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UK online grocery sales to soar by 33% in 2020

UK online grocery sales to soar by 33% in 2020, Nick Carroll of Mintel © CNBC
© CNBC

 

The UK’s online grocery market will expand by a third in 2020, according to projections by Mintel, and will be worth £17.9 billion by 2024. Moreover, the changes to consumer behaviour brought about by the Covid-19 pandemic, are likely to be long-lasting. UK consumers are expected set to spend £16.8 billion on internet groceries in 2020, up from £12.7bn in 2019. This comes after growth had been slowing down since  2015, reaching just 2.9% in 2019.

The Mintel survey was carried out between 28 February and 23 April, and found that 36% of British consumers reported increasing their online shopping, with 50% trying to limit the time they spend in bricks-and-mortar stores and 9% using click-and-collect more frequently.

Nick Carroll of Mintel said, “Over the course of just a few months, Covid-19 has had a seismic impact on Britain’s grocery sector. The pandemic is giving a significant short-term boost to online grocery services, as shoppers look to avoid stores and limit their contact with the outside world. However, the impact will last beyond the crisis. While there is currently a significant disruption to the online grocery market, with some retailers not accepting new customers, this will ease in the short term as more capacity is brought online.”

However, when the data is analysed in closer detail, different patterns emerge. Just 28% of the country’s over-65-year-olds had made online grocery purchases before the current health crisis, while 37% report having done so subsequently. Many consumers rely on the kindness of friends and family, with 24% of under-44s helping friends and family and/or neighbours with their shopping.

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X5 Group reports five-fold increase in online sales

X5 Group reports five-fold increase in online sales
© X5 Group

 

Russian retail giant X5 reports a 470% increase in online sales in the space of one year. Total revenue in the year up to April 2020 amounted to €21.3 million, making the X5 Retail Group the number-one online grocery delivery company in Russia, according to Retail News. In April 2020, online sales represented 2% of X5’s turnover in Moscow, the Moscow region and St Petersburg, where online services are available. At the end of the month, X5 was delivering more than 23,000 orders per day, with the number continuing to grow.

X5’s CEO, Igor Shekhterman, said, “During the quarantine designed to combat the spread of the COVID-19 virus in Russia and introduced for the period from March 21 to on May 11, our consumers more than ever need safe ways to get food to feed their households without having to visit a store. In the largest cities where we operate, we at X5 have been able to offer our fellow citizens two convenient ways to meet this demand: first by stocking up via our online supermarket (in Moscow, the Moscow region and St Petersburg), which offers a wide assortment of food, household goods, personal hygiene products, children’s goods and pet supplies; second with express delivery from a nearby Pyaterochka store (176 outlets in Moscow and Kazan), with deliveries completed in 1.5-2 hours based on the assortment of our standard proximity store.”

Since 2017, X5 Retail Group has been investing in expanding infrastructure for its online platforms, including the commissioning of four dark stores, a fleet of 283 delivery trucks, as well as the IT infrastructure and user interfaces for online operations. The group’s plans for 2020 include launching Perekrestok.ru in Nizhny Novgorod in the summer, based on an innovative solution of transforming a former Karusel hypermarket into a dark store. This will be Russia’s first fully fledged online food retail platform boasting a wide product range, including fresh produce, offered in regional markets outside Moscow and St Petersburg. By the end of 2020, X5 plans to scale up its express delivery service while continuing to refine the efficiency of business processes in order to increase market share in this segment and to achieve break-even sooner. In addition, X5 plans to launch express delivery from Perekrestok stores using the new Perekrestok.Bystro mobile app.

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T-Systems and Mercabarna create app to deliver food to groups in need during COVID-19 crisis

T-Systems and Mercabarna create app to deliver food to groups in need during COVID-19 crisis

T-Systems, a digital services subsidiary of Deutsche Telekom and Mercabarna, Barcelona’s wholesale market, two leading European companies in the technology and fresh food sector, respectively, have joined forces, together with other partners, to create an app (https://t-mercabarnasolidaria.com) that will help entities and groups in need during the COVID-19 crisis. T-Systems provides the technology, while Mercabarna, and the companies within the market, supply fresh food and logistics and transport capacity.

A 24h hackathon

Among the initiatives already undertaken to help during the current health crisis, T-Systems and Mercabarna have organised a hackathon (meeting of programmers whose objective is the collaborative development of software) to develop a fully operational application that optimises the distribution of fresh food to needy groups.

During 24 hours of uninterrupted programming, a team of 20 T-Systems experts, with the collaboration of Mercabarna executives, created a solidarity marketplace that connects the surpluses from wholesale companies with the demand from social entities and the logistics company responsible for transporting food to the destination.

The project partners

The project is supported by two wholesale Mercabarna companies specialised in fruits and vegetables (Frutas Diego Martínez and Hermanos Fernández), as well as a logistics operator, also based in the wholesale market (TAE Transports).

The first social entity to benefit from this new application will be the Red Cross of Catalonia (which has 90 distribution points distributed throughout Catalonia), but it is planned to gradually incorporate new social entities into the project.

This innovative initiative adds to the work that Mercabarna’s wholesale companies have been carrying out on a regular basis, with their contribution of more than 100,000kg per month of fruit and vegetables through the Food Bank, which are distributed to 35,000 people in need. 

The director general of Mercabarna, Josep Tejedo, said, “Mercabarna once again demonstrates its proactivity and solidarity to meet the needs of the most vulnerable during this health crisis and to continue to guarantee the supply of fresh food to the population at the same time.”

T-Systems has contributed its technological and innovative capacity. Osmar Polo, general director of T-Systems Iberia, said, “The current crisis of COVID-19 is making clear the importance of technology to provide collaborative solutions and, at T-Systems, we wanted to offer our knowledge and technological capacity to help improve as far as possible the difficult situation that vulnerable groups are experiencing. We are confident that we will get out of this crisis soon, and we believe that technology will help us to do so”. 

 

Technology at the service of society

The application, developed in just 24 hours by the team of volunteer professionals at T-Systems, allows non-profit organisations to access a bank of food products available in Mercabarna and request a delivery based on a catalogue established by the wholesalers. In addition, it allows you to create profiles by type of company (wholesalers, carriers or associations), and includes statistics on orders and delivery times, as well as an order traceability system, with real-time tracking by state and location.

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FPI Live focuses on modern retail

India’s food retail market is characterised by the dominance of traditional trade, such as street vendors, roadside markets and neighbourhood stores. Modern food retailing – centred on supermarkets and hypermarkets – has struggled to gain market share, particularly when it comes to fresh fruit and vegetables, but the sector has come a long way in the last ten years. 

Over the past decade, John Baker of marketing consultancy Produce Marketing Australia has visited India six times to deliver retail training programmes for the Washington Apple Commission and USA Pears to over 1,000 retail participants in 13 locations across the country. In that time, he has seen significant changes and improvements.

In an exclusive expert talk at Fresh Produce India Live, John will illustrate some of the key advances since 2009, from diversification in formats to better in-store merchandising and execution. He’ll explain the impact across the supply chain and highlight the areas for further development. He’ll also offer advice on how fresh produce suppliers and marketers can work more closely with modern retail operators and add value to their offerings.

Fresh Produce India Live livestreams from 1pm Indian Standard Time on 23 April. Asiafruit’s Chris White and John Hey are hosting five sessions of quality insight and ideas for the future of the fresh produce business in India. They’ll be joined by speakers and expert panellists from India and the rest of the world to discuss the challenges that face India today. 

Visit the Fresh Produce India Live website for more details on the programme and to register. It’s free to join.

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Tesco expands home delivery services to meet surge in demand

UK retailer Tesco has expanded its home delivery and click-and-collect services following a sharp increase in demand that led to shoppers reporting difficulties in securing online delivery slots. The firm’s delivery and collection capacity has risen from 660,000 to around 780,000 in the past two weeks, with plans to increase this by another 100,000 in the coming weeks. Tesco has also added over 200 new vans and recruited another 2,500 drivers and over 5,000 pickers, as part of the delivery expansion.

Last week, Tesco said it was limiting shoppers to only 80 items per online order. Tesco chief executive Dave Lewis said the Covid-19 pandemic has “led to unprecedented levels of demand for grocery shopping services. We’re doing everything we can to increase the number of slots available and to support vulnerable people.”

Meanwhile, online grocer Ocado announced it was recruiting an extra 3,000 staff to work in its logistics division to meet the current surge in demand.

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Japanese supermarket giant Aeon, in online grocery push

AEON organic retail store

AEON organic retail store

Credit: Aeon

 

 

Aeon is partnering with British online grocery pioneer Ocado to launch a new company by March 2020 that will use AI and robotics to deliver a cutting-edge digital experience. Also, as a sustainability initiative, Aeon has set up a platform to help boost organic farming in Japan, where demand is outstripping supply of organic food.

 

Fresh food delivery has yet to truly take off among the Japanese, who largely still pick up fresh produce on a daily basis. But with better logistic networks and different demographics – such as more dual-income households and senior citizens – that’s forecast to change. And with AmazonFresh already in Tokyo, and Walmart (owner of Aeon rival Seiyu) beefing up its online grocery delivery together with Japanese e-commerce giant Rakuten, it’s no surprise that supermarket Aeon is also making the leap. In a statement in November, Aeon said it will leverage Ocado’s world leading know-how to launch and operate “the next generation online supermarket.” It plans to open its first customer fulfilment centre harnessing the Ocado Smart Platform by 2023 to serve Japan’s Kanto region, followed by others over the following two years in order to eventually serve the whole country. And it anticipates achieving online grocery sales of about 600 billion yen (about €4.92b) by 2030. “Aeon will realise a highly efficient operations and distribution system to deliver ‘anytime, anywhere, anything’ through a superb application interface to meet our customer needs. It is expected that these technologies can be utilised for the existing Aeon online supermarket business, store pick up, click & collect,” the company said in a press release. Aeon also plans to seek more partners both in Japan and around the world in order to be at the forefront of the digital era. Ocado, it should be mentioned, has also been chosen as a partner by other major supermarket groups around the world, including Kroger in the US, Casino in France, Marks & Spencer in the UK, ICA in Sweden and Coles in Australia.

Produce from farms run by Aeon Agri Create // Credit: Aeon

 

A platform to boost organic production 

Two other key initiatives from Aeon are in the area of organic food. Back in 2017, among the sustainable procurement goals the group set itself was that of boosting the sales ratio of organic products to 5% of all its agricultural products by 2020, also when Tokyo will host the summer Olympics. Aeon says it wants to contribute to “human, social and environmental health” through organic products, furthermore ones that are “cultivated, distributed and consumed naturally.” It also says it is “responding to our customer demands for safer, better tasting, and environmentally friendly food products.” However, while interest in organic produce is on the rise in Japan, “supply of organic products has not caught up with growing consumer demand,” it says, and “organic JAS certified producers in Japan account for only 0.2% of all farmers.” Given this context, in September 2019 the retailer announced another initiative, the new Aeon Organic Alliance (AOA). In a statement, it said this platform will boost the supply of organic products and help farmers overcome the burden of high organic cultivation costs and those incurred due to inefficient distribution, as well as giving them opportunities to gain new skills, exchange information and share and solve issues together. The AOA platform will be used to “centrally manage production, procurement, processing, distribution, and sale of organic agriculture products.”

Organic produce in Bio c’ Bon store in Japan // Credit: Aeon

 

14 new organic stores in Japan

AOA members will also have access to technological know-how for the acquisition of Global G.A.P. and organic JAS certification. Aeon has acquired such expertise via the 20 farms it directly manages across Japan. The farms are operated by the company Aeon Agri Create and three hold organic JAS (Japanese Agricultural Standard) certification, one of which is the fully organic 16 ha Saitama Hidaka Farm. Aeon’s organic farms will serve as distribution bases that collect products from growers who are members of its organic alliance, thus reducing distribution and delivery costs while also facilitating joint purchasing of materials necessary for cultivation, which in turn lowers costs. Furthermore, an AOA website will share what is happening in stores, including customer feedback, product line-ups, and sales performance, as well as overseas trends and other relevant information. It will also serve as a communication platform for connecting producers. Another group subsidiary, Aeon Topvalu, develops Aeon’s private brand for organics, Topvalu Gurinai, which is sold in group stores across Japan. Also providing a sales outlet for organic produce in Japan are the Bio c’Bon stores operated by Aeon in partnership with French firm Bio c’ Bon. There are now 14 such stores in Japan.

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Strong growth in South Korea’s online retail

Strong growth in South Korea’s online retail

 

South Korea’s retail sector is currently going through a period of intense price competition. The growth in the country’s online retail sales is in stark contrast with the picture in offline sales, prompting retailers to seek out ways to ensure they maintain their market share. According to data published by the Korean Ministry of Trade, Industry and Energy, total retail sales rose by 6.8% in 2018. However, while online sales were up by 15.9%, offline sales inched up only 1.9%. Overall, online sales now account for 37.9% of the entire retail sales (+2.9%). The lower costs associated with online retail are allowing firms to reduce prices somewhat, thus fuelling ever more intense competition to win over price-conscious consumers. 

Photo: foodnavigator-asia.com