GAFA: French supermarkets in the lion's den?

On Monday 11 June, Carrefour and Google sealed a "strategic" agreement: from 2019, the voice assistant of the American giant will be used to order its purchases from the French retailer. A digital pact to tackle the new world of commerce and compete with the other giant, Amazon. But a Faustian pact too. Indeed, this agreement is complemented by a commitment for Carrefour to use all Google's digital tools and to train its 160,000 employees in their use. A total dependence since it concerns not only the organization of work but also the collection and analysis of data.

 

East March, it was Monoprix who announced that it was teaming up with another Silicon Valley giant, Amazon, to revolutionize commerce in France. Today, it is Google that is joining forces with Carrefour, the French heavyweight in mass distribution, after having concluded the same type of pact last August with its American counterpart Walmart. The battle of the Internet mastodons to take over the whole of world trade has only just begun.

 

Firstly, the use of voice commands for shopping, starting in 2019. Google is making its voice interface available to allow consumers to connect via their smartphone or the Google Home connected speaker to Carrefour's entire catalogue of food products. Voice ordering is the new promise of eldorado. According to experts, it would represent 40 billion dollars in sales and would be, according to the strategy consulting firm OC&C, the future of commerce.

In its statementCarrefour says it wants to offer French consumers "a simplified and intuitive shopping experience. "Everything will be done orally and the consumer will only have to pick up their purchases at a point of sale or have them delivered to their home. The same services will be available via the Google Shopping website. By the end of the year, it will be possible to buy all the everyday consumer goods on offer in stores (from toothpaste to household appliances); and from 2019, the service will be open to all fresh food products. This is a world first, since even the American retail giant Walmart has not yet done so.

 

The second part of the agreement, the creation of a Innovation Lab. Carrefour and Google will create a joint structure in which the retailer's engineers and Google Cloud's artificial intelligence experts will work "hand in hand" to develop new services and products for consumers. New shopping experiences too, resulting from a sophisticated analysis of the data collected.

 

The third component concerns the training of Carrefour's staff in "digital culture". The retailer is thus opening its doors wide to Google. Indeed, within six months, the American giant will train a thousand employees of the French retailer. But that's not all: it will also deploy its suite of office automation and collaborative solutions. Gsuite (Gmail, Calendar, Drive, Docs. etc.) among Carrefour's 160,000 employees. These employees were trained by Google staff.

 

With this alliance, Carrefour is implementing its digital strategy, which is the wish of its chairman Alexandre Bompard. A survival solution announced in January with the elimination of thousands of positions and a reduction in its sales areas. In return, the new president, who comes from Fnac and Darty, announced that he was betting 2.8 billion euros on digital, the "omnicanal", the intelligent articulation of online and in-store sales. His objective: to become the leader in food e-commerce, with 5 billion euros in turnover. But Carrefour is starting from a very long way off in terms of digital. Almost everything had to be redone and the bet was not won in advance. All the more so as the competition was getting more active with the agreement between Amazon and Monoprix, a subsidiary of Casino, and the announcement of an alliance between Auchan and the Chinese giant Alibaba.

 

The pact with Google saves Carrefour's stake but makes the group dependent on the largest American digital platform. This association raises several questions about the concessions accepted by the retailer. Thus, since transactions are made in the Google environment, it is not the retailer who will bill the buyers. Moreover, according to the newspaper The WorldThe agreement "appears to provide for remuneration of the intermediary, for example by a percentage of the purchases paid, although Google refuses to comment on the amount and nature of the value sharing. »

 

In addition, Google's control over the IT organisation of transactions means that it will have access to all customer data and their purchasing habits. Of course, unlike Monoprix, which has agreed to orders being delivered by Amazon, Carrefour still remains in control of all delivery logistics. Until when?

 

Finally, Carrefour agrees to rely on Google and Google Cloud solutions for all its IT infrastructure, including office automation. A major dependence that translates into the training of all its employees on Google products. A real danger because Google will have access to all the mysteries of Carrefour's management. Little secrets and big strategies will be shared with a player that does not hide, like Amazon, its ambitions to control the whole of world trade. These digital giants not only have a ferocious appetite, but they also have the means to satisfy it. In 2017, Amazon has paid out a staggering $14 billion to acquire the organic distributor Whole Foods. 14 billion dollars is the equivalent of Carrefour's market capitalization, and twice as much as Casino's!

 

There is also a risk of dependence on Google's technical and strategic choices, and on Google alone, without any alternative. Recent experiences have shown how the GAFA can change the rules of the game according to their own interests and impact entire sectors of the economy. Advertising professionals know all about this. Their continued existence is threatened by recent and brutal changes in Google's practices towards European publishers. The entire digital advertising industry, which cannot do business without Google's services, is strongly impacted. Only winner? Google which already occupies more than 80 % of the digital advertising market.

 

Despite these risks, does Carrefour, like other retailers, have a choice? What is the alternative to these Faustian alliances with giants that have become unavoidable? In spite of the controversies on the taxation of the GAFA, on their practices with regard to our personal data, on their disproportionate power which sometimes exceeds that of the States, the equivalent of a European Google does not exist. For a French group like Carrefour to develop and continue to expand internationally, it has only one choice: to ally itself with an American giant. For better or for worse.

 

 

Header image: Christian Oster, Invitation to the wolf, Leisure school fly