PARIS (Reuters) - French supermarket chain Carrefour could be under pressure to do a deal with the likes of Amazon, after a deal between its French rival and a British online specialist threatened to leave it trailing behind in e-commerce.
Alexandre Bompard took the helm at Carrefour, the world’s second-largest retailer behind Walmart, in July. Its online sales lag rivals and in August the company issued a profit warning. Bompard is preparing to unveil his turnaround plan.
French rival Casino on Tuesday agreed to use British online retailer Ocado’s e-commerce platform to expand its e-commerce grocery business in a deal that analysts say will allow Casino to outpace domestic rivals.
“Casino is taking a key technological advantage in France and will drive Auchan and Carrefour to react ... The read across for Carrefour implies an alliance with a partner which can only be Amazon,” Natixis analysts said in a note.
Analysts think it is only a matter of time before Amazon makes either a bid for a French retailer, or forms partnerships along the lines of what it has established in Britain and Germany, or becomes a provider of logistics and delivery services. France’s grocery market is worth $230 billion (£171.70 billion) a year.
“Such a deal would be well received by the market and even more so if its announcement came on Jan. 23 during Mr Bompard’s group’s strategic review,” Natixis said.
Carrefour declined to comment on the review.
By 1037 GMT Carrefour shares were up 2.38 percent and leading CAC-40 gainers while Casino shares were up 2.41 percent, outperforming the European retail sector.
The Casino-Ocado deal comes as French brick and mortar retailers feel the heat from Amazon, whose acquisition of U.S. upmarket food retail chain Whole Foods, has triggered speculation the online giant is looking to crack the European grocery market next.
Last month, Michel-Edouard Leclerc, the head of French retailer Leclerc, which recently overtook Carrefour to become France’s largest grocer, said he had talked with Amazon.
“Yes, we have been approached by Amazon. They could — why not? — be our logistics partner,” he told Reuters on October 4.
Meanwhile, Carrefour is working on a turnaround to stem its sliding market share at home, now at 20 percent.
Having been slow to embrace digital, in part due to its focus on the large hypermarket format, it is ramping up investment.
The online operation accounted for just 1.7 percent of Carrefour’s total French food retail sales of over 30 billion euros last year, while more digital-savvy rival Leclerc managed 8 percent, according to Bernstein analysts.
Bompard told analysts in August that there had been an acceleration of partnerships between bricks-and-mortar and e-commerce and that “in such a context Carrefour needs to accelerate the digital transformation and become truly omni-channel to compete in the new retail landscape.”
Reporting by Dominique Vidalon; Editing by Elaine Hardcastle