Although e-commerce for food is not yet profitable for distributors, it could overtake the market share of hypermarkets and convenience stores in Belgium. Distributors are multiplying investments and developing home delivery.
Motto? Ease, flexibility and growth. Here is the main motivation of distributors who invest in e-commerce. Delhaize, Carrefour and now Colruyt… It’s simple: (almost) everyone gets involved. The share of food e-commerce is relatively limited, even though “everyone expects a 15% growth, but we don’t know when exactly,” explains Gino Van Ossel, a professor at Vlerick Business. School. If this growth is confirmed, the market share of e-commerce would surpass that of hypermarkets and convenience stores in Belgium. “Which explains the distributors’ efforts to be present in this sector”, he says.
Motto? Ease, flexibility and growth. Here is the main motivation of distributors who invest in e-commerce. Delhaize, Carrefour and now Colruyt… It’s simple: (almost) everyone gets involved. The share of food e-commerce is relatively limited, even though “everyone expects a 15% growth, but we don’t know when exactly,” explains Gino Van Ossel, a professor at Vlerick Business. School. If this growth is confirmed, the market share of e-commerce would surpass that of hypermarkets and convenience stores in Belgium. “Which explains the distributors’ efforts to be present in this sector”, he says. Belgium has experienced unprecedented growth in online food trading during the health crisis. If our country is still lagging behind its French, German or Dutch neighbors (only 8% of Belgians shop online for food, against 30% of French and 25% of Germans), this segment has practically doubled in two periods of the year. This growth rearranged cards for large retailers, who had to adapt their strategy. The Colruyt Group brand has just announced the implementation of a new home delivery service in the Brussels and Antwerp regions. “It was necessary not to lose market to Carrefour and Delhaize, which already acted in home delivery”, says Gino Van Ossel. In this area, Delhaize is a forerunner, as the brand has been delivering at home since 1989 with Caddy Home, which made it possible to place orders over the phone (prices were, however, higher than in stores). The reconciliation of family and professional life, the use of telecommuting and the evolution of technology are shaking consumption habits a little more every day. “The health crisis also played an important role,” adds Wim van Edom, chief economist at Comeos. Customers look for convenience. “They expect their store to save time,” said Roel Dekelver, a spokesman for Delhaize Belgium. As a result, the online shopping service continues to grow in popularity. And all the distributors surveyed assure us that online commerce makes it possible to win over customers. “Today we are seeing a slowdown in the dramatic growth that occurred at the beginning of the pandemic, but the number of new customers continues to increase. Which means that consumers are really enjoying online shopping services”, analyzes Leen De Dobbeleer, Innovation Manager. from Collect&Go, Colruyt’s online platform. At Delhaize, home delivery already represents 50% of the volume of e-commerce, proving the interest in this type of service, with the rest being click-and-take. Food e-commerce has developed thanks to click & collect, a formula that allows customers to select the products they want online before picking them up at a pick-up point, without queuing at the checkout. A privileged entry service because it is cheaper than home delivery. “But today the biggest growth is located in delivery”, analyzes Gino Van Ossel. In France, it now weighs more than the unit, as our neighbors call click & collect. It represents 10.7 billion euros when the unit, also growing, weighs 9. All large distribution players have a similar discourse, insisting on the complementarity between physical stores and e-commerce and on the need not to oppose them. “There is no reason to think that e-commerce will cannibalize the sale of physical stores”, adds Arnaud Lesne, director of innovation at Carrefour Belgium. Today, the customer is omnichannel. Available data from Delhaize does not say otherwise. “Customers are not 100% digital and continue to visit physical stores,” says Roel Dekelver. And it is not by chance that the distribution centers where most orders are prepared for Delhaize, Colruyt and Carrefour are currently located on the Brussels-Antwerp axis, respectively in Puurs, Londerzeel and Willebroek. This area is strategic for distributors. “Not only is the population density very high, but the purchasing power is very high, specifies Professor de la Vlerick. These are two essential elements for accelerating growth.” Population density makes it possible to distribute large volumes and therefore reduce costs. That said, e-commerce is far from profitable for food distributors because logistics costs are not yet fully billed to customers. But if supermarkets have waited too long before embarking on e-commerce for food and home delivery because of the lack of profitability, everyone is convinced of the long-term investment. “You don’t launch a service to lose money,” says Leen De Dobbeleer. “It’s a structural battle where, at the moment, everyone is losing money, but where it’s possible to win customers”, continues Gino Van Ossel. Delhaize gained market share thanks to this system.” Will it ever become profitable? The answer is yes. The two main costs are in order preparation and delivery. “The technology will allow us to optimize and improve management efficiency and order preparation”, adds the expert. Then volumes will only increase, which will reduce delivery costs. But not all distributors are in the same boat. Although Aldi and Lidl are among the European leaders in food retail, they are lag behind in food e-commerce. Hard discounters were able to grow because they were able to perfect the concept of profitable self-service to the extreme. But they lose that cost leadership when it comes to online, according to a report by LZ Retailytics. The reason is simple. : Lidl and Aldi are secondary stores for most consumers, meaning they are not the go-to place for all purchases, but only for certain products. “The offer of these stores is different from that of traditional distributors, recalls Gino Van Ossel. Consumers go there because it is cheap.” Across Europe, e-commerce is a big challenge for deep discounts as delivery costs are proving to be very high relative to the value of items. “For these stores, it is even more difficult to be profitable”, underlines the specialist. Of course, Lidl is still present in this segment, but only not to feed. However, not all distributors chose the same formulas. For example, while order management and fulfillment is a service that remains in-house, store-to-customer delivery is not necessarily. Carrefour, for example, developed ShipTo, a personal shopper platform that delivers using cargo bikes in 90 minutes. The distributor has also established partnerships with delivery platforms such as Deliveroo, Uber Eats and Just Eats. “These partnerships provide an e-commerce solution for stores that have never developed drive-thru, such as Carrefour Express”, specifies Arnaud Lesne. Especially since these stores usually open later than the hypermarkets and therefore allow you to cover a wider opening hours. “Our work is not logistical, that’s why we call professionals”, he adds. Colruyt also combines different formulas. In addition to the 500 drivers, formerly known as “neighbor delivery”, a service that uses private couriers, the brand completes its home delivery offer with 20 of its own delivery men. “We have a target of 50 for the next year”, specifies Leen De Dobbeleer. Colruyt delivers on board vehicles powered by CNG (natural gas) “which emit far fewer harmful substances than vehicles powered by diesel or gasoline, adds the manager. engine”. For Delhaize, “being the first to embark on home delivery allowed it to have a certain advantage over competitors and to develop logistics”, continues Roel Dekelver. The company also uses Urbike, a Belgian start-up that offers companies delivery of bicycles for all types of goods. This option is preferred for stores located in places that are difficult to reach by car (especially on the metro) or prohibited from traffic, such as certain areas of Brussels. The advantage of the cargo bike is that it avoids having to adapt the supply chain in depth. “This avoids traffic jams, but also traffic restrictions”, explains Renaud Sarrazin, co-founder of Urbike. The proposed solution also makes it possible to decarbonize the environment. “We not only improve air quality , but we avoid noise pollution.” Proof that home delivery is on the rise and concerns everyone, The Barn BioMarket store, a brand that has set out to democratize food organic plant in Brussels, has also launched a home delivery service. It also has a Belgian start-up, Proxideal, which has become its exclusive partner. “We are the first to offer large purchases within two hours, for the same price as the store”, adds Andréa Englebert, co-founder. The partnership started with the Ixelles store and will soon be extended to other stores. “We get dozens of orders a day.” Will e-commerce for food save supermarkets? What is certain is that if the growth in delivery is confirmed, those who did not take advantage of the opportunity could lose the penalty… or the market share.