Retail Shake-up Proposed for Supermarkets

French retailing may be in for a big shake-up, with the introduction of Sunday opening, and other measures aimed at driving down prices. The Government have now acknowledged that, in comparison with other countries, the situation in France is somewhat ‘paradoxical’ and that they would like to introduce Sunday opening in 2008. Negotiations are now taking place with the retailers and unions. At the present time, Sunday opening is not permitted in France, but there are many exemptions and loopholes. Nevertheless, the French themselves do not seem to share the same enthusiasm for shopping seven days a week as those from elsewhere in Europe. In a recent poll, barely half of those surveyed expressed support for the change.

The Government is also to grant greater pricing freedom for supermarkets, and is considering a relaxation of planning controls on the implantation of new stores.

They are responding to proposals made by the Attali ‘Commission on Economic Growth’, which argued in a recent report that present controls on retailers inhibit competition and increase prices for consumers. Whilst between 1986-1994 394 new supermarkets opened in France, this figure went down to 162 up to 2003. This has contributed to the four main supermarket groups obtaining a dominant position in the market, with 66% of the total market share.

The Commission considers that, as a result, the stores have not developed their products, systems and services in the manner as has occurred in other countries, and that the operating profit of these dominant players is higher than elsewhere in Europe.

Price controls have also meant that supermarkets have been unable to sell loss leaders, although they have been able to benefit from ‘off-invoice’ discounts from their suppliers, which have not been passed on to the consumer. Indeed, over the past decade food prices in France (excluding meat and vegetables) have increased by 14%, whilst elsewhere in Europe the increase has been 10%. With the relaxation of price controls, it may well mean that consumers will soon be able to benefit from sales throughout the year, not just at a time decreed by the Government. Critics argue that these changes will have a devastating impact on independent local shops, unable to compete with new low price supermarkets that will become established.


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