Chronodrive poised to expand drive-thru format in France

French retailer Chronodrive is appealing to shoppers with its convenient drive-thru format in France, writes Jerry SoverInsky*.

The best description of France’s Chronodrive, a six-year-old grocery retailer that operates 16 units with six more scheduled to open later this year, begins with its obvious deficiencies. There’s not a single cashier or a delivery person in sight. And although the company operates physical, bricks-and-mortar warehouse-like stores, they lack in-store signage and display fixtures — not even a shopping cart.

A litany of seemingly retail vulnerabilities, right? Yet the company’s retail model — a dedicated pick-up/drive-thru supermarket — is resonating with consumers throughout France, and its success is spawning similar operations soon to emerge across the rest of Europe.

How it works

Chronodrive’s concept is simple: Customers place their orders online for any of 7,500 items, which include meat, produce, dairy and frozen foods, as well as personal hygiene and home maintenance products, and designate a Chronodrive pickup location and pickup time (the stores are open daily from 8:30am to 8:30pm). Orders are then ready at the pickup location in as little as 90 minutes and can be held up to 24 hours after the scheduled pickup time.

When a customer arrives to retrieve an order, he identifies himself at the store’s entrance, makes a payment (if he didn’t do so online already), parks his car at a designated spot, and within five minutes a Chronodrive worker emerges from the facility with the order and packs it into the car.

The company also accepts orders onsite for 500 immediately available items, should a customer arrive spontaneously without having completed an online request.

Products include all major brands and prices are in line with those at traditional supermarkets. Thanks to partnerships with local bakeries, each store stocks a variety of fresh breads and produce is guaranteed fresh. Indeed, Chronodrive workers show fruits and vegetables to customers while loading their cars, exchanging items that don’t gain approval.

There are no additional costs — no pickup fees and no tips to the workers who bring the orders to the cars.

Secret to success

Chronodrive’s success was borne out of customer frustration with online retailers who charged premium home delivery fees (up to $26 US per delivery) as well as steep food charges (up to 15% higher than at traditional stores). And because the French tend to shop for food several times each week, Chronodrive’s pricing and convenience model immediately resonated with consumers.

“The success of the model is largely due to the fact that in France, as consumers are so price aware, they are often unwilling to pay delivery costs,” explained Isabel Cavill, senior retail analyst at Planet Retail in London. “In addition, it is often the case that drive-thru concepts offer the same prices as in stores, while regular e-commerce sites are often higher priced than bricks and mortar counterparts.”

Chronodrive doesn’t succeed by value alone. Its convenience factor is significant for the French, whose shopping routines have become almost burdensome.

“[T]here may be something unique about French super- and hypermarkets, around the speed or service, size of queues and time spent waiting in line,” said Richard Lewis, sector analyst for The Consumer Goods Forum in Paris. “Basically, it takes a long time to get out of the average French grocery store. So Chronodrive is really offering something that French consumers want: more of their life back.”

Launched in 2002, Chronodrive brought in Groupe Auchan as an investor, assuring the company the purchasing power of a major retailer, and opened its first store in northern France in 2004.

Today, stores are located in suburban, middle-class French neighborhoods, whose residents shop frequently but who live busy lives — and thus value convenience.

Though Chronodrive doesn’t release sales figures, it cites 130,000 regular customers who purchase an average of 40 items per visit. Because each store operates as a warehouse, employee head count is modest, with no more than a dozen workers per store, a huge advantage for Chronodrive’s bottom line.

“Running a warehouse is...much cheaper than running a store, in any market,” Lewis explained. “In Europe and developed markets, labor is a retailer’s heaviest cost. Chronodrive is essentially a warehouse with a web site. Labour costs are minimal.”

*This is an extract from an article, which first appeared in the May 2010 issue of NACS Magazine.