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Online retail sales jump 20% due to impact of coronavirus

Online retail sales jump 20% due to impact of coronavirus

The Coronavirus is changing the way people shop, with the restrictions on movement and health fears driving an increase in spending online. Analytics platform Contentsquare published a report based on its analyses of 1.8 billion user sessions and 50 million transactions on 1,400 websites worldwide between the weeks of February 16 and 23. The study compared the conversion rate, the number of transactions, the number of visits, the length of sessions in order to analyse changes in consumer behaviour online during the two-week period.

The results showed a sharp increase in conversions for household and grocery items, as well as a major rise in hours spent on the web searching for first necessity products. Online purchases from large retailers increased by nearly 20% and consumers spent 25.7% more hours searching online, up 44%. At the same time fears over shortages drove sales in physical stores up 16%, with an 8.1% increase in the industry’s average conversion rate. 

Over the coming weeks, it is likely that online sales will continue to rise if lockdowns spread worldwide.

Press Release: https://contentsquare.com/

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Online grocery sales grow 15% to $48bn

"FMCG growth is slowing, but our data shows that people are looking for more convenience, which can be met by shopping online."

The global e-commerce grocery market has grown 15% in the year to this June, reaching sales worth US $48 billion.

In comparison, the FMCG market as a whole is flat, increasing just 1.6% over the same period.

And e-commerce now accounts for 4.4% of all FMCG sales, according to the new 3rd annual Kantar Worldpanel study The Future of E-commerce in FMCG.

Kantar Worldpanel global shopper and retail director Stéphane Roger said the data shows that while overall FMCG growth is slowing, people are looking for more convenience, “which can be met by shopping online.”

Grocery e-commerce, although currently small, with only one in four people shopping online, is growing fast.

“We forecast it will grow to 9% of the market and be worth $150 billion by 2025. With new entrants such as Amazon expanding rapidly, the industry is facing a shake-up,” he said.
Key findings from the report include that:

  • E-commerce growth is not equal around the world and is not explained by connectivity. South Korea is the world’s largest online FMCG market by value share (16.6%) but in the US, also a digitally developed country, only 1.4% of groceries are bought online.
  • China is the market which saw the biggest growth in the last 12 months, 47% – to a value share of 4.2%.
  • Europe has a relatively low adoption of e-commerce in all countries except the UK with 6.9% of the market and France which has 5.3%.
  • France is a relatively unique e-commerce market as their success is with the Drive model whereby the online shop is collected from the store.
  • Once shoppers have begun shopping online they are more likely to continue doing so.
  • Online shopping baskets are usually bigger – shoppers generally spend more per trip online than they do offline. Brands that make it onto online shopping lists are more likely to stay there
  • 55% of online shoppers use the same shopping list from one purchase to the next so brands need to focus their efforts on getting onto that list.

Source: http://www.kantarworldpanel.com/global/News/Global-e-commerce-grocery-market-has-grown-15-to-48bn

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How to win in both online & conventional retail

Eurofresh Distribution editor Pierre Escodo's latest editorial looks at critical factors for success in both conventional and e-retail.

Fruit and vegetable consumption may be declining in Europe but as highlighted at the ‘Tomatoes, trends towards 2020’ conference in Antwerp in April, the market value of tomatoes has nevertheless risen.

The reality is that sales can be boosted via tastier, more convenient varieties that increase consumer satisfaction.

And more sales can also be achieved through online shopping.

In Europe, Denmark is one country where e-commerce is truly booming for fresh food, such as seen with the success of nemlig.com, and in Asia, Japan – where online sales are growing at double digit rates – reveals that it’s not just young people but also seniors that supermarkets should cater to with their online platforms, including mobile retail.

Adapting online shopping to consumer needs is crucial to success, and entertainment is a factor that also needs to be considered, advises Kantar WorldPanel in its recent report on the growth of e-commerce in FMCG. Interestingly, its data shows that in the UK, tomato products form the category with the second highest online share, and in France, soups are top-ranked.

From the pen of editor Pierre Escodo on page 3 of edition 143 (May/June 2016) of Eurofresh Distribution magazine. Read it online here.

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Insights into food retailing in Japan

What exporters need to know about the Japanese retail food industry.

About 23% of household spending in Japan is on food. It’s a country where tastes and preferences are heavily influenced by cultural, societal and environmental drivers. Japanese culture, for instance, places strong emphasis on the four seasons, which is reflected in changes in purchase habits and gift-giving patterns over the year.

According to a USDA Gain report, Japan is also a nation that prefers convenience, quality, and single-serving sizes. More than 3 million people commute via a combination of train and walking into Tokyo every day and highly value convenience and accessibility.

Key target markets in Japan: seniors and young people

Japan’s population is aging faster than any in the world and its Generation M is the fastest growing senior population (over 65) in the world. The roughly 35 million citizens in this generation are expanding the influence of the silver demographic, estimated to now represent about 27% of the Japanese population but set to reach 36% by 2040.

The retail response has come in the form of delivery services, mobile operations, expanded internet shopping, smart phone market integration, promotions, and products developed with Generation M in mind. Because many elderly can not drive or go far to buy groceries, many get their daily meals from a local convenience store.

With such a large senior market, Japan’s youth segment is often overlooked though their consumption spending has increased. Young adults who live alone or with roommates do not cook and almost exclusively eat out. “Due to a busy lifestyle, these young people want to avoid the hassle of cooking at home. The rise of the working, single-person households is correlated to the rise in sales of ready-made, frozen, take-out, delivery, and restaurant-prepared meals,” the report says.

Recent food trends in Japan

Major trends of relevance in Japan include burgeoning demand for private brands, healthy and functional foods, and for time-saving foods (e.g. frozen foods).

There has been strong growth in the area of prepared foods, particularly home meal replacements (HMR), in the past few years, with offerings increasing in every retail area and a 13% rise in HMR consumption.

Frozen foods have a large presence in the HMR market. In response to an ever-increasing desire for convenience and value-priced food, sales of frozen food in Japan have been rising at about 3.3% annually. Frozen vegetable imports increased to a total of 142 billion yen in 2013.

Changes in Japan’s retail food sales

According to the report, the Japanese retail food industry experienced growth in all of the three major categories in 2014: large scale and conventional supermarkets, department stores, and convenience stores. Total retail sales including food, beverages, general merchandise, fabrics, apparel and accessories amounted to 69,911 billion yen in 2014, with food and beverages – which accounted for 65% of the total  – seeing a significant increase.

Total Retail Sales (Billion JPY)

How large-scale and conventional supermarkets are evolving

The report says Japan’s supermarket business is considered saturated for standard large-scale and conventional supermarkets. So as to better compete with convenience stores, many major supermarket chains are investing in city-style stores (smaller versions of supermarkets located in city centres) which allow easier access and “have been a hit with the elderly population, mothers, and value-conscious customers.”

As the Japanese market continues to mature, the two national brands AEON and Seven and I Holdings have strived to appeal to the aging population. In 2014, the Japanese retail group AEON announced it would triple the number of its “Akore” city-style stores in Tokyo, Saitama, and Chiba from 90 to 250 by 2016.

And in October 2014, AEON’s private brand TopValu expanded to include organic products. “AEON has recently taken to promoting healthy food and local community activities in order to appeal to the rapidly evolving mature and health-conscious market,” the report says.

Convenience stores thriving

Despite the growth of online shopping and a tax hike of 2014, convenience stores continue to be a major retail competitor.

They have continued to increase their market share thanks to their numerous locations and wide variety of products, with a major contributing factor to their success being their proximity to consumers’ homes. Some also offer home delivery, such as Seven-Eleven’s Seven Meal bento delivery service.

Department stores reinventing themselves

Department stores have had to employ new techniques and strategies to stay on top. For example, in December 2014, Matsuya president Masaki Akita announced stores would be hiring more foreign language speakers in order to draw in visitors from abroad. Tourists make up a large percentage of department store customers.

While department stores have seen a significant drop in profits from non-food products in the last decade, those from food products have actually risen due to their premium nature and the popularity of depachika, the ‘wonderlands of food’ found on the basement floors of department stores.

The report says department stores usually carry imported, branded food products though typically in small quantities. “Many of the items are packaged as take-out products due to the proximity to train stations and the premium nature of the products means they are often used as gifts.”

Online shopping a hit with seniors

E-commerce and m-commerce are both expected to grow in the coming years with same-day delivery services and social media awareness. Seniors are some of the most active online shoppers.

Online sales are still relatively small yet have been growing at double digit rates, dwarfing the growth of Japan’s retail market overall. While the majority of sales are for non-food items, food and beverages account for 13.7% of e-commerce sales and are increasingly bought online.

Online shopping remains a lucrative market for grocery stores with some offering home delivery for little to no charge, an option popular with seniors.

“Many major supermarkets now offer online grocery services in most parts of Japan, including rural areas. The most successful has been Ito-Yokado, whose sales grew 14.3% in 2012 with the introduction of online groceries.”

The might of mobile-driven commerce  

Many online vendors are offering m-commerce as a way to connect with mobile users, often by offering mobile-friendly versions of their site, phone apps, and special downloads for customers on-the-go.

“Rakuten is a big name in m-commerce, receiving as much as 52.2% of its total value of transactions via mobile devices in the fourth quarter of 2013, while PC driven sales fell by 8%. It is worth mentioning that food and beverage sales make up 49.2% of Rakuten’s total sales. Popular items include heavy, bulky items that are hard to transport and fresh produce.”

Food procurement by Japanese retailers

The report says that when it comes to sourcing food, Japan’s large-scale supermarkets still rely primarily on importers and wholesalers. Most are engaged to some degree in developing and maintaining private labels which they tend to outsource to food processors.

The giant, nationwide supermarket chains such as Aeon and Ito-Yokado purchase their food primarily through three channels: directly from importers, directly from manufacturers and processors, or via wholesalers and distributors. Wholesalers and big trading houses are generally interested in handling high volume products, not niche-oriented ones, it advises.

Conventional supermarkets purchase through similar distribution channels, although they mainly purchase from wholesalers, whereas the major national chains rely on more direct routes. Department stores, meanwhile, procure food items almost entirely through wholesalers and tenant merchants (who mainly purchase the ingredients for their products from wholesalers and then manufacture the products to be sold).

Convenience store chains use trading companies or wholesalers, depending on the type of product. Their management systems present the most significant challenges for imported packaged processed foods, the report says, because they require exporters to modify product taste/specifications to Japanese tastes, cut delivery times to ensure freshness, and update and introduce new products frequently.

Food exports to Japan

Japan’s food self-sufficiency rate has been declining due to the aging farm population and is only 39%, meaning there are obvious opportunities for suppliers from other countries.

It also helps that since the Fukushima nuclear reactor incident cast doubt over the safety of some domestic produce, Japanese consumers have been more open to imported food.


As can be seen in the pie chart above, the US enjoys a commanding lead among countries exporting food to Japan, helped by Japanese consumers’ preference for US goods, the report says.

Read the full USDA GAIN report: Japan Retail Foods

Main image: “Depa-Chika” at Lotte Department Store by ayustety – http://www.flickr.com/photos/ayustety/12482886/, CC BY-SA 2.0 https://commons.wikimedia.org/w/index.php?curid=12013829

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Trends in food retail in Russia

Grocery remains one of the sectors least affected by the macroeconomic and political situation in Russia. That’s mainly because it offers basic products of high necessity and the market’s growth is supported by the increasing sales value of large area store chains which are continuing their expansion in Russia.

Grocery remains one of the sectors least affected by the macroeconomic and political situation in Russia. That’s mainly because it offers basic products of high necessity and the market’s growth is supported by the increasing sales value of large area store chains which are continuing their expansion in Russia.

But even so, a new USDA GAIN report on retail foods in the Russian Federation says over January-September 2015, Russian retail sales turnover fell 8.5% year-on-year (in comparable prices) reaching $338 billion in value terms and food sales were down 8.3% to $165 billion.

Russia’s ban on a numerous food and agricultural products from Canada, the United States, Europe, Australia and Norway in August 2014 had a tremendous effect on grocery segment and hit retailers and Russian consumers hard. The sudden drop in food supply led to price hikes in several food categories ranging from vegetables to dairy products. “Market analysts have stated that even if Russian producers are able to replace all imports eventually, prices are not likely to ever fall back to previous levels,” the report says.

Organic, Healthy and Ready-to-Cook Products

Another trend in food retail in Russia is that busier lifestyles, particularly in Russia’s largest cities, has created steady growth in demand for products such as chilled ready meals and frozen ready-to-cook products. Supermarkets, hypermarkets, and independent grocery stores have responded by boosting their offerings of chilled and ready-to-cook meals.

Similarly, increasing health-consciousness has spurred a greater offering of healthy, low-fat, salt-and sugar-free foods, fresh exotic fruits and vegetables. High-end supermarkets have begun to develop a range of organic foods, and some entrepreneurs have tried to develop supermarkets specialising in organic produce.

Though disposable income in Russia is expected to drop along with the falling ruble and rising inflation, making all imported products more expensive for Russian consumers and causing prices for organic products to rise in the near future, Euromonitor experts estimate the category will keep growing at 5% yearly to reach $90 million by the end of 2019.

Internet retailing in Russia

The number of internet users in Russia grew 5% in 2014 to 87 million, with the biggest growth of new online customers in Russia’s regions. Indeed, regional expansion was the main driver of internet retailing expansion, as saturation in the markets of big cities negatively reflected on the channel’s overall growth towards the end of 2014.

According to a Profi Online Research study, only 17% of Russians order grocery products online. Respondents asked why they did not buy grocery items online most often mentioned doubts regarding quality and freshness – particularly for fruits and vegetables.

Source:  GAIN report RFATO028, December 9, 2015, Russian Federation, Retail Foods

Image of Moscow City 2013 by Dmitry97ken (Own work) [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons

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Waitrose plans to open 14 new branches in 2016

Waitrose expects to create 1,500 jobs in new branches and its e-commerce grocery depot in 2016.

Waitrose is to open 14 new shops across the UK from spring next year, including five new supermarkets and nine new little Waitrose convenience shops.

It will also create up to 200 roles in its e-commerce fulfilment centre in Coulsdon, South London, to service its expanding number of branches.

In a press release, the UK supermarket chain said the supermarkets already confirmed include High Wycombe (Buckinghamshire), Uttoxeter (Staffordshire) and Solihull (West Midlands), which will all open in spring, and Truro (Cornwall) and Worcester, which will open in summer.  

It will also add new little Waitrose shops in the South Bank Tower in central London and Leatherhead in Surrey during the summer and has plans for seven more convenience branches in new locations throughout next year.

Juice bars, areas for grazing and informal dining, wine bars and welcome desks are among the concepts Waitrose said it aims to introduce more of in the new stores, “to deliver the modern Waitrose shopping experience.”

It already has eight shops with a juice bar and five shops with a wine and beer bar and recently became the first national supermarket to install a counter for freshly made sushi in its shops with the launch of sushi counters in its Battersea Nine Elms and Bath branches (in partnership with Kelly Deli).

Waitrose director of development, Nigel Keen, said many of the new shops will “go beyond the traditional supermarket, delivering exciting modern shopping experiences, which tap into the growing demand for grazing and casual dining.”

“At a time when many retailers’ estates are contracting, we are delighted to be opening new shops around the country,” he said.

The new outlets will give Waitrose almost 200,000 sq ft more selling space.

Its 80,000 sq ft e-commerce grocery depot in Coulsdon opened in 2015 to allow the supermarket to build its online capacity. The multi million pound centre will eventually fulfill 20,000 orders a week or over 1 million orders a year for Waitrose customers living within the M25. It already employs almost 400 people and once fully operational expects to employ more than 700.

Waitrose currently has 346 shops in England, Scotland, Wales and the Channel Islands, including 62 convenience branches.

Its omnichannel business includes the online grocery service, Waitrose.com, through which customers can choose to have their shopping delivered direct to their home or collect items from their local branch with a Click & Collect service.

Read more articles about Waitrose: https://www.eurofresh-distribution.com/tags/waitrose

Images: Waitrose

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DIA expands its online business in Barcelona

DIA says its online shop includes a range not available in certain high street stores and is the cheapest establishment in the entire company, thanks to its aggressive rates and promotional discounts.

DIA has expanded its online shopping business with the launch of an online platform in Barcelona,

In a press release, DIA said that having rolled out this experience in Madrid and Málaga, it is now making its online business available to reach a potential 4 million consumers in Barcelona.

“DIA’s online shop, which includes a range that is not available in certain high street stores, has become the cheapest establishment in the entire company, thanks to its aggressive rates and promotional discounts.,” it said.

Delivery will be made from 7 DIA shops, where the number of staff has been increased, with a total of 14 new hires, and is free for orders over €50. If the order is made before midday, it can be delivered that same day, and an SMS is sent to customers 20 minutes prior to delivery.

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CAGR of 63% in line for India’s online grocery market to 2022

6Wresearch predicts India’s online grocery market will grow at a CAGR of 62.7% over 2016-22.

India’s online grocery market is still in a nascent stage and primarily confined to Tier 1 cities, says New Delhi-based market intelligence centre 6Wresearch.

And the hyperlocal model (which usually features on-demand delivery) is growing faster than the ‘pure-play’ one (such as  businesses that focus only on e-commerce) in India, it says in a recently published report summary.

“(The) pure-play business model requires heavy investments and warehouses, which pushes the overall operating cost. On the other hand, hyperlocal model saves cost and time of delivery due to the support from the local merchant,” it says.

6Wresearch predicts India’s online grocery market will grow at a CAGR of 62.7% over 2016-22.

“India is the sixth largest grocery market in the world, which is majorly dominated by the unorganized sector with over 12 million pop and mom stores all over the country. Online grocery market is one of the fastest growing markets fueled by the intensifying e-commerce industry.”

But senior research analyst Avishrant Mani said the fruit and vegetables segment is growing sluggishly compared to other grocery segments, “since (the) consumer prefers to purchase fruits and vegetables in fresh condition, favours touch and smell of the items to judge the quality.”

Otherwise, the grocery and staples segment is contributing major revenue share in the online grocery market, followed by the FMCG segment.

Bengaluru from southern region is the key market for online grocery, followed by Mumbai from western and Delhi from northern region. Online grocery companies are mainly operating in metropolitan cities due to better infrastructure facilities and higher internet penetration as compared to tier II and tier III cities.

“However, online grocery firms are now targeting tier II and tier III cities to expand their presence on a pan India level. BigBasket, one of the key players of the market, is planning to enlarge its operation to 50 cities by the end of 2016.”

Read more “Wide Acceptance of Online Shopping and Busy LifeStyle Spurring the Growth of Online Grocery Market in India – 6Wresearch

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The new face of grocery retail in Spain

There has been a boom in proximity retailing and urban stores in Spain, with various Spanish and foreign retailers opening stores on busy shopping streets in city centres, generally with lower amounts of retail selling space. Examples include Condis Express, Carrefour Market and Supercor Expres.

Spain is slowly recovering, but its five years of economic recession have left a lasting impact on its retail sector and consumer behavior. Shoppers are now more price-conscious and retailers have had to adapt to the increasing importance of convenient locations and the incipient threat from low-cost retail formats.Those are among the observations in a new USDA GAIN report on opportunities for US exporters in Spain’s retail food market.

Consumer confidence

The report says Spain is expected to continue to show positive signs of recovery, with a return to pre-crisis retail sales figures likely by 2019. “This situation will likely be reflected in consumers gradually increasing their expenditure again, so opportunities will continue to arise for U.S. exporters,” it says. In the retailing industry, some operators have started to see slow positive growth for the first time in several years, especially in grocery.

Shopping habits

GAIN says that, according to Euromonitor, another effect of the economic crisis is consumers are now reluctant to travel to hypermarkets and big shopping malls on city outskirts, due to the cost and inconvenience. “As a result, the future of many of the large retail centers built during the good days of the Spanish economy are compromised.”

There has thus been a move to proximity retailing and urban stores, with various Spanish and foreign retailers opening stores on busy shopping streets in city centres, generally with lower amounts of retail selling space. Examples include Condis Express, Carrefour Market and Supercor Expres.

Product trends

Spanish consumers are also increasingly health conscious, GAIN says, noting that naturally healthy and free-from products are more widely available in supermarkets and specialty stores. “One of the most interesting and promising categories are healthy products indicated for food intolerances. According to Euromonitor, in 2014, food intolerance products sales grew 27% in value to reach $306 million.

Online sales in Spain

Online retailing is steadily increasing (+7% in value in 2014) and expected to continue to be prosperous in the medium term, as more store-based companies move to online commerce.

Its top internet retailers are focusing on building trust among their collective consumer base. According to Euromonitor, the reasons consumers give for shopping online are:

  • Convenience 78%
  • Better prices and offers 73%
  • To save time 66%
  • Easy purchase process 56%

However, mobile retailing is outperforming internet retailing overall in Spain, where smartphone penetration is estimated at around 80%, one of the highest rates in the EU.

Table 2. Grocery Retailers Company Shares (% Value)

Source: GAIN report SP1542, Spain, Retail Foods Annual 2015

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Survey sheds light on Australia’s online grocery shoppers

A third of consumers who buy their groceries online do so because it’s easier than shopping in a physical store.

Australians are curious about the benefits of buying their groceries online, but the majority don’t feel the need to make a permanent transition as they remain content with the current offerings provided by the bricks and mortar stores, reports customer satisfaction research and ratings business Canstar Blue.

Based on a survey of 6,014 Australians, it said consumers often prefer to physically inspect certain grocery items before purchasing them, particularly when it comes to fresh fruits and vegetables, dairy products and meats.

“However, 42% of the 1,474 adults who have bought groceries online in the last six months said they expect to do the majority of their shopping this way in future. And as online grocery retailers continue to develop their services, it seems a reasonable assumption that more and more consumers will choose to shop this way in the coming years, even if it is only occasionally.”

Of those who had ordered groceries online in the last six months, just one in five choose do all of their shopping this way, Canstar Blue said.

Its research also found:

Who buys their groceries online?

  • women (27%) are more likely than men (21%) to have bought groceries online in the last six months
  • but of those who have done so, men (22%) were more likely than women (18%) to do all of their grocery shopping this way
  • adults aged in their 30s were most likely to have bought groceries online in the last six months (37%), followed by 18-29 year-olds (30%) and consumers in their 40s (29%)

Why people buy groceries online

  • 35% of consumers buy their groceries online because it’s easier than shopping in a physical store
  • 24% struggle to find time to shop in-store
  • 17% believe it’s cheaper buying online
  • 7% don’t like visiting supermarkets
  • the majority of survey respondents (55%) always use the same website when they buy their groceries online, but 36% have tried more than one online grocery store
  • most consumers (64%) are inclined to click onto the website of the supermarket chain they usually buy from in person

What people don’t like about buying groceries online

  • 30% of online shoppers cited delivery costs as the biggest cause of complaint
  • 18% said their greatest issue was receiving replacement items for products that were unavailable
  • 15% found uncertain delivery times their main bugbear

How much people spend when buying groceries online

  • More than half of consumers (58%) said they tend to spend less online than they would if they bought their groceries from a bricks and mortar store.
  • While a previous Canstar Blue survey found consumers spend an average of $138 per week when they buy groceries in-store, the average for respondents in this survey was a $130 spend on their weekly online shop.

“It’s worth remembering, said Canstar Blue, “that buying online arguably makes you less likely to impulse buy other products that perhaps weren’t on your shopping list in the first place. Shopping online could also make you more price-conscious and willing to select a cheaper option if it’s available. You could argue that shopping online allows you to pay closer attention to your spending, when it’s easier to get carried away in store.”

Read the results here: http://www.canstarblue.com.au/retailers/online-grocery/
Online shop image: by Namakkalshowroom (Own work) [CC BY-SA 4.0 (http://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons