1. 53April / May 2013 | C&I | www.c-store.com.auApril / May 2013 | C&I | www.c-store.com.au52
European retailers ramp up online grocery
E
UROPEAN RETAILERS ARE ROLLING OUT A VARIETY OF FASTER
AND MORE FLEXIBLE ONLINE GROCERY ORDERING, DELIVERY
and pick up services to keep one step ahead of their competitors.
Major online grocery trends in Europe and the UK include click
and collect and quicker home delivery times, while consumers are
increasingly interested in the web as a source of greater convenience.
And Amazon has started to build its own network of delivery lockers in
high footfall areas such as convenience stores and shopping centres.
Business models for online food retailers include: home delivery
– store to home from existing stores; click-and-collect - collect
goods at grocery stores; warehouse to home delivery; and
drive-through - pick up from stand-alone ‘shadow’ stores*
.
Delivery locations and times have long been a barrier for consumers
looking to purchase items online and many consumers revert back to
store-based purchases if workplace/home deliveries are not viable options,
says Lamine Lahouasnia, retailing analyst at Euromonitor International.
Internet retailing now accounts for 4% of global retail sales and the
channel has become a familiar shopping venue for many consumers,
Euromonitor says. However, whilst internet retailers have widened virtual
aisles and lowered prices, they have struggled to recreate the feeling of
instant gratification that consumers get from store-based shopping.
* Source ATKearney research
Not satisfied with express next day delivery options, consumers
have indicated a willingness to pay more for quicker delivery
times, resulting in a third party logistics companies such as Shutl
offering retailer to consumer delivery in less than one hour.
UK online grocery market ramps up
While the UK market is Europe’s most developed with sales up 12-14%
for 2011-12, online groceries only account for £5.6bn of a £156.8bn
market. However, it is expected to nearly double to £11.1bn within five
years and online market leader Tesco (25% of total grocery sales) now
faces challenges from Morrisons (4th biggest grocer) and Waitrose.
Tesco launched its online grocery system Click & Collect in 2011 and has
over 100 ‘drive format’ stores located next to Tesco stores. In January,
Tesco opened its fifth ‘dark’ store to process online deliveries. Tesco
chief executive, Philip Clarke, said in 2012 that Tesco.com “provides
all the growth we have in our core food businesses these days”.
Wal-Mart-owned Asda is the second biggest grocer and took a little longer
to get its web offering off the ground but now controls 33% of the online
market. It is opening its third dark store in Nottingham in March.
Ocado is the biggest online-only grocer, with 5% of the market, but has failed to
turn a profit. However, it has a loyal customer base, regularly
comes top of satisfaction surveys and has expanded into non-food sales.
J Sainsbury is the third biggest grocer with an 18% market share and delivers to
88% of the country. Sainsbury’s staff pick orders from shop floors, rather than
from dedicated warehouses and a click-and-collect service has been popular.
Upmarket chain Waitrose launched its own delivery service in 2011.
Waitrose announced a multi-million pound investment in February with the
launch of a drive-through click and collect service at Waitrose Cheltenham
in March, followed by services in branches in Southend, Salisbury,
Wolverhampton and Lincoln. Shoppers will be able to order groceries
online and pick them up from a collection area in the branch car park.
Morrisons holds a 10% stake in US online grocer Fresh Direct, a success
story in New York that has just branched out to Greater Philadelphia. Fresh
Direct, which launched in 2002, has 250,000 customers, $400 million
in annual sales and sells about 3,000 varieties of perishable foods,
household brands and ready-made meals. Morrisons is expected to
divulge more details about its online grocery service in March.
Auchan expands drive
In June 2000, Auchan - France’s second biggest hypermarket and
supermarket retailer - launched the concept of Drive stores, a new distribution
channel midway between e-commerce and traditional retailing.
In 2004 it launched the Chronodrive brand with the same offer. Auchan also
offers home delivery of groceries and household goods, with e-commerce
sales in France, Luxembourg and Poland up 22% for the year to 30 June 2012.
Auchan’s Chronodrive has 60 locations and offers 7500 skus in a wide
range of products: fresh produce, meat and fish, frozen, groceries,
beverages, cleaning products, personal care, and small domestic appliances.
Auchan’s Drive format has about 70 locations and works on the same
principle of ordering online with the convenience of pick up and loading
of groceries into your car two hours later at supermarket prices.
In February, Auchan, announced that they will launch a new, stand-alone
drive concept store incorporating fresh produce called Multifrais that will
open this March in the Paris metro area. The 1330 square metre branch
will focus on fresh produce and include frozen food, with four sections
for meat, poultry, rotisserie and traditional butcher and a wine offer.
Rewe takes up online grocery challenge
Germany is Europe’s biggest market for food and beverages but major
retailers such as Amazon, Edeka and Rewe (the two largest grocers) have
struggled to establish a successful online grocery presence. In 2012 – after
Hamburg, Frankfurt, Düsseldorf and Cologne – Rewe started a delivery
service in the capital, Berlin. Consumers can order products online
and choose the moment the goods are delivered to their doorstep.
The online service, www.rewe-online.de, offers a large supply of items
such as fresh produce, dairy, frozen foods, beef, liquor and non-food
items. Prices are the same as in the stores, customers can order up to
21 days in advance and changes can be made up to a few days before.
Rewe also opened the first click & collect drive in supermarket at
Wiseloch, Baden-Wurttemberg in 2012, which is now offered in
seven cities including Frankfurt and Hamburg. Customers can
pick up their shopping ordered through reweonline at a time
determined by them, without having to enter the supermarket.
Above: In the UK Tesco delivers pre-ordered convenience with its
Click & Collect 'drive format' stores: Tesco.com is an important source of
growth in Tesco's core food business.
Even moreEven more
convenientconvenient
INTERNATIONAL
Above: Traditional convenience store format: the Rewe store in Frankfurt, and
(left page) making it more convenient: Rewe's on-line grocery service provides a
convenient delivery alternative.