Distribution and Consumer Goods
Sales force

What challenges for the sales forces of mass consumer goods in 2025?

• Reading time: 2 min

In 2022 and 2023, inflation and its impact on household consumption rightly took center stage. As expected, inflation receded in 2024, and starting in April, prices for fast-moving consumer goods (FMCG) sold in large retail chains began to decline. By September 2024, prices had decreased by -0.5% compared to the previous month and by -0.8% compared to September 2023 (Insee). After food prices rose by over +20% in two years, this drop is not enough to reverse consumer behavior, as their purchasing power remains eroded. By September 2024, 65% of French consumers felt they had lost purchasing power, and 82% expressed concern about inflation’s impact on their households, with 31% saying they were “very worried” (Potloc – Alix Partners).

Deflation: Worse than Inflation?

Although consumers may not see it as significant, the price decline is real, and distributors are now seriously discussing deflation—a real burden if consumption fails to recover. And it hasn’t: in the FMCG-food segment, volumes fell by -1.1% in 2024 (Circana). While this is better than in 2023 (-3.9%), value growth has flattened at zero for the year (compared to +10.1% in 2023), raising concerns for grocery store owners and managers:

“You’re simultaneously facing lower volumes and falling prices. Not only are you selling for less, but you’re selling fewer products. This inevitably impacts your revenue. Meanwhile, your major cost structures—labor, energy, etc.—haven’t decreased, further weakening your operating income.“

Olivier Dauvers

The decline in non-food sales in grocery stores (-3.8% in value in 2024 vs. 2023) further exacerbates the situation, solidifying the shrinking role of grocery retail in household spending, a trend observed since 2019. This translates to an annual loss of approximately €2.5 billion in revenue for grocery stores—a slow but relentless commercial erosion where the weakest retailers suffer the most.

“This is exactly what we’re witnessing on the ground with the collapse of a group like Casino, which, seven or eight years ago, still generated €40 billion in revenue. Casino is now disappearing due to market challenges and strategic missteps. It’s long been the worst performer, but as long as times weren’t as tough as they are now, it managed to scrape by.”

Olivier Dauvers

 

Two Long-Term Trends Affecting Consumption

After blaming consumption declines on short-term factors like COVID-19 and inflation triggered by the war in Ukraine, it’s time to confront long-term trends reshaping the FMCG outlook:

  1. Unfavorable Demographics:
    • In 2023, the natural balance was at its lowest since WWII, with births down 6.6% compared to 2022 and a fertility rate of 1.68 children per woman, well below the replacement threshold and a sharp decline from the 2010 peak of 2.03 (Insee).
    • While fertility and birth rates decline, life expectancy is rising again after the COVID-19 dip, leading to population aging. In a society where 1 in 5 people is over 65, consumption naturally declines, including caloric needs. This demographic trend is set in stone for decades across the European Union.
  2. Lower Desire to Consume:
    • Partially due to an aging population, this trend also reflects disenchantment and pessimism about the future. The desire to shop and indulge is waning: in 2024, only 35% of French consumers expressed a strong desire to consume, down from 48% in 2021 (ObSoCo). This reduced appetite for consumption spans all age groups.

These trends confirm that natural consumption growth has been absent for over a decade. While annual variations may occur, the average annual growth rate for household goods consumption between 2011 and 2024 is zero (Insee). In this unpromising context, food retailers must fight harder than ever to increase market share.

Circuits – Winners and Losers

If the consumption pie is no longer growing, some channels and retailers are faring better than others. Thus, in 2024, the only channels that have seen their revenue grow significantly compared to 2023 are drive-through (+8%) and discount stores, driven by the retailer Action, which attracted no fewer than 1.3 million new households in the first 8 months of the year. On the other hand, hypermarkets, supermarkets, and proximity stores (SDMP) recorded negative revenue growth of –0.6%, –0.3%, and –1.5%, respectively.

  • Drive-through remains the channel with the highest growth potential. With over 7,100 locations across the country (as of July 2024), drive-throughs generated €13 billion in revenue in 2024. While the number of locations is expected to stabilize, the channel is far from reaching its revenue limits. Not only does it continue to recruit new customers, but it also retains them effectively. This is evidenced by the frequency of purchases, which increased from 9.5 in 2020 to 12.8 in 2024, and the 58.4% surge in the annual budget spent by these customers in this channel over the same period (Kantar).
  • Why is the drive-through so appealing? Quite simply, because it represents a clear improvement in the value proposition of mass retail by offering customers an additional service at the same cost as in-store shopping. The same applies to home delivery, whose revenue grew by +16.3% in 2024 compared to 2023.

Hypermarkets and supermarkets are not dead yet! While they are slowly losing their dominance, they remain the leading channels, where higher volumes are sold than anywhere else.

 

Retail Chains – The Impact of Casino’s Fall

The acquisition of Casino stores by Intermarché, Auchan, and Carrefour is shaking up the retail landscape and altering the balance of power among the key players. This is particularly evident in the Southeast and major metropolitan areas, which account for 230 of the 421 Casino hypermarkets and supermarkets acquired by other chains.

“Theoretically, these acquisitions should enable the acquiring retailers to consolidate their market share in Casino’s former strongholds. However, competition and the uncertainty over whether customers will embrace the new brand make the shifts hard to interpret. Especially as more than half of the acquired Casino stores already have an Intermarché and/or Carrefour Market within their catchment area.”

Vincent Cornu, Retail Services Leader & a3d Managing Director

The integration of stores changing hands may also be slowed by competition authority rulings. It does not happen overnight, even when no arbitration is required. For example, as of mid-October 2024, of the 294 stores acquired by Intermarché, only 7 had actually been taken over by a member, while the others remained in a holding phase—an observation period for potential buyers who could withdraw if the deal proves less attractive than expected.

In other words, it will not be until the end of next year that we can determine which retailers have benefited the most in terms of market share. By the end of 2024, the retailer rankings are as follows:

  • Key Observations:
    Carrefour’s 2.3-point market share growth is attributable to the acquisition of Cora stores, even though the actual brand conversion only began in September 2024.
  • Aldi’s market share remains stagnant despite acquiring 547 Leader Price stores from Casino in 2020. At the time, the combined share exceeded 4%, yet Aldi now accounts for less than 3%.
  • Lidl’s slow progress, despite heavy communication investments, raises the question of whether there is truly room for two discount chains in France—a model that attracts little loyalty.
  • The momentum of Leclerc, Intermarché, and System U continues. All three are growing organically, proving the strength of the independent model. This is evident in the combined market share of these three players, which rose from 40.1% in 2007 to 54.4% this year. Leclerc remains the frontrunner and confirms its dominant position in the drive segment (46% market share), which accounts for 19% of its sales value in 2024.

The success of independents and long-term trends argue for market consolidation around four major players. While it is highly likely that the three independents will be part of this “Big 4,” it is difficult to predict whether Carrefour or Auchan will take the fourth spot. As for the timeline? No one is willing to speculate, but what is certain is that sector concentration will continue.

 

What Are Your Sales Force Priorities for 2025?

Your priorities largely depend on your product ranges and your brand’s market penetration. However, whether you are a well-established or emerging brand, you must integrate the following strategic focus areas:

  1. Focus on Independents – Your sales force has everything to gain by being highly present with independent retailers, as this is where your area managers can build the most enduring relationships with store owners and their teams—especially if they demonstrate the value they bring. This does not mean neglecting other chains but perhaps skipping their lower-potential stores.
  2. Develop a Real Drive Strategy – Even though the drive trend leans toward promoting private labels and streamlining assortments, it would be a mistake not to invest in this channel, which is experiencing the strongest growth.
  3. Account for Brand Changes – The number of stores affected and the pace at which they are or will be integrated require you to reassess your segmentation and adjust the portfolios of your area managers. We strongly recommend starting with this point.

To Support You, Nomadia Has Developed a Special Offer for the End of 2024

Our solution enables you to evaluate your current segmentation and simulate the impact of store brand changes on your territorial coverage and your sales force’s workload. Based on this analysis, we work with you to build the ideal segmentation to rebalance your territories and optimize your overall sales performance—whether by adding or removing stores from your follow-up list or by redefining geographic zones experiencing overwork or underutilization.

With this new structure, you can quickly readjust your strategy to adapt to the new retail landscape, optimize your sales pressure and results, while ensuring your teams’ well-being.