Everyone is afraid of the “monster”, as the French Audrey Duperron calls it – one of the most informed European experts in retail – and within 40-50 years this “monster” will engulf – she declares – the world's big names in distribution. The "monster" is Amazon and it has already begun to devour its off and online competitors. Who must fear Amazon's bulimic anxiety even if they are very powerful like Wal-Mart (current world No. 1 in retail), Carrefour, Metro… The reason? Duperron calls Amazon the most efficient organized commercial dumping company ever to appear worldwide. And so, in the face of this real terror and accounts that are not always and no longer prosperous, competitors are choosing two options: for the first time they are joining forces with each other overcoming national borders, ruthless competition and profound differences in commercial strategies . And then they come to terms with the "monster", or with the giants of the web to become omnichannel and multichannel. In other words, using any technology and devices to sell and survive, obviously starting from e-commerce. After all, Auchan, which was the first to allied itself with the real "monster" of e-commerce, Alibaba, in November 2017, overcame the crisis in which the collapse of consumption had reduced it, obtaining important results.
From allies to subcontractors?
Alibaba has recently disbursed 2,44 billion euros for 36,16 percent of Sun Art Retail Groups of which Auchan holds 36,18 percent. In China Auchan is the leading food brand and the Chinese market is in second place after France for the big French brand. Carrefour, for its part, has allied itself with Tencent (Chinese) and with Google which also collaborates with the American Wal-Mart while Monoprix has an agreement with Amazon. With a generalized and growing risk: that they become subcontractors of ever more powerful giants. And that they will soon surpass them. The n.3 in the world ranking of GD, Kroger (115 billion dollars) has signed a close collaboration with Alibaba (39,9 billion dollars) but do not mislead the difference in turnover because the growth of the Chinese commerce is awesome. And while physical brands operate on a limited territorial scale, the giants of online sales are global in size and operations.
Agreements between competing chains
Alliances and agreements, joint ventures and acquisitions are increasingly necessary and the scholar Sophie Malka has drawn from them a complex iconography that also confirms the trend of omnichannel (physical channel + digital channel) and multichannel (multiplicity of touchpoints on the consumer). That's why American groups and brands are converging, for example, on Google Express and Carrefour has very recently closed a partnership with the English Tesco by pooling purchases. This will offer suppliers a broader base for advertising and promotion campaigns but will also create a purchase driver of no less than 90 billion euros with savings of over 430 million. Casino and Auchan have recently allied with the German Metro which controls, through Ceconomy, Fnac-Darty, Mediaworld and Saturn. And which already operates with the Real chain.
Food appeals to Amazon
In the food sector, the large supermarket chains in Europe have been subjected to aggressive competition from discounters such as Lidl and Aldi for some years, so much so that Carrefour (84 billion dollars) and Tesco (57,5 billion dollars) which accumulate 8 percent of the market of Western Europe, are closely followed by Lidl which reached 6 per cent and Aldi (84,9 billion dollars) 5 per cent (Euromonitor International). And given that food is booming everywhere, even the big names in e-commerce have acquired chains of physical grocery stores. Amazon has acquired the American chain Whole Foods and has been operating in England for some time with Amazon Fresh which will sooner or later be extended to Europe, which has thrown many large-scale retail boards into panic.
Compete how?
What should they do – wondered the mega-consultants of the European and American brands? Aside from the quest for omnichannel and multichannel, price competition is suicidal. By dumping, Amazon realizes huge losses in the operational branch of online sales but these are increasingly compensated by "Cloud" services. And since traditional brands have margins of just 5-6 per cent, price competition-dumping becomes unsustainable in the medium term. But there is something more. Which makes many experts say that the time of large-scale distribution and also of large-scale distribution is destined to end. The substance of Amazon's rapid expansion lies in the brutal strategy of selling the cheapest products by offering practically free transport (at enormous costs and in management at a loss but sustainable for Amazon). The least expensive products are the basic ones that three-quarters of consumers hate to ritually go and buy in supermarkets. With Amazon and with the Wi Fi Dash buttons they arrive at home. Consequently, with the progressive crisis of large surfaces that sell everything, local, specialized and highly professional shops will return to popular centers and suburbs, as is already happening all over the world. And of course the big names in e-commerce are taking up space and will take it. With one annotation: Amazon loses a lot on international markets with its dumping strategy: those who know the accounts well are already beginning to wonder how long it will be able to sustain this growth rate (+20 percent of turnover, quadrupled in one year) with constant losses on world markets.
