Grocery retail has thus far proven resilient to e-commerce – but is this simply because shoppers are not interested in shopping for groceries online? Or, with very few pure play online grocery retailers in Europe, is it poor supply driving low demand?
Proportion of online shoppers who buy grocery items online.
In Asia almost a third of online consumers are buying groceries online.
Strong grocery anchors are in high demand; offering defensive qualities such as a consistent flow of consumers, long leases and tenant diversification.
The investor community has not been idle in acknowledging this, with Supermarkets equivalent to 13% of invested volumes in the first half of 2019, more than double the amount compared to 2016.
But like every other retailer on the planet, the leading players in grocery need to adapt to changing consumer demands.
With the European grocery retail market sales expected to reach €2,289 billion by 2022 (source: IGD) – how can retailers and landlords alike find opportunity for this growth both via online as well as physical stores?
Proportion of online orders made for food and groceries in Europe in 2018
Investment volume in supermarkets compared to other asset types
Est. European grocery sales by 2022
Hema by Alibaba
Hema is not just a supermarket, it is a dining experience, a warehouse and fulfilment centre, and an online database of customer preferences.
While the European grocery retail market differs in many ways from its Asian counterpart, the 65 new retail stores opened by Alibaba across Asia in 2018 illustrates a strong example of phygital and resilient food retailing.
Hema was first introduced in 2015 as a new format local supermarket, serving consumers within a 3 kilometre radius. Using the mobile app, customers scan barcodes in store giving them access to personalised discounts, recommended items, product information, origin of product and recipe ideas. And forget overflowing trolleys or heavy baskets – within a few clicks shoppers or “users” have the option to order the same goods to be delivered to their home.
Alongside shoppers, employees shop the aisles fulfilling online orders in reusable bags which are then loaded onto the conveyor belt in the ceiling before heading to the delivery drivers who can get the goods to customers within 30 minutes. Payment is done using the Taobao or Alipay platforms – and some stores even use face recognition for payments.
Efficiency is everywhere. The data captured in store ensures supply of stock, but no wastage. Meat, eggs and vegetables are labelled with the day they were packed and any unsold items head straight to the in-store restaurant for use the next day.
We believe the future of New Retail will be a harmonious integration of online and offline, and Hema is a prime example of this evolution that’s taking place. Daniel Zhang, CEO of Alibaba Group
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