• The trading environment for French electricals retailers is tough – the economy is suffering, unemployment is at a record high and consumer confidence is extremely low.

• We estimate the market size for electrical goods to have been € 30.2 billion in 2014, a decline of 1.4% on the previous year, and the seventh consecutive year of falling spending.

• The market as a whole has shrunk by €3.2 billion over the last five years, with the steepest decline in value sales seen in brown goods.

• The telecoms category has grown most strongly due to the uptake of smartphones and despite falling prices on these products.

• It is hard to be optimistic about prospects for the sector due to the parlous state of the French economy and ongoing uncertainty within the eurozone.

• All the electricals categories have shown persistently low inflation since 2010, with the steepest price drops in telephone and telefax equipment.

• The electricals specialists capture 65-70% of spending on electrical items in France.

• The share of the big chains (Fnac, Darty, Boulanger, Conforama and BUT) has been growing in recent years, while the groupings of independents, such as Gitem, Digital and Pro&Cie have seen their share decline.

• We estimate that the hypermarkets (Carrefour, Auchan, Leclerc, Géant, Casino and Cora), capture some 16% of the market.

• Our consumer research, cited in full later, found that 38% of respondents claimed to have shopped for electricals at a grocery store in the previous 12 months.

• The trend for consumers to shop more frequently with smaller basket sizes is resulting in a drift away from hypermarkets, which may be working in favour of the specialists in electricals.

• The specialists have managed to keep sales steady over the last five years, despite the declining market.

• Innovation and expansion online have enabled them to grow in importance and capture a larger share of spending.

• 2012 was a low point, but 2013 saw an improvement with electricals specialists sales growth of 1.4%.

• We think 2014 was weak, but still positive, with the specialists managing to increase sales by just under 1% to €18.6 billion.

• With the economic outlook still uncertain and a shortage of major new products hitting the market we do not expect the sector to exhibit strong growth over the next few years.

• The market is dominated by the two giants, Darty and Boulanger, both of which are broad specialists selling all types of electricals.

• Darty is the larger business, with 227 stores compared to Boulanger’s 122. Between them they capture almost 20% of consumer spending on electricals.

• Fnac is listed as market leader, but in fact only just over half of its sales are of electricals. These are predominantly small consumer electronics, such as cameras, PCs, tablets, gaming hardware etc.

• All the big players are opening stores, Darty and Fnac via franchising and Boulanger with company-operated stores. Many of these are smaller format stores, often in smaller catchment areas. These help to create a virtuous circle that facilitates the convergence of online and offline buying.

• Two other retailers are very important: Conforama and BUT, both selling a combination of furniture and household electricals. Between them they generate around €1.5 billion from sales of electricals.

• Fnac and Darty have very similar market shares, but this is somewhat misleading. Excluding Fnac’s sales from “editorial products” and services, its share is much smaller, at 6%.

• In truth then, the market leader is Darty, which accounted for 11.2% of all spend on electrical goods in 2014.

• Together as a group, the leading seven specialist groups captured 35.2% of spending in 2014, up from 33.1% in 2012 (counting only Fnac’s electricals sales).

• Conforama and BUT are not included in our analysis as they are not electricals specialists, but based on our estimates of their sales of electricals items, they capture respectively 3.7% and 2.3% of spending on electricals. This makes them the fourth and fifth most important retailers of electricals in the country when compared with the specialists.

• Around 55% of internet users have bought electrical goods through this channel in the last year according to our consumer research (see The Consumer: Where They Shop).

• In France e-commerce has not achieved the penetration levels seen in Germany or the UK, but it is growing in popularity.

• We estimated that total online sales in France in 2014 were €31.8 billion including VAT, representing 6.8% of all retail sales.

• Electricals is the most developed online sector in the country, with an estimated 29% of spending in this category online (around €9 billion).

• Certainly the leading players in the electricals sector have woken up to the potential for online and are focusing on developing an omnichannel offering.

• There are also several important pureplays; Cdiscount, Amazon, Pixmania and Rue du Commerce, although this type of retailer is less popular in France than in Germany, Italy or Spain.

• Our consumer research shows that, in terms of online electricals shopping, more people buy from Amazon than any other retailer, although market leader Darty is not far behind.

• Some 83% of internet users had bought an electrical product in the previous 12 months, with 75% having bought in store and 55% online.

• Darty is the clear market leader overall, followed by Amazon, Fnac and Boulanger, all three with very similar levels of popularity.

• When shopping online for electricals, Amazon is the most popular retailer, with Fnac the most popular store-based brand, followed by Darty.

• The grocers are a popular choice for electricals shopping, but appeal to a less affluent consumer.

Figure 3: France: Retailers used to buy electrical goods in the last 12 months, online or in-store, January 2015

Base: 2,000 internet users aged 16+

Click here to zoom

Source: Lightspeed GMI/Mintel

• French consumers value good after-sales service and think that some stores have better trained staff than others. This is an area where store-based retailers have an opportunity to stand out.

• They show a strong engagement with multichannel issues and initiatives, with over half of internet users agreeing they prefer to shop from retailers that have stores and an online shop and similar numbers saying they would like pureplayers to open stores they can visit.

• But consumers are sceptical about offers and deals with over half agreeing they are not always genuine discounts, while almost 50% agree that most retailers offer similar prices.

Figure 4: France: Attitudes to buying electrical goods, January 2015

Base: 1,666 internet users aged 16+ who have bought electricals in the last year

Source: Lightspeed GMI/Mintel

The French electricals sector is a difficult marketplace with persistent deflation and depressed consumer spending. The competition has become cut-throat, but rather than stifling growth, it has increased the imperative for investment and innovation.

Our research shows that French shoppers like shopping online with brands they know and trust, and the main chains are forging ahead with omichannel initiatives. These include click and collect moves, such as collection lockers, express delivery and also opening more stores, in smaller catchment areas and in travel locations. These help to create a virtuous circle of higher brand awareness, convenience and in-store traffic that facilitates the convergence of online and offline buying.

These strategies mean that as a group, the specialists are countering the competitive threat from online pureplays and growing their share of the market.