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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

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Spanish supermarkets shift more fruit & veg

The recovery in prices and good weather have been a boon for retail sales of fruit in Spain, which in the first nine months of 2015 were up 10.2% on the same period last year.

The recovery in prices and good weather have been a boon for retail sales of fruit in Spain, which in the first nine months of 2015 were up 10.2% on the same period last year.

According to a post by Nielsen Spain’s retail services account manager Gema del Castillo, vegetables have also increased their presence in shopping baskets, rising 7% compared to Jan-Sept 2014.

Del Castillo singled out the avocado for special attention, noting sales growth of 43.9%, “possibly helped by its status as a ‘superfood’.” Also undergoing strong growth were courgettes and artichokes, which both increased their sales by more than 20%, with broccoli not far behind (+19.9%).

But it’s the classics. such as oranges and potatoes, which are still the most common in Spanish shopping baskets, she said.

Fruit and vegetables are also gaining ground in online sales, with growth of 26.3% in sales of this produce online, compared to 8.7% for sales in physical stores.

Interestingly, it’s not just the sale of heavy produce, such as oranges and potatoes, that were popular in online sales, but also ready-to-serve and seasonal produce items. Del Castillo said sales of the latter were helped by online promotions.

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How Spain’s fruit and vegetables market is evolving

Nielsen’s retail services account manager, Gema del Castillo Tamayo, shared insights into today’s Spanish consumer and where opportunities for growth lie.

Is there scope to increase retail sales of fruit and vegetables in post-recession Spain? At the AECOC Fruit and Vegetable Congress in Valencia in June, Nielsen’s retail services account manager, Gema del Castillo, shared insights into today’s Spanish consumer and where opportunities for growth lie.

Signs of economic recovery

Del Castillo started by looking at whether the market is on the road to recovery. Effectively, European consumer confidence continues to improve, she said, but it is yet to return to pre-crisis levels, namely before the big recession hit Europe (in about 2008). Nielsen data shows that In Spain, consumer confidence has reached levels not seen since 2010. There was 3% growth in the Spanish GDP in the first quarter of 2015, while the CPI fell 0.7%.

Other indicators, such as an increase in employment, car registrations, sales of electrical appliances and electricity consumption also augur well for believing that a recovery has started. The hospitality business, for instance, has stabilised, with beverage sales showing growth since 2013 and for the first time in six years the number of establishments has started to increase again. But Del Castillo warned this is a bit of a wobbly start to recovery that is accompanied by uncertainty.

What’s happening with FMCG sales?

Nielsen’s analysis shows that despite a decline in Spain’s population last year, demand strengthened, though with the downside of a drop in retail prices. Compared to 2013, the value of retail sales last year fell 0.4% and prices 1.1% but the volume was up 0.7%. For fresh produce specifically, sales were 1.2% and prices 1.8% lower as the volume rose 0.6%. But compared to last year, retail sales to this April were up 0.7% in value and 1.1% in volume and prices up 0.4%, with the respective changes for fresh produce being +0.3%, +1.2% and -0.9%. Thus overall the context is one of improved demand and a slowing of the drop in prices.

Key components of the fast-moving consumer goods industry during the first quarter of this year were:

  • Strong pace of new store openings and concentration of the top retail chains
  • Supermarkets and superstores are gaining share from specialist and traditional stores
  • A slowing in relation to the increased market share of private label goods (they have since started to grow again)
  • A stable level of deal proneness

Price-sensitive, bargain-hunting shoppers

On the latter, Del Castillo highlighted that, according to Shoppertrends 2015:

  • 24% of consumers will change stores depending on which one offers the best sales promo
  • 37% rarely change stores but do actively look for the special offers
  • 20% say they know the prices of all the articles they buy regularly
  • 46% say they  know the prices of most of the articles they buy regularly and notice when there is a price change
  • 72% of shoppers believe that food prices have risen in the last year

The last figure shows that while there’s been a deflation of prices, many households have not perceived it, she said.

Trends in fruit and vegetables sales

Last year, fruit and vegetables accounted for 11% of Spanish consumers’ shopping spend, up from 10% in 2011.

Sales in the main categories have grown in volume thanks to lower prices. For fruit, it is oranges that are the winners, representing about 27% of the total fruit volume sold in the 12 months to April this year in Spain. Add mandarin sales (7% of the total), and citrus fruit accounts for one in every three fruits sold. Apples (11%) and bananas (10%) were next hottest in demand.

As for vegetables, potatoes formed 29% of the volume sold over the same period and tomatoes 16% and together they account for nearly one in every 2kg of vegetables bought, but just 31% of the total vegetable spend. Next highest in volume came onions (9%) and peppers (5%).

Nielsen’s household panel data shows fresh produce is accounting for an increasing share of the value among all shopping missions, but particularly in the case of routine ones, which are those involving the biggest spend. It is also increasing across all retail channels, but above all in supermarkets and superstores. The latter are gaining ground, moving from 51% in 2008 to 58% in 2014 in terms of fresh produce sales, compared to 49% to 42% for traditional and specialist grocers.

Opportunities for growth: online and convenience channels

Del Castillo said that as growth opportunities, two areas that have already seen major gains outside Spain are the online and convenience channels.

“The online channel is growing at a much faster rate than offline,” she said, displaying figures showing the value of online fresh produce sales value grew 14.7% for the 12 months to April 2015 while offline sales rose just 2.2%.

Fresh produce accounts for a smaller share of the online shopping basket – for fruit it’s 17% for offline and 9% online –  however there are big opportunities for staples such as potatoes.

The key to increasing online sales is to “earn trust through reliability“, Del Castillo advised, and ways to do this include offering customers a refund if they’re not happy with the produce delivered. In her own experience, Del Castillo said the melon delivered to her by online suppliers is usually much tastier than what she picks herself in person.

“More and more shoppers are buying fresh products online despite retailers being sceptical about the potential of this channel for them. The consumer is definitely ready to do part of their fresh product shopping online, all that is lacking is the retailers’ investment to sell these products online properly,” she said.

The convenience channel, which includes a broad range of outlets including petrol stations, fitness centres and airport and train station shops, is also very promising. Sales of convenience products, such as pre-cut and prepared fruit, salad and vegetables in the UK’s leading supermarkets, are worth €1.7 billion a year, according to Nielsen Scantrack Grocery Multiples data.

JB
Photos of Gema del Castillo by Roger Castellón courtesy of AECOC

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Inside India’s biggest e-grocer – BigBasket

Big Basket is currently India’s biggest online grocery player, clocking an average 12,000 orders a day – 70% of which include fruit and vegetables – and sales growing 10-15% month on month.

BigBasket says fruit exporters have a big chance to grow their brands in India, the world’s 6th largest grocery market e-grocery

Currently India’s biggest online grocery player, BigBasket clocks an average 12,000 orders a day – 70% of which include fruit and vegetables – and sales growing 10-15% month on month.

Even so, that’s just a drop in the ocean of potential grocery e-commerce in India. Against a total F&V market of about US$ 53 billion, modern retail sales of fresh fruit and vegetables contribute around US$ 500 million and online sales around US$ 30 million. So said Vipul Mittal, head of fruit and vegetables for Bangalore-based BigBasket.com.

Speaking to ED from India, Mittal also stressed that e-retail success is “not as simple as it looks.”

“A lot of back end work has gone into this company over the last 3-4 years to make it very powerful. It’s about being a comprehensive service and delivery package and not just a web site.”

And Indian consumers look for value irrespective of the channel through which they buy. Hence constant benchmarking against all competitors takes place to compare prices and ensure value, he said.

E-grocery potential in India

With an estimated 1.27 billion people — and likely to overtake China by 2028 as the world’s most populous country — India also has lowest rate of meat consumption, highest rate of vegetarianism, and a growing affluent class keen to try new cuisines.

According to the Indian daily Business Standard, last year Randstad India – which pegged India as the world’s 6th biggest grocery market – estimated just 1% of the groceries Indians buy are online. By 2020, it expected that to grow to 2%, making India’s online grocery market worth around €9 billion.

Indian households tend to buy fruit and vegetables 2-3 times a week, and the same trend is seen on Bigbasket.

Mittal said e-commerce facilitates insight into consumer buying patterns and allows the offering to be tailored accordingly, for instance running a promo on apples to all mango customers in the off-season (July).

Expansion into ready-to-cook food

The online retailer sells other grocery items apart from food, such as personal hygiene products, but until now, sales of fruit and vegetables have hovered around 14-16% of its total value sales, Mittal said.

However, having built a solid customer base, it now plans to increase its assortment further with many other food products including an imported and gourmet range.

According to recent reports, BigBasket is also set to offer more organic fruit and vegetables and plans to start selling gourmet salads and ready-to-cook meals – initially Thai, Mexican and Italian dishes – that include freshly cut vegetables and other ingredients, and recipes. This it has launched under the brand ‘Happy chef’ – a la Blue Apron.

Technology aids forecasting

Getting supply right is the key to BigBasket’s success, Mittal said. ”We have used a lot of technology for forecasting demand and use a dynamic model to plan capacity and the availability of vehicles.”

“Historical data has limited scope to assist demand forecasting in perishables, especially when the growth is so rapid and there are multiple variables.”

Big Basket has developed backward linkages with growers and buys directly from growers wherever possible, giving it better control of quality and enabling delivery of fresher produce by reducing time between harvest and consumption.

Direct sourcing preferred

BigBasket is currently located in six cities – Bangalore, Hyderabad, Mumbai, Pune, Chennai and Delhi – and tries to source what it needs in the vicinity of each.

By the end of this financial year, it will have opened 50 more locations, all in clusters with 5-6 cities around six central locations typically with one central warehouse.

BigBasket has no contracts with growers as yet, but is setting up collection centres to source directly from multiple farmers. It plans to establish linkages to bring safe food to the table with complete traceability, having already set up four such centres in southern India.

“We are currently a very small player with respect to total production in an area. So typically when we go into source areas, there are multiple farmers who can supply us. We create an enabling environment for the farmer to bring his produce to us soon after harvest and provide him the transparency of price and weighment. We have also initiated a pilot to provide extension services to the farmers through our field agronomists.”

BigBasket may also draw on wholesale markets to fill any gaps but prefers not to, Mittal said, because the produce is a step further from harvest, therefore less fresh and more expensive. “Quality and freshness are the driving force rather than price and margin.”

Chance for exporters to build brands

In terms of opportunities to export into India, it is a matter of creating differentiation, which so far has been very limited. BigBasket is looking to stand apart by bringing in different products and varieties, such as seedless watermelon, wider variety of pears and apples, exotic fruit, etc. (Few vegetables are imported by India, mainly due to shelf life reasons.)

Mittal stressed he sees a big – and so far largely untapped – potential for foreign suppliers to harness e-commerce to build their brands.

Most imports into India are channelled through traders and conventional retail channel. Growers/shippers don’t have much opportunity to build their brands because they don’t have much control over distribution channels, as well as other marketing elements. BigBasket, in contrast, can package, display and deliver its imported apples under a brand, for instance.

“It’s a big opportunity to build a brand in India, where ecommerce is still in a very infantile stage but set to expand rapidly,” he said, stressing e-commerce’s power to communicate directly to consumers.

(BigBasket is also said to be looking at launching a data analysis business to offer information on customer trends related to brands.)

Also on imports, Mittal said produce should adhere to global food safety and quality standards but trade with India is “not as tricky” as with the EU and US.

No questions asked returns

BigBasket’s customers mostly order by noon for same day delivery or choose a convenient slot among four options the next day. Insulated boxes are used to maintain the cold chain for temperature sensitive products such as mushrooms.

Its recent acquisition of a a hyperlocal food delivery startup in Bangalore will be act as a springboard to compete with rivals offering hyper-rapid delivery.

Mittal said customers can return produce at the time of delivery if for any reason they don’t like it. The return rate for fresh fruit and vegetables is about 0.5% and the most common reason is a problem with quality caused by transit damage.

Analysis of complaints has led to service improvements, such as in the case of customers finding worms in their cauliflower. Now the company has introduced florets, thus solving the worm problem “and adding value.”

Another big source of complaints was fruit being delivered semi-ripe. Thus, in March, BigBasket set up a ‘freshometer’ – for bananas, mangoes and papayas – on its sales page so consumers know when to eat them. Mittal said this is important because BigBasket tends to ship these fruit to consumers at the semi-ripe stage – to reduce transit damage – so consumers need to know what to expect and when to consumer for best results.

Customers expect Big Basket to be ‘greener’

Mittal said customers’ increasingly expect Big Basket to be environmentally friendly, but e-grocery has its pros and cons in this regard.

On the one hand, all its produce must be pre-packed for home deliveries and till recently only plastic was used. But unlike on retail store shelves, having transparent packaging is not a necessity for home deliveries, so Big Basket is now trying to increase its use of more eco-friendly packaging, such as paper and cardboard boxes. “For example, this season all mangoes were shipped in cardboard boxes,” Mittal said.

BigBasket.com

JB

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What Europe’s new retail landscape means for fresh produce

Planet Retail’s Bianca Casertano on how Europe’s changing retail sector will affect the fresh fruit and vegetables category.

Planet Retail’s Bianca Casertano on how Europe’s changing retail sector will affect the fresh fruit and vegetables category

Yesterday we shared the Frankfurt-based retail analyst’s analysis of the key shifts in grocery retail in Western Europe. Casertano charted the rise of the discounter and convenience stores, the demographic changes behind the decline of big box stores, and the blurring of lines between hypermarkets, discounters and convenience stores. Here, in part two, read Eurofresh Distribution’s interview with Casertano after her presentation on this topic at the  AECOC Fruit and Vegetable Congress in Valencia in June as she discusses the fresh fruit and vegetables category.

What do these changes imply for the fresh produce assortment in stores?

What is really interesting to know is that the shift from big box formats to small box formats, and online, means a change in product ranges. What you had in the past, this huge volume of fruit and vegetables on offer, will decrease both in volume and product diversity.
In city locations with a small sales area, you have to choose which fruit and vegetables you offer. Normally you choose the convenience oriented things, and focus on less variety. You can’t offer all the exotic fruit and vegetables anymore, as in hypermarkets.
For example, in a hypermarket or in a normal supermarket you can find carrots with some greenery on them. In convenience stores, maybe baby carrots is the product you need, because it’s ready to eat and there’s another package size. The shift towards small, inner city locations will have a huge impact on these product groups.

Could you share an example of innovation you’ve seen?

Demand is growing for pre-prepared and pre-washed products, because people don’t want to spend much time on that. There are some convenience store where you can wash your fruit so you can eat it right after you buy it. I think that is a genius idea. It costs almost nothing and it helps you increase the sale of fruit and vegetables. How often do you enter a store and you would like to have an apple or a peach right now? And some ICA stores in Sweden allow you to make your own smoothie onsite from pre-cut fruit and vegetables you buy there. These are small examples of innovative things that can increase sales for this segment.

What should the sector bear in mind amid the changing retail landscape?

That multi channel is on the rise. They are not straight borders anymore, the formats will merge, and this means more complexity. For retailers that means more investments but these high investments will definitely pay off in the end. Because at the moment, if as a hypermarket operator you say, “No, I don’t want to launch ‘click and collect’, e-commerce is another sector and I don’t want to have to do something with it,” then you will fail, because people expect to at least have the possibility of. Although it’s not profitable for the retailer, they have to react to this trend. Also, because of the demographic changes I talked about, retailers need to go more into the inner city locations, not the outskirts anymore.

Is a move to less loose and more pre-packed product inevitable?

I see a trend in Germany towards more of these products, packaged products, or already washed products, because people don’t have time anymore to prepare their food. They want to have it ready to eat, and therefore I think this will increase in the future.

How might the growth of e-commerce affect producer prices?

As far as the online trend is concerned, I think you can’t offer fruit and vegetables online for a higher price just to get the right margin. Grocery e-commerce is very cost intensive and people won’t pay a higher price just because the system is more expensive. I don’t think that prices will go up, because people won’t accept that. What we currently see in Germany is that prices for groceries have really decreased but people don’t have the feeling, because overall they think they have to spend more for everything, but this is not true for groceries.

You have stressed there are risks in over-generalising and that not every market follows the convenience trend. How does your home market of Germany vary?

In Germany you don’t have so many hypermarkets. you have a high density of discounters. Everywhere you have a small shop within the cities, so if you want to buy something you can buy it anywhere. And in Germany margins for grocery food are so low that it’s very difficult to have a profitable online business for grocery. German shoppers are quite conservative, as well.

A last word of advice?

Suppliers often bank on countries in emerging markets and not on cities. This is a huge mistake because there are so many huge cities in emerging markets, cities with more than 5 million inhabitants.

Just as an example, there are 40 countries in the EU which have less population than Moscow. As a retailer, and also as a supplier, you have to focus on these mega cities, not on the country. This is an area in which Planet Retail has invested significant research.

JB

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Photo: (top) Bianca Casertano during AECOC conference, by Roger Castellón

See some of our photos from this year’s AECOC Fruit and Vegetable Congress