Hypermarkets and Supermarkets. Digital Gap
MHE Retail Omnichannel Index 2017
Digital transformation: Strategic alternative for Food retailers?
MHE Retail Omnichannel Index 2017 results reveal the outsantind position of Carrefour and Dia in terms of digital transformation and omnichannel activities, integrating online, mobile and physical stores. There is a clear strategic decision in both companies to improve customer experience with the digital help. Ecommerce sales are still discrete (les than 1% of total turnover) and direct operational costs are subsidised by traditional stores.
The big gap with Mercadona. leading supermarket chain in Spain has substantially increased during year 2016. Mercadona is proud to keep “very low digital” profile, protecting its more traditional, simple, low cost business model that generates excellent results in terms of sales, growth and profitability.
Spanish housewives are not an exception to the digital fever and already consider smart phone as an effective tool for their day to day activities. Even, discounts formats such as Lidl are already usisng digital channel for their promotional push and to build stronger customer relationships.
Customer exchange experiences across retail sectors
Food retailers were the first to start Ecommerce in early times, having strong losses due to operational difficulties to execute online orders. Meanwhile Non Food operators have achieved a significant development in the last 2 years implementing omnichannel and are showing the way to consumers that easily are eager to apply same experience across different sectors.
Fresh products. Key for Ecommerce
Fresh products have historically been an strong barrier to Ecommerce in Food. All efforts made by retailers are starting to change slowly some shopping patterns and in most of the chains, 75% of the online order include already some perishables. This will mean a higher order frequency online. In fact, the development of new products/packaging in Fresh produce suppliers will facilitate to accelarate this upwards trend.
Promotional activity and customer relationship
Hypermarkets and Supermarkets have strongly expressed as their main interest while using omnichannel, will be their promotional activity and customer realationship management. We are not only in a situation where chains are replacing traditional printed offer brochures by digitial communication. A much higher commercial impact will come from a more personalized and digital approach.
Delivery costs. What is too much for the Client?
The range of all delivery costs among the different operators is very wide. The same applies to the minimum required quantity to have free home delivery by the Food retailer.
Traditional home delivery service offered by most supermarkets has had a very slow update process and in fact, food retailers are already convinced that the way forward is not to adapt their current delivery service but to articulate a new system that implies high investments and new management resources.
Pure Ecommerce operators are struggling to acquire new customers providing very low minimum purchase threshold to get free delivery.
Delivery and perceived value
Consumer perceived value of delivery choice is very high spite of the strong concentration on the more standard service and popular hour bands. It is not enough to offer the choice but to be able to honour and fulfilled what is promised.
Click & Collect service (Drive in) has not achieved the planed success, given very positive experiences in other european countries (specially France where it represents over 5% of total sales and there over 2.700 drive in facilities across the country. Nonf Food sector is enjoying strong growth via Click & Collect (30% of online sales) as it is considered by the customer as an excellent resource to make sure size availabilty of the desired product/colour in the nearby store.
Entrega. Coste y alternativas
|Operador||Mismo dia||2 horas||Domingos||Gratis a partir de x €||Coste (€) Click & Drive|
|Amazon||Prime Now||Prime Now||Prime Now||Premium||NA|
Innovation on non core areas to improve the real business power engine
Pop up experiences such the joint venture among Amazon Prime Now and DIA help to break and penetrate old moulds and shopping patterns. It is proven to be a good innovation initiative that will have a positive impact on core businesses of each of the partners involved.
Retail Omnichannel Index