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#WRC2019: Food retailers should concentrate on core propositions

Success in grocery can be achieved through focusing on specific areas of the market and single channels, rather than attempting to cater for all customer types across all channels.

Speaking at World Retail Congress in Amsterdam, Michael Love, group CEO of Netto, explained how the company did not feel under any pressure to open up online and that its low-cost model, operating exclusively through physical stores, could continue to be successful.

“I don’t know of a market that is more penetrated online than the UK. All the elements are in place to support the massive growth of online grocery shopping, but it is not exploding. It will be a while before it fundamentally attacks the more conventional forms of retail. We’re going to get our toes wet at some point [online] and find a way that is unique to us. Online is not putting any pressure on us right now in any of our markets,” he said.

Gerard Scheij, partner at online supermarket, Picnic, suggested it is particularly tough to do omnichannel grocery shopping and to keep those two channels working concurrently with online goods picked in-store and click & collect models typically having their deficiencies. Much more efficient to develop a model specifically for online, he suggested, which is the route taken by Picnic in its original Netherlands market and subsequently Germany.   

Driving efficiencies and eco-positivity

In order to drive efficiencies it has some unique elements. These include having specific delivery times for each area – rather than letting customers choose time time slots – as this enables much more efficient logistics. Picnic does not offer same-day delivery, which means it can operate a system whereby it will only have enough bread baked based on orders received for the next day. This helps reduce waste. Its sustainability credentials are enhanced further by its packaging being different to that which would be sat on a supermarket shelf.

“Packaging is not just to hold a product, it’s for marketing. For online we don’t therefore need to have the same packaging. We just have its photo online. Certain products have two-thirds air in their packaging but for Picnic delivery we can have just one-third of the volume,” explained Scheij.

As an online-only operator Picnic has lots of data that it uses to inform a lot of the decisions it makes. “We partner with suppliers based on consumer behaviour. We can see what they have been looking at online. We can also see the effect of our marketing and social media activity,” said Scheij.

It is a different story at Netto where Love said the collection of data would require the creation of a loyalty programme and there is a reluctance to go down this route as the company does not feel it would be sufficiently worthwhile and does not fit the core Netto model.

“We don’t collect data. Our model is based on low cost and we do not see discounters having complex loyalty programmes. We step lightly into these things as we do not want to alter our low cost model.”