A tie-up between supermarket retailer Casino Guichard-Perrachon SA and Amazon.com Inc. to deliver groceries to Parisians appears unlikely to have a material impact on the French company, analysts said.
The deal, disclosed March 26, will see thousands of products from Casino's Monoprix chain of stores offered to customers of Amazon Prime Now, the U.S. online retail giant's superfast delivery service, in the French capital and its neighborhoods. The service is scheduled to debut in 2018.
Initially, products ordered online via an app will be picked from two branches of Monoprix, but that number will increase to four brances as the service expands. Amazon will be responsible for delivery, offering a one-hour service for a fee and free delivery within two hours on orders valued at more than €40.
"Whilst the deal grabs headlines, and may fuel conjecture of a closer tie-up in future, we don't expect any meaningful cashflow impact," analysts at UBS wrote in a March 27 research note. They noted that typical Amazon Prime and Monoprix customers are demographically similar, urban and wealthy, so they doubt the likelihood of a new addressable market.
The collaboration comes as rival E. Leclerc, one of France's leading grocery retailers, launched its own home delivery service in Paris on March 26, Reuters reported.
In a conference call with analysts, Monoprix Chairman Régis Schultz said the partnership allowed the chain to cater to the 10% of the French market that purchased smaller volumes of groceries at the last minute.
Analysts at Bernstein Research in a March 27 research note said the Amazon deal was "unlikely to be a game changer to French competitive dynamics," adding that a similar arrangement in the U.K. between Amazon and Wm Morrison Supermarkets PLC after two years yielded results that were "hardly measurable."
However, they said that as an upmarket retailer with strong credentials in quality fresh food, Monoprix resembled Amazon's Whole Foods Market Inc. and appeared to be a good fit for customer crossover with Amazon Prime.
Schultz said Monoprix could learn from Amazon. "You learn more from playing with the best in the class than [from] playing alone," he said.
Casino, based in Saint-Étienne, France, has other plans to address the online market for shoppers who buy bigger baskets. It is seeking to build out its online capabilities, remodeling its existing online offering, monoprix.fr, which serves customers with next-day deliveries, with help from U.K. online grocery retailer Ocado Group PLC.
On Nov. 28, 2017, Casino signed an agreement for Ocado to develop an end-to-end grocery delivery service, encompassing front-end website functionality, state-of-the-art automated warehousing, last-mile routing management and big data, real-time implementation. The build and launch are expected to take at least two years.
Casino's shares closed March 27 at €38.97, up 3.8%.