lockdown period, local products, a longstanding and traditional offer in our stores, were very popular with our customers. We have reinforced it during this period and our consumers remain demanding. Nevertheless, it is still too early to measure the impact of the health crisis on consumption and draw lessons. We will measure it in September and October. We are facing the situation of a France divided in two. On the one hand, French people who have saved a lot during this period: more than 100 billion euros. The question is when are they going to reinject these savings to boost consumption. Is it during the festive season? In view of the very complicated year, consumers may want to take advantage and enjoy themselves. On the other hand, you have French people in difficulty who have found themselves or are in unemployment or short-time work. The weight of food expenses has increased in their budgets so they are more sensitive to promotions, pricing, etc.. However, our cooperative, like the entire industry, has made sure to maintain this purchasing power by not increasing prices. We have thus blocked the prices of 5,000 products, putting 6 fruits and vegetables at cost price.
You have recently ventured into the second-hand market, can you tell us a little more about it?
This project had been under consideration for quite some time. We have officially launched this activity of buying and selling second-hand cars under the name "U Occasion". Currently, this service is offered in 5 of our stores, notably located in rural areas as well as in the Côte d'Or. We buy products (electronic articles, video games, books, small household appliances) from customers, the customer drops off his article, we evaluate its price and we make a value proposition. If there is an agreement, the product is bought back in the form of a voucher to be used exclusively in the store. We believe in circular economy: less waste and more purchasing power by allowing our consumers to buy cheaper products. This new activity is off to a strong start.
During the lockdown, food e-commerce has grown strongly at all retailers. What about System U?
Before the crisis, food e-commerce represented 3% of the turnover. It rose to 7% during the lockdown and today we are at 5%. The crisis has served as a gas pedal for the development of e-commerce at Système U. We have thus increased the size of our assortment, promotions via flyers to the drive. Many new products will be launched this fall. By the end of the year, the stores will be able to further personalize the e-commerce site and open stores with local products, group categories by theme on the Home... This process will be gradual but the first steps will start this fall.
What changes do you perceive with your online customers?
Many of our customers were not aware of or did not use this service and became adepts during the crisis. E-commerce was seen as a useful service during the lockdown. Some of our consumers continue to shop on this channel. Among these new users, we are seeing an older clientele who have taken up the service for security reasons. We observe changes in consumption habits with very high average drive-through baskets. Customers have also understood that they can buy fresh products online. This led us to develop our offer in this category. Before this crisis, the drive was for standard groceries: water, diapers and hygiene items for children, heavy products, toilet paper, etc. We are now offering a new range of products in the drive category. The clientele was mainly composed of families with young children. This crisis made it possible to break the barrier concerning fresh products: butcher's shop, fruit and vegetables, fish shop...
What about food e-commerce in the Paris region?
In order to bolster our online food offering in Paris, last June we signed a partnership with the start-up company La Belle Vie to enable people in the Paris region to benefit from an optimized delivery service: deliveries in less than one hour in Paris and three hours in the Paris region. We deliver La Belle Vie grocery products by becoming a supplier, but without any capital-intensive intervention. This partnership is interesting because we exchange data and information, especially on the e-commerce part and the design of the site.
What are your concerns at the moment?
We need to capitalize on all the latest launches: the second-hand market, the CFA for the food trade. Beyond the health and economic crisis, the climate crisis is looming in the background. Système U is ready to take up this challenge that customers are waiting for. We must have less of an impact on the environment: less packaging, greener transport and find more sustainable solutions.