International feature C&I Apr 2012
- 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.