Monday, March 16, 2015


German retailer REWE prepares for Amazon move to food

Germany's second-biggest supermarket group REWE is investing heavily in grocery ecommerce even though it does not expect to turn a profit soon, as it braces for Amazon to expand its food delivery service.

"We know that we will still not work profitably for several years, but it is not blowing money," REWE Chief Executive Alain Caparros told Reuters in an interview. The customer is changing. They want to have it easy and we have to prepare ourselves for that. The online customer is our opportunity to become the number one in Germany. The train is leaving the station and I want to be on it."

While online sales of books, electronics and clothes are booming in Germany, grocery ecommerce has been slow to take off as the country has a high density of food stores and the dominant discounters Aldi and Lidl have little incentive to push loss-making deliveries given their already thin margins.

However, big players such as REWE and Metro are now expanding delivery services, and start-ups funded by the likes of ecommerce group Rocket Internet are also proliferating.

A survey by management consulting firm A.T. Kearney showed that 38 percent of Germans had tried online food retailing in 2014, up from 27 percent in 2013 and just 18 percent in 2011.

A.T. Kearney expects ecommerce will account for 3 percent of Germany's grocery market by 2020 -- or some 5 billion euros ($5.3 billion) -- up from just 1 percent now. Online already accounts for 5 percent of the grocery market in Britain, which has been a global trailblazer in food ecommerce.

Amazon has said it plans to keep expanding in Germany, including eventually delivering fresh groceries, without giving a timetable.