By Dominique Vidalon
PARIS (Reuters) - Privately-held French supermarket operator Leclerc said on Tuesday it would launch a food delivery service in Paris this month, stepping up its offering in the face of competition from Amazon (NASDAQ:AMZN) and domestic rivals.
Amazon's purchase of upmarket U.S. food chain Whole Foods last year has prompted speculation the online giant could focus on the European food and supermarket sector next, with some analysts seeing France as prime target.
"We will rise up to the challenge, starting with home delivery in Paris. Amazon are the kings of logistics, the kings of IT and algorithms," chief executive Michel-Edouard Leclerc told France Info radio. "But I have a trust relationship with consumers. I think commercial policy will prevail."
Leclerc has overtaken Carrefour (PA:CARR) as the leading food retailer in France by market share, partly because its prices are typically lower than its rivals.
The new service, to be called 'Leclerc Chez Moi' (Leclerc To My Door), will be launched on March 26 in northern Paris and from May 15 in the south of the city.
It will price products at 15-20 percent below those of competitors with a goal of generating revenue equivalent to a hypermarket in the first year.
"The Leclerc division is coming to Paris and it will free up prices," Leclerc said in reference to the French 2nd Armored Division, headed by General Philippe Leclerc (not a relative), who liberated Paris during World War Two.
CASINO SEES NO THREAT FROM LECLERC IN PARIS
Questioned about the impact of Leclerc's plans on the performance of its Franprix and Monoprix convenience stores in Paris, Casino CEO Jean Charles Naouri told analysts last week he was not overly worried.
"The Paris food market is worth 7 billion euros and Leclerc thinks it can generate a food revenue of 170 million euros. This will have a limited impact of 1 percent on the revenue of Monoprix and Franprix," he said.
Amazon, which has run its Amazon Prime express delivery service in Paris since 2016, is steadily building up its presence in France. Privately-held French supermarket operator Systeme U recently disclosed it was in discussions over a grocery supply deal with Amazon.
Faced with the challenge from the U.S. giant, France's retailers have been looking to improve their online offerings.
In January Carrefour unveiled plans to boost its e-commerce investment and said it would seek a partnership in China with Tencent. In November, Casino said it would use British online retailer Ocado (LON:OCDO)'s e-commerce platform to help expand.