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Southern Europe loads up its digital shopping baskets

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Via Financial Times

Geraldine de Wever’s family-run farm shop in Normandy is doing brisk business during the coronavirus shutdown in France. Her most popular offering: her new online service.

“It was just a lucky coincidence that the site went up last week and now that people are worried about coming out or stuck at home, they’re ordering online,” she said. “We have to keep up with the times.”

With much of southern Europe on lockdown to slow the pandemic, an experiment is unfolding: will the coronavirus be the catalyst that finally spurs the Italians, Spaniards and French into the era of online shopping? 

Ms de Wever launched her service through a page on Ollca, a start-up that helps local butchers, fishmongers, and fruit and vegetable sellers to go digital. Founder Victor Gobourg said sales on his marketplace over the past three days had been as high as during the busy Christmas period, and that Ollca had added 20 new vendors eager to get online fast.

Beyond Ollca, much remains to be done. Italy and Spain have among the lowest rates of ecommerce penetration in Europe at 4 per cent and 5 per cent of total retail revenues respectively, according to the Centre for Retail Research. France is farther along, with online making up about 10 per cent of sales, but it falls short of the UK’s 20 per cent or China’s 36 per cent.

Adoption varies widely depending on the product, analysts say, with European consumers being more open to buying clothes, electronics, or books online than fresh food. A host of other factors also comes into play: broadband penetration, credit card accesses, strength of delivery infrastructure and also real cultural differences.

Grouped bar chart showing the Sales annual % change for Italy and Spain following the virus outbreak

For example, in France, people tend to buy a fresh baguette at a local bakery each day, while Italians stock up at trattorias and Spaniards at outdoor markets. Cooking at home — back in vogue amid the shutdown — had not lost as much ground to delivery services such as Deliveroo. The restaurant delivery market in Italy and Spain is estimated to be worth less than $1bn each annually compared with the UK’s $8bn.

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But life under quarantine has altered behaviour. In Italy, under lockdown since March 9, supermarket chain Carrefour said online customers had doubled to 110,000. Sales via its partnership with logistics start-up Glovo, which delivers certain items in 30 minutes or less in Italian cities, are up more than 10-fold. 

In France, Nielsen Research estimates online orders for home delivery rose 32 per cent year on year in the week of March 2, while click-and-collect orders rose 29 per cent. French chains pioneered the click-and-collect model for grocery a decade ago since it worked well with the large hypermarkets that are found on the outskirts of towns and cities.

People stand apart as they line up to enter a supermarket in Rome, Friday, March 20, 2020. For most people, the new coronavirus causes only mild or moderate symptoms. For some it can cause more severe illness. (AP Photo/Andrew Medichini)
People stand apart as they line up to enter a supermarket in Rome on Friday © AP

Carrefour’s head of ecommerce Amélie Oudéa-Castéra said the group was racing to develop new services to help older people confined to their homes. It has been testing out a new telephone bank to take orders from seniors who may not be tech-savvy enough to shop online. 

“If the crisis lasts a long time, we are also thinking of selling subscriptions to a basket of staple items like ham, bread, pasta and jam with a fixed delivery time each week,” she added. 

In Spain, there are signs that people are battening down the hatches for lengthy spells at home. El Corte Inglés, Europe’s biggest department store chain, has seen big increases in demand for telephones, smart TVs, children’s toys, fridges and large freezers. “People are making these orders online out of necessity, or out of health concerns,” the group said. “So customers who previously were perhaps uncomfortable with ordering online before can now see the advantages of doing so.”

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Joëlle de Montgolfier, a retail expert at Bain & Co, thinks new consumer behaviours can outlast the crisis. “Many people are going to be exposed to online grocery for the first time,” she said. “It should result in an acceleration in a category that has long resisted going online because people want to see their products to judge freshness and quality.”

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Unfortunately, for many people, the online experience has been frustrating. Websites have been slow and orders have failed at checkout. Carrefour had to install a virtual queuing system to control the number of people shopping on its websites. 

Other retailers are being stymied by lack of delivery capacity or staff to prepare orders. In Milan, grocer Esselunga has restricted orders to one per week and long waits for delivery have become common. 

The sheer number of people shopping at the physical outlets at Spain’s Mercadona supermarket chain has led it to stop taking online orders in most of the country.

Mandatory Credit: Photo by FERNANDO VILLAR/EPA-EFE/Shutterstock (10585659a) Customers wait in line, while respecting the minimum safety distance, outside a supermarket in Alcala de Henares, Spain, 17 March 2020. Spain faces the third day of the state of emergency declared by the Spanish authorities over the ongoing pandemic of the COVID-19 disease caused by the SARS-CoV-2 coronavirus. Spain in lockdown as coronavirus infections continue to soar, Alcala De Henares - 17 Mar 2020
Customers wait in line, while respecting the minimum safe distance, outside a Carrefour supermarket in Alcalá de Henares during the lockdown in Spain this week © FERNANDO VILLAR/EPA-EFE/Shutterstock

“The customer experience during this period risks being severely degraded,” said Olivier Lamara, a retail expert at Nielsen. 

Even ecommerce behemoth Amazon is running into problems: workers have protested at its US, France and Italy warehouses after coronavirus cases emerged, and it estimates it needs to hire 100,000 people to keep up with increased demand. It has also started temporarily blocking shipments to its warehouses in the US and Europe of all items other than essentials and medical supplies.

As the shutdowns lengthen, people are likely to turn more to food delivery apps. Experience in markets such as Hong Kong suggests that consumers initially shun food delivery and instead stock up on groceries. Then, after a couple of weeks, as they tire of cooking the same dishes at home, online orders from restaurants pick up again. 

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That uptick is not yet apparent in Europe, where consumers are still confused about what precautions they should take and what services are available. In Paris, many restaurants that usually offer delivery through the apps have disappeared, including big chains such as McDonald’s and KFC that have chosen to close even though quarantine rules would permit them to continue food deliveries

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“In the last few days, it’s a disaster — everyone is panicking and it’s super-hard to operate,” one food delivery executive said. “Couriers don’t want to go outdoors and restaurants are closing . . . In the short term, it is quite bumpy so we are not seeing any positive impact yet.” 

With long shutdowns looming, Uber Eats has been recruiting more restaurants and pitching the platform as a lifeline.

In France, Spain and Italy this week, Uber Eats is rolling out an accelerated enrolment system to allow restaurants to start selling through its app within two days, rather than the usual week. It is lifting a requirement to take photos and letting people use their own devices instead of shipping out a tablet to manage orders.

To help cash flow, it is also waiving the €600 activation fee until the end of March and paying merchants daily instead of weekly.

“Long term it is going to change the habits of people,” said one food delivery executive. “But once things are back to normal, we need to make sure we have stable economics for everyone.”

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