Bold move for Monoprix: French retailer extends partnership with Amazon

Global powerhouse Amazon forged a sales partnership with Monoprix last year, surprising several players in the French market. The deal has been seen as a way to secure traction for the online US retailer in France, whilst boosting Monoprix’s online grocery sales. What is it about Monoprix that made it so attractive to the internet colossus, and what does the French brand stand to gain?

It seems that Amazon made the move into the French grocery market in an effort to recreate the US market offering it secured when it bought Whole Foods, the eco-focused supermarket. From Monoprix’s perspective the partnership seems to have been a smart move, with the company reporting that online sales through Amazon Prime have been outperforming projections by two to three times over.

Regis Schultz, company president of Monoprix since 2016, appears quite pleased with the results. “A first assessment is very, very satisfactory,” he said. “Our priority is now to expand the service.” When it began, the Amazon Prime service was covering a third of Paris and generated sales of €10-20 million, equivalent to the food sales of one Monoprix store. The service is now extended to all of Paris and 35 neighboring cities.

Schultz believes that the world of groceries and fresh produce is about to change dramatically, discovering the same revolution that general retail experienced a few years ago. An example of actions taken to deal with this change were seen in an earlier strategic partnership in 2016 between Monoprix and Ocado, the purely warehouse-based online supermarket. Together the companies started building an automated, hyper-efficient warehouse to service Monoprix’s online customers living in and around Paris, Normandy, and the Hauts de France region. The result is expected to bring greatly reduced online order preparation times and a much-improved service for Monoprix’s customers.

Another example of Monoprix’s ability to embrace market shifts was the release of its Monop’easy app, allowing for in-store self-checkout through the use of a smartphone, entirely removing the need to have to queue. Innovations like this are at the heart of Schultz philosophy. He operates on a self-imposed mandate to remove all the small “annoyances” from the lives of consumers.

Nicolas Bonnetot, Monoprix’s director of food and beauty, also sees this on-going food transformation. “Today the food sector is changing with the emergence of start-ups that combine new technologies, AI, and agriculture to address many issues such as reducing the environmental footprint…[and] combating global warming.”

The relevance of Bonnetot’s words were seen in 2018 when Monoprix explored the possibilities of these new technologies aiding in-store footfall. Taking advantage of services offered by Facebook, the company tested the utility of having Monoprix stores displayed on the platform. Stores that opted in to Facebook gained a 1.4% increase in revenue.

Following this initial indicator, the company decided to go deeper down the technological rabbit hole, joining forces with Amazon in a limited partnership. Monoprix pays a cut of its profits in exchange for Amazon Prime offering and delivering its products in the Paris area. Casino Group is the first major company in the French grocery market to seize the potential of such a partnership.

Schultz sees an opportunity to continue to outpace his competitors. Although Monoprix is slightly more expensive, generally, than its rivals, delivering higher-quality, specialized products, he believes that consumers are learning their lessons from discount stores. “People in France are starting to wake up. They realize that after a certain point, lower prices mean bad quality.” The benefit of this price and margin gap is that Monoprix is able to support convenience initiatives like this partnership with Amazon. Low-price competitors running on more modest margins would be unlikely to make a profit through an equivalent arrangement.

The result is a competitive advantage. Schultz said that the deal with Amazon gave Monoprix access to the 70-80% of Amazon Prime clients who were not already Monoprix clients, including many offices. “We clearly are getting new clients from Prime,” Schultz explained. “There are no elements showing a cannibalization of Monoprix or Monoprix.fr.”

At the same time, the alliance furnishes Amazon Prime with a large new suite of products in the grocery department. With more to offer, the online retailer is also looking at greater success and profits, as well as deeper market penetration. Conventional wisdom suggests that Amazon Prime would be looking to take a zero-sum slice out of Monoprix’s market share, but it’s not clear at all that that is what has happened. In fact, it seems that there is actually still a space where the two worlds, those of the brick-and-mortar and the digital, can come together and both can benefit.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s