French Market

French consumers are much more cautious when it comes to spending money, with many reducing spend in areas such as technology and clothing, and more shoppers choosing discount outlets and private label. Pensioners were relatively less concerned than the under 45s... the young were most likely to be drawing on credit to manage shortfalls, not widely in France.

These top-line results come from the new Strategy Briefing on Consumer Buying Behaviour in the Recession which analyses the results of Euromonitor's 2011 Annual Study and examines the implications of these findings for marketers. This report provides unique strategic insight from Euromonitor's most experienced industry analysts into the why behind behaviour and how we anticipate this will impact on future market trends.

Euromonitor International's Annual Study surveyed 16,000 consumers of all ages (15-65+) in 8 mature and developing markets in July and August 2011, questioning respondents on the following themes: health and wellness, food and drink, technology, shopping and leisure, personal traits and values. For more information on Euromonitor's survey findings, please see the Survey page on Passport.

Key findings

 31% of French respondents had increased the habit of "saving money over the last 12 months, while 35% intended to do so in the next 12 months.

 The propensity to save was higher among younger consumers, and lowest among those aged 60 and above.

 29% of respondents had increased visits to discount stores, while 19% had purchased more private label products.

 University/college graduates were most likely to have bought more private label goods (23%); as were respondents aged 30-59, who are most likely to have children and young adults living at home.

 Very few consumers in France increased their spend in areas such as new technology andclothing/footwear (7% and 8%, respectively).

 Most were also pessimistic about the future, with even fewer intending to increase their spending on new technology and clothing/footwear over the next 12 months.

 Increased spending on both new technology and clothing/footwear was far more apparent in the youngest age group (10% and 11%, respectively) than among those aged 60+ (just 3% and 1%, respectively).

 Almost three quarters of French respondents (74%) said they never use credit cards for luxuries, while 58% do not even use credit cards to manage shortfalls.

 Only 5% of respondents claimed they would increase credit card usage over the next 12 months.

 Credit card usage is more common among younger consumers: 6% of those in the 15-29 age group had increased their use of credit cards for luxuries, versus 1% of those aged 60+.

Hard discounters become softer

The survey revealed that the recession has made French consumers more cautious when it comes to spending money, with many reducing spend in areas such as technology and clothing, and more shoppers choosing discount outlets.

The discounter concept is well developed in France, but there has been some blurring of the boundaries between discounters and supermarkets in recent years, as Lidl, ED/Dia, Leader Price and Netto adopted a soft discounter positioning, for example by adding more branded products to their ranges, while some supermarkets/hypermarkets implemented EDLP (everyday low pricing) strategies or increased their private label ranges to include more value items (for example Carrefour Discount).

Private label has made good progress in recent years, and Euromonitor International estimates that it had captured a 25% share in fmcg by 2010. Private label continued to be successful in basic categories such as home care, nutrition and staple products and meal solutions, but also made strong progress in impulse and indulgence categories such as chocolate, snacks and gourmet foods, where retailers have become more innovative and no longer rely on "me too" products.

The survey results confirm that there is not a significant culture of buying items on credit in France, where debit cards (eg the ubiquitous "Carte Bleue") are the norm. While this suggests that there may be potential for the development of credit services in the future, an ingrained aversion to debt among French consumers will be hard to overcome. Nevertheless, it is interesting to note that younger people seem to have a more open attitude towards buying on credit.

France: "In the past 12 months have you changed any of the following habits?"/"In the next 12 months do you intend to change any of the following habits?"

% respondents replying "increased" or "will increase"

Source: Euromonitor International Annual Study 2011

France:"In the past 12 months have you changed any of the following habits?", by age group

% respondents replying "increased"

The French recovery is a feeble one. The banking system's exposure to Greek debt leaves the economy vulnerable and any withdrawal of credit will have significant consequences for economic prospects. A stringent austerity programme, including pension reforms, large cuts in public-sector jobs and new efficiency measures, will lead to a sharp reduction in the fiscal deficit. The economy may actually slip into recession by the end of the first quarter of 2012.

KEY POINTS

 France's economy relies on bank loans for two-thirds of its financing, a far higher figure than in most market-based economies. Given the banking system's exposure to Greek debt, any withdrawal of credit has significant consequences for economic prospects. Real GDP is expected to grow by just 0.1% in 2012.

 France slashed its budget deficit by a third due to the end of one-off spending measures which could have dipped as low as 5.3% of GDP for 2011.The deficit target for 2012 is 4.5% of GDP. Authorities intend to reduce the deficit to 3% of GDP (the EU benchmark) by 2013 and 2% by 2014.

 Among the fiscal measures to control the deficit, the 2012 budget provides a 3% tax on top earners in France with income in excess of €500,000 (US$652,425), 15% general cut in existing tax breaks and 5% increase in the corporation tax in 2012 and 2013.

 Although employment is rising, the number of jobless remains high. Unemployment was 9.6% in 2011. It will edge downward to 9.2% in 2012. Among younger workers unemployment is above 20%.

FACTS