Sleeping with the devil or an angel In disguise?

Tuesday 27 March 2018

Article

News today of French grocer Casino's partnership agreement to sell its products through Amazon further illustrates how traditional retailers are softening their stance to partnerships with the big platform players.

In this instance the near term benefits for Casino are clear, accelerating their online reach and delivery offer, and providing a necessary antidote to the billions of euros of capital invested by its larger grocery competitors. The surge in its share price illustrates that investors think the same.

For Amazon, the ability to accelerate to network scale and learn the idiosyncrasies of the French grocery market make it an attractive proposition.

The challenge for this partnership comes in the medium term, and ultimately what happens once Amazon has reached local scale in France. 

We would urge two areas of focus for Casino, and other retailers considering this model, to ensure long term value is protected.

1. Ensure that you protect and build your assets and capabilities through the partnership and that you neither give too many of your crown jewels away, nor get left stranded some distance away from a credible standalone digital offer in the future. 
2. Maintain a clear view of your customer economics and ensure that you are not inadvertently shifting profitable customers into channels where you reap less of the spoils.

We will certainly follow the partnership with great interest.

Find out more about Matt Coode, Partner