1. Emma Gough is a senior consultant at Promar International, a leading val-
ue chain consulting firm and a subsidiary of Genus plc. Gough has worked on
a range of international fresh produce projects across Europe, as well as in
Southeast Asia. She is a committee member of the UK Chartered Institute of
Marketing Food, Drink and Agriculture Group.
begin operationsin France andGermanythisyear. A feature on the U.S.
site allows consumers to select fresh produce items that will be hand
selected and purchased by Amazon employees from a consumers’
local market. The aim is to provide busy working professionals the
opportunity to source food from local suppliers. In the U.K., a deal
recently manifested that will result in products from Morrisons super-
market being available for purchase online via Amazon.
Further development within the sector occurred with the launch of
Natoora in the U.K. and France. This platform focuses only on selling
fresh produce to consumers and businesses such as restaurants
and smaller retailers on a wholesale basis. The operation has seen
strong growth since its launch, and it currently supplies more than
400 London restaurants. The business itself is focused around the
fact that it sources all of its products from a number of European
wholesale markets and directly from a set of core growers. This
presents opportunities for produce suppliers to work directly with
online trading platforms to supply products in the European market.
Impact On US Suppliers
This continuing development of the online grocery channel in
the U.K. and rest of the EU means that there are a number of key
factors U.S. suppliers must consider in order to take advantage of
the opportunity in this route to market:
• Product Range – Suppliers need to be able to provide online
channels with the variety and choice their consumers require.
• Consistency – Suppliers need to ensure retailers receive consis-
tently high-quality items with adequate shelf life dates.
• Competitive Price – With the sensory aspect of purchasing fresh
produce eliminated online, the price of products becomes a
leading purchasing decision factor.
• Promotion of Country of Origin (COO) – U.S. suppliers can
work with retailers to actively promote the COO and boost the
awareness of U.S. fresh produce.
• Local Competitiveness – U.S. suppliers must consider the
competitive advantages they can offer the consumer over local
sources, such as innovative and additionalvarieties, seasonality,
and competitive prices.
With the online grocery market set to grow by 73 percent over the
five years in the U.K. alone, there still remains plenty of room for new
produce suppliers to gain a slice of the action. Those suppliers that
consider their offering for the market; how it can best be presented
online; pricing; and working directly with retailers will be the ones
that have the potential for success. pb
The Changing Face of
Fresh Produce Retailing &
Opportunities for US Suppliers
BY EMMA GOUGH
G
reater advances and access to technology mean that an
increasing number of consumers around the world, but not
least in Europe and the U.S., are venturing online to purchase
their weekly shop. This is further helped by the modern consumer’s
need to utilize technology for greater convenience and time efficien-
cies. As an example, in the U.K., all the major supermarkets — such
as Tesco, Sainsbury’s, Asda, and Waitrose — have their own online
sites allowing consumers to shop 24 hours a day. This is beginning
to present serious implications for the fresh produce sector.
In the U.K., the online grocery market grew at an annual rate of
13 percent during the past five years to reach a value of £8.6 billion
in 2015. There is a forecasted 12 percent yearly growth during the
next five years to £15 billion in 2020. Of this value, currently brick-
and-mortar grocery retailers (with their own online site) account for
74 percent of sales with the remaining 26 percent accounted for by
“online-only” retailers, such as Ocado and AmazonFresh.
In the European online grocery sector, France is the pioneer. Domi-
nant retailers such as AuchanDirect, E.Leclerc, Casino Supermarket
and Système U operate their own online sales channel. As a result,
France produces a route to market, which other European countries
lookto for ideas and inspiration. A good example of this is the “click
andcollect” format, which manyother European retailersnow invested
in and is a growing trend popular with time-pressured consumers.
The retailer’s drive-through-service stores, E.Leclerc DRIVE, are
also commonplace in France, whereby consumers can collect their
online grocery order without actually entering the supermarket. For
the French retailer, E.Leclerc DRIVE contributed to around a third of
its total online market share growth. By the end of 2016, the retailer
aims to have 800 DRIVE stores open across France, including its first
on a motorway.
Retailers are seeing an ever-increasing growth in the volume
and value of sales on their online channels. Online grocery sales
at Tesco now account for 7 percent of total sales at £2.9 billion. The
retailer currently operates from six fully dedicated dot-com stores
and in-store picking from larger U.K. stores as a direct result of
greater consumption demand for online groceries. Taking the lead
from French retailers, Tesco invested in 1,750 Click & Collect points
as well as more than 260 grocery drive-throughs.
Online Only
In addition to online supermarket websites, new platforms are
emerging whereby no physical stores are present. The digital only
presence gives these retailers a competitive advantage in terms of
lower operating costs. Typically, a number of these formats launched
successfully in the U.S., such as FreshDirect and Instacart, but now
these are entering the wider European marketplace.
AmazonFresh was launched in the U.S. in 2007, and last year
opened in the U.K., with further reports indicating that it will also
european market
140/ JUNE 2016 / PRODUCE BUSINESS