Alphabet’s (GOOGL - Free Report) division Google has teamed up with French grocery retailer, Carrefour, in a bid to bolster its presence in the global online retail market.
Per the deal, Carrefour’s products will be sold online via Google’s new shopping site, a product of its search engine, in France. Additionally, the customers will be able to shop using their voice with the help of Google Assistant and Home speakers. This will enrich the shopping experience provided by the retailer.
The customers of the retailer will be able to avail the facility of online sale of groceries from early 2019.
Partnership to Benefit
The deal seems to be a win-win situation for both the companies. With the latest move, Carrefour will strengthen its competitive position against its rival Casino’s subsidiary Monoprix and E.Leclerc. Notably, both these companies are striving to improve customer base by going online and enhancing delivery services.
Further, the recent partnership will aid Google foray into the growing European online retail market. Further, as part of this tie-up, the grocer is set to establish an innovation lab in Paris for the development of customer friendly services by leveraging the power of artificial intelligence.
This will be done in collaboration with Google Cloud. Moreover, G Suite tools will be deployed to 160K employees of Carrefour. This will improve the customer base of Google Cloud which will in turn aid top-line growth.
Coming to the price performance, shares of Alphabet have returned 8.4% on a year-to-date basis, against the industry’s loss of 2.5%.
Google’s Focus on Retail Sector
The company is continuously making efforts establish itself in the ever growing retail market with innovative shopping apps and services. Google aims at helping the retailers to improve their customer reach out with these services.
Google partnered with Walmart (WMT - Free Report) and Target (TGT - Free Report) to make the retailers’ product available online for purchase via its app called Google Express.
Further, the company has recently unveiled voice activated coupon for the customers of Target who shop from its app using Google Assistant.
All these efforts have helped Google in reinforcing its competitive position against Amazon (AMZN - Free Report) which has been the company’s biggest rival in almost every sector including home automation, cloud, voice assistants, audiobooks and so on.
The partnership will help Google in gaining a competitive edge against Amazon who recently joined forces with Monoprix to sell goods of the latter via its huge e-commerce platform.
Reportedly, Amazon was also trying to acquire Leclerc and Carrefour, in case of which, Google has pulled one over by winning the partnership deal with Carrefour.
The European grocery market is rapidly growing and holds the potential for further growth opportunities. Per the latest report of a research and training firm, IGD, the grocery retail market in Europe is expected to grow at a CAGR of 3.7% between 2017 and 2022. Further, the French market is expected to grow at a CAGR of 2.1% in the same time frame.
According to data from Statista, Europe contributed 32.9% of the global online grocery sales in 2017 with France contributing 5.6%, the second highest after 7.5% contributed by the U.K.
We note that Google’s strategic partnership with the French retailer will help it in reaping benefits from this growing market.
Currently, Alphabet carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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