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The Big FIX

In their book “The Big Fix”, Denise Haern and Vass Bednar, among many difficult pain points, touch on emerging issues in e-commerce. It resonates deeply with my professional perspective and the struggles I have personally experienced as a consumer.

“What initially made e-commerce so great – primarily, the ability to quickly search for product comparators across a range of stores and geographies, price compare, and be informed by reviews – has become unnecessarily difficult and disorienting. It’s not just counterfeit products. It’s getting harder to make the best possible choice when you shop because firms of all sizes do sneaky things like preference their own products, make inflated claims through undisclosed influencer marketing, secretly change the shape and size of their products, degrade product quality, or rush you to buy things online through deceptive hurry-up design. Our trust is being manipulated and exploited, and the tactics used by firms to take advantage of consumers are making markets less knowable and more confusing”.

Through selling ad words, tweaking search results by adding “sponsored content,” or guiding shoppers away from their initial search toward the product retailers are incentivized to sell, I ask myself: where does the border lie between providing shoppers with what they want and enforcing on them what brands want them to buy? And to what extent is retail complicit?

When does marketing end and marketeering begin?

hashtag#The_Big_Fix
Image source: https://lnkd.in/eetyaeB2

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French Retail Evolution

French retail continued its strong transformation in 2024.

Non-food, petrol, and apparel remain among the biggest “casualties” of post-COVID consumption decline.

Hypermarkets are still the preferred shopping destination, as shoppers continue to hunt for promotions and save on volumes.

The rebound of click-and-collect (which peaked at 12% during COVID) is primarily driven by E.Leclerc’s widely publicized low-price strategy and shoppers’ desire to control “out-of-pocket” spending.

The same logic applies to proximity stores, where lower basket sizes provide a strong incentive to avoid driving to the hypermarket, saving on petrol and impulse purchases.

2025 will be a year of:
– Continued hypermarket share decline, with ongoing decreases in non-food sales driving the need for space optimization. The convergence of hypermarkets and supermarkets now seems inevitable.

– Click-and-collect will continue its growth, as retailers begin implementing AI agents to facilitate recurring purchases, introduce virtual personal shopper, or a chef.

– Uncertainty around failing EDLP concept. Will Lidl’s new management be able to stabilize company’s market share and reach break-even? And will Aldi remain in France at all?

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Gnarly Problem

In his recent book The Crux, Richard Rumelt introduced the notion of the “Gnarly Problem.”

For non-English speakers, gnarly is an American slang word, defined by the Merriam-Webster dictionary as “very difficult or challenging to deal with, nasty, unpleasant, gross”.

Gnarly Problems are complex (involving multiple moving parts), have high uncertainty, and lack a clear and linear path to resolution (goodbye Game Theory!).

Solving such “gnarly problems” isn’t just about analysis or analytical skills, it requires strategic insight and bold decision-making.

Many industries, including retail, encounter gnarly problems today. French consumers, for example, have created a paradox that has no straightforward solution.

On the one hand, French consumers want to spend less (the FMCG market is in slight decline). On the other hand, they reject EDLP (Every Day Low Price models), putting pressure on Lidl and Aldi and boycotting Amazon.

Surprisingly, the only sales channels that are growing are the ones where products are sold at a premium – proximity stores and click & collect.

Proximity is a very challenging channel (high rental costs, restrictive supply, limited space for stock), while click & collect suffers from lack of choice and scale, high software and hardware costs, and full dependency on the physical store’s stock.

Both channels are normally subsidized by larger store formats that benefit from scale (price and assortment, supply chain efficiency), unplanned/impulse purchases, bundling, and other irrational spending behaviors.

The crux of the challenge for French retail is how to attract shoppers to profitable sales channels while nudging them to accept “fair” prices in the fast-growing yet unprofitable ones…

For example, the pressure on France’s iconic hypermarket format (50% market share before COVID, 38% by the end of 2024) has led to massive layoffs, wiping out tens of thousands of jobs. The textile, non-food, and beauty industries are in dramatic decline due to their reliance on hypermarkets and the shopping galleries. Small businesses, unable to offset consumer behavior changes, are going bust.

A recent IRI study showed that the widely popularized “buy local” trend accounts for no more than 3% of total FMCG sales. The market is still dominated by international conglomerates.

To me, the clear winners in the next decade will be those who can:

* Build an ecosystem around shopping centers – creating communities by combining retail, activities, and leisure. Retail is about experience.

* Redefine stores – dramatically reducing assortment, focusing on local produce and own brands, and selectively working with international brands that truly need the partnership (instead of chasing those who don’t).

* Partner with shoppers – creating transparent value chains and incentivizing the right choices (e.g., buying from small local stores in galleries, supporting sustainability efforts).

How do you see a solution to retail’s gnarly problem?