Research article

Pure players and new concepts

Pure players are rising their markets share as they compete on price and convenience. New technologies are leading to the emergence of new concepts and players


In comparison to the traditional brick-and-mortar model, the pure play has clear advantages associated with lower costs of having multiple retail locations, better inventory management and ease of collecting detailed information about their customers’ shopping habits. Despite this, the e-grocer model has disadvantages derived from brick-and-mortar consolidated store locations, awareness, and power of attraction of a greater range of clients.

Major players in the e-grocery landscape differentiate themselves by the types of products and services they offer, particularly by their method of order fulfilment and delivery (which is closely related to the types of goods sold), and by the geographical markets in which they operate. 'Eat Now' models such as Gorillas and Flink from Berlin focus on fast delivery, while online supermarkets such as Picnic, from the Netherlands, and Ocado in the UK, as well as the delivery services of stationary retailers, offer the classic supermarket range.

Even though these players do not require physical stores, from a real estate perspective, they have created strong demand for urban warehouses, as they all rely on fast delivery to remain competitive.



Pure play giants

Amazon Fresh

Launched in 2016, it is one of several grocery delivery services owned by Amazon. It offers everything you would usually find at a local grocery store; that includes staple items such as fruits, vegetables or raw meat. The client has the option to choose not only same-day or next-day delivery, but also 'Doorstep Delivery', a three-hour window in which you are not required to be at home, or 'Attended Delivery' a one-hour window that requires you to be available to accept the delivery. You can also use Alexa (Amazon's cloud-based voice service) with a system that learns your preferences. Amazon Fresh currently delivers in more than 2,000 US cities and towns, and the company says it will continue to expand this grocery service.

Ocado

Founded in 2000, Ocado is a pure play online grocery business that comprises Ocado.com and two other retail brands: Fetch, the online pet store, and Ocado Zoom, a new one-hour grocery service. It offers a product range of over 55,000 items, and it’s estimated that it holds more than 15% of the UK online grocery market and around 2% of the UK grocery market. In 2020, Marks & Spencer and Ocado Group became the joint owners of Ocado Retail. It opened its first two customer fulfilment centres abroad, for Casino in France and Sobeys in Canada. The software-led model, specifically built for e-groceries, is scalable and expected to be adopted by other players in the industry. For instance, in 2017, the company signed a partnership with French retail group Casino to automate its warehousing operations in the region of Paris.



Weekly groceries providers

Strong tech capabilities are giving way to the emergence of an important number of new grocery players willing to address higher frequency purchasing needs. In Europe, building this model is a challenge given the lower order density, but a correct execution has given companies like Picnic in the Netherlands and Cortilia in Italy the chance to expand their business.

Picnic (Netherlands)

Founded in 2015, Picnic is an online-only supermarket from the Netherlands that only operates as a mobile app that has developed a fast-growing, low-cost business model for the mass market. It runs a regular delivery route instead of using on-demand delivery, building waiting lists of interested consumers and adding routes only when there are enough customers to make the new route profitable. The advantage of this positioning is that it attracts enough consumer interest so that Picnic has long waiting lists ensuring the profitability of new routes and reinforcing the cornerstone of its business model. Picnic has shown strong growth in 2020, managing to double its revenue, which is predicted to be worth almost half a billion euros. After the Netherlands and Germany, they want to grow in Spain and France.

Cortilia (Italy)

The Milan-based grocery start-up Cortilia was founded in 2011 and intends to fill the online grocery gap by delivering fresh food products to homes in the north of Italy. It is an agricultural online market that links consumers and farmers with the purpose to buy fresh food from the countryside, leveraging a network of local producers to reduce the number of intermediaries. Users are matched with a list of local farmers that will become their reference agricultural market based on their address. The purchase allows the customer to choose from more than 1,000 fresh products like fruit, vegetables, cheese, bread, meat, cold cuts, jam, convenience foods and products for body care and home, representing a brand-new way of enhancing the local economy. Currently, Cortilia service is widespread in Lombardy (Milan, Monza and Brianza, Varese, Como, Pavia, Lodi and Bergamo), in Piedmont (Novara and Turin) and Emilia-Romagna (Bologna, Modena), with the aim to expand into other cities in the future.

Rohlik (Czechia)

Founded in 2014, Rohlik is a delivery start-up launched in the Czech Republic in 2014, Hungary in 2019 and Austria in 2020. It is active in nine cities, and with home delivery within two hours is currently the leading online grocery service in the Czech Republic. Its product range includes the high-quality, fresh foods you find at local farmers’ markets and speciality retailers. The company, which has some 17,000 items in its online store, saw revenues rise 101% in FY 2020 to €300 million, has announced plans to launch its service in Germany. The expansion was originally planned for 2025, but due to the current high demand for online grocery shopping, the start has been brought forward. Rohlik hopes to attract customers with short delivery times compared to competitors, charging less for deliveries. The first German service will be offered in Munich.



Quick-commerce

Q-commerce is the natural evolution of e-commerce. Lifestyles are changing, and speed and convenience are becoming more important. The purchases made in Q-commerce are usually of small quantities, but the instantaneousness of their shipments is the most important.

The purchases made in Q-commerce are usually of small quantities, but the instantaneousness of their shipments is the most important

Eri Mitsostergiou, Director, European Research

Super-fast grocery delivery is nothing new (e.g. Gopuff in the US and Fancy in the UK), but picking up speed lately with more and more new companies entering the field, and expanding quickly. Gorillas and Flink are not only expanding in Germany, but also in the Netherlands and lately even in the UK. The Turkish company Getir also expanded to London and is currently looking for employees in Berlin. Flink is also planning to open in Paris. Other examples include London's Dija and Weezy, and France's Cajoo. Unlike supermarkets, the provider does not need prime locations with top rents. In addition, there is the possibility of demanding listing fees and advertising subsidies from consumer goods groups, similar to the supermarket chains.

As they collected a lot of venture capital lately, further expansion is to be expected. But as the margin is very low, we expect that very few players will remain (similar to the market adjustment for restaurant deliveries).

Gorillas (Germany)

Founded in May 2020, Gorillas delivers groceries within an average of 10 minutes. Unlike gig economy models, it employs riders directly and emphasises its ability to get fresh groceries, along with other household items, to shoppers within 10 minutes, at 'retail prices' and including a delivery fee of just €1.80. The idea is that the start-up can address a large part of the groceries market that falls outside of a weekly bulk shop.

Weezy (United Kingdom)

Weezy has positioned itself as the UK’s first on-demand supermarket delivering with an app and website in just 15 minutes. Weezy is developing a network of dark stores across London while relying on a rider network to deliver orders to customers. Launched in July 2020, Weezy uses its own delivery people on pedal cycles or electric mopeds to deliver goods. As well as working with wholesalers, it also sources groceries from independent bakers, butchers and markets.

Read the articles within Spotlight: European Food and Groceries Sector below.