French consumption holding up: association

PARIS (Reuters) - French retail consumption is stable and holding up well in the economic downturn but retailers face strong competition and pressure on margins, the president of the French FCD retail federation said on Wednesday.

Retail sales volumes in France should rise this year as prices at the major brands fall 2 percent on average, Jerome Bedier told the Reuters Global Retail Summit in Paris. Last year food prices rose 4 percent, hitting volumes by about 2 percent.

"Consumption is stable. Overall, consumption is holding up well," Bedier said.

The FCD groups French retailers with around 150 billion euros ($211.7 billion) of sales.

The pressure of the financial crisis on consumer budgets has seen companies such as yoghurt maker Danone (DANO.PA) broaden price ranges and supermarket group Carrefour (CARR.PA) try to shed its expensive image with a new discount range.

"Competition is strong. Pressure on margins is big," Bedier said, adding that margins had already been under pressure for around two years.

Still, companies are benefiting as consumers trying to tighten their belts choose to prepare meals at home rather than spending money on restaurants or entertainment, Bedier said.

Sales volumes of organic food will likely rise some 20 percent this year, despite being more expensive than non-organic ranges, Bedier said, adding that organic production in France could not meet demand.

Retailers own brands would also continue to grow their market share, however, rising from around a quarter of the market last year, Bedier added.

It was hard to make more specific predictions about retail performance for the whole year at this stage, he said.

"Until December 27, it's difficult to know whether the year is rather positive or negative," Bedier said.

($1=.7087 Euro)

(Editing by Hans Peters)