FMCG ecommerce slower in Germany

Even though FMCG ecommerce is growing, German consumers prefer to select fresh food themselves. Photo by rawpixel.com from Pexels.

Germany is having an immensely high geopgraphical density of food-retail outlets. And also because discounters act so strongly in Germany, the margin for trading food in Germany is well below the level of other countries. This is one of the reasons why digital retail models are so difficult (for example ordering food via app).

“But if the share in ecommerce increases for example from one to five percent, some individual local businesses will no longer be profitable and retail chains will be forced to cut their number of outlets. Then it thins out, and that’s how the spiral starts.” says Albert Christmann, shareholder Oetker KG. „As soon as the high density [of stores] in retail trade begins to crumble, the desire of customers for digital alternatives will also increase.“ FMCG ecommerce will be growing slower in Germany than in other countries he concludes.

According to Nielsen, online spending of German households for fast-moving consumer goods (FMCG) rose by 22 percent in 2018 to around 1.3 billion euros.

And some product groups of the supermarket assortment have already migrated to the internet much more than others. According to GfK, pet supplies already account for 10.6 percent of online sales. For cosmetics and health products it is 3.4 percent, for alcoholic beverages 2.8 percent and for frozen food 2.6 percent. Fresh produce such as fruits and vegetables (0.9), meat and sausage (0.3) and bread and baked goods, however, customers hardly buy on the internet.

As a result of one of their recent studies, Lebensmittelzeitung further reports: „Traders as well as suppliers expect that by 2025, a quarter of the food and near-food offer that stationary grocers offer today in their shops will be purchased online.“

Overall, consumers are getting more and more used to order online. And it seems they are adapting their shopping habit also to food-retail. Whereas nonfood assortments are already disappearing from brick-and-mortar shelves, it seems consumers are still sceptic when it comes to fresh food and prefer to select it themselves in stores. In addition, online food delivery services, be it tradiotional retailers or new players like Amazon Fresh, Picnic, Getnow or Myenso are still struggling to build up profitable supply structures. Picnic announced to be profitable in their operations in the Netherlands and are now expanding their structures to Germany. At Amazon we will have to find out if profitability in operations is what they are looking for at all.

Update Feb. 26th, 2019 – Retailer ranking 2018 (Turnover online food):
1. rewe.de – 174 M€
2. Edeka24.de – 78 M€
3. Real.de – 73 M€

10. Amazon Fresh – 11 M€



Sources:
Albert Christmann, Dr. Oetker, in OMR podcast #178
Lebensmittelzeitung, 15. Februar 2019, „Reise ins Ungewisse“
Lebensmittelzeitung, eFood-Ranking Germany 2018


Photo:
Photo by rawpixel.com from Pexels