International analysis: Système U targets €1bn sales from Drive format

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French grocer Système U has reported online sales of i240m (£202m) between January and August. About 90% of that was generated through the Drive format, where a customer orders online and collects in store.

Click-and-collect is proving a success for French food retailer Système U

Drives that were already open in January generated 25% growth in sales, with total sales growth including new openings standing at 40%.

The success of the Drive format in France is by no means a new phenomenon, with a number of operators vying for a stake in the growing market. Système U, however, has one of the boldest targets - it plans to increase sales through the format to E1bn (£843m) by 2014.

French retailers, in particular Système U, often see the Drive format as a channel in its own right, especially considering that for many it accounts for the vast proportion of online sales.

The Drive format is highly successful for a number of reasons, most notably because it is often more convenient to pick up food products than having to be at home for a dedicated time slot. Drive formats are also popular with retailers because the customer goes the ‘final mile’, reducing retailers’ fulfilment costs.

The actual cost of fulfilling a grocery home delivery order is in the region of E15 (£12.65), with actual fees recouped by the retailer typically much less. The main reasons for this include the cost of the driver, temperature-controlled delivery vans and the requirement to offer short delivery windows. For these reasons, the Drive format is spreading well beyond France into the UK (Tesco and Asda), the Netherlands (Ahold), the US (Ahold) and central Europe (Tesco).

Other news to emerge is that Système U’s average basket size at Drive formats stands at 52 products, amounting to E120 (£101) per transaction - a sizeable basket. This shows that the Drive format predominantly caters for customers carrying out a full shop.

Additionally, Système U says baskets purchased at Drive formats have a bigger proportion of own-brand products - 40% of sales, compared with 30% in stores. This will boost margins at the Drive formats. Much of this can be attributed to retailers highlighting their own-label products as an alternative to brands through their online channels.

Planet Retail expects strong growth of the Drive format across the globe as consumers embrace it because of convenience and retailers turn to it as a more profitable route to offering online groceries.