Proximity, digitalisation, glocalisation are key for grocery retail

Proximity, digitalisation, glocalisation are key for grocery retail sector’s success. These trends were already prevalent in the last few years, which got accelerated since the COVID-19 outbreak.

Global food retailer SPAR International has a leading position in proximity retailing with over 7,000 neighbourhood stores in Europe, integrated into the communities that they serve. SPAR is gradually introducing proximity and multi-format stores in the Middle East too. “Our neighbourhood and community stores performed exceptionally well as COVID-19 broke out, offering convenience to the communities. They were already driving compounded annual growth for SPAR over the past few years,” says Tobias Wasmuht, CEO, SPAR International.

Especially during the lockdown, as shopping malls were temporarily closed, coupled with capacity restrictions in the grocery stores, SPAR’s large-format stores or hypermarkets were somewhat challenged. However, very quickly the hypermarkets began supporting the online stores, acting as hubs for doorstep delivery. “In India, where we saw a 500% growth in online orders, compared to pre-COVID levels – 70% via our own mobile app; we leveraged our mall-based hypermarkets and staff to fulfil the online orders,” Wasmuht points out.

SPAR entered Saudi Arabia in partnership with Al Sadhan Group, where its neighbourhood stores are performing quite well as the large hypermarkets. “In partnership with the Khimji Ramdas Group, our neighbourhood stores in Oman, spanning 5,380-6,450 sqft on average, are seeing strong growth. The same is true for the UAE, where we have partnered with the Abu Dhabi Co-operative Society. While we are ramping up online presence in Qatar, where we only have hypermarkets, operated by our partner Al Wataniya International Holding,” Wasmuht shares.

Along with the success of its neighbourhood stores, SPAR has witnessed a year-on-year growth in online sales penetration internationally, and COVID-19 uplifted this trend “dramatically.”

Currently, SPAR has an online shopping presence in more than 25 countries worldwide. “In Europe, our online sales rose by 400% in certain markets. With delivery and click-and-collect services, we were able to respond faster to customer demand through speedy fulfilment of orders. Within three months in 2020, we have added another 13 countries that went online,” he adds.

Owing to a multi-fold spike in online orders, fulfilment was a challenge for most grocery retailers that often led to delay in delivery during the lockdown period. Last-mile is a challenge for online retail, Wasmuth agrees. “At SPAR, we quickly brought into play innovative solutions. In Central and Eastern Europe, as we were overwhelmed by online orders, we partnered with local taxi services to ensure timely fulfilment of orders on top of our own fleet of delivery trucks. In the UAE, we have partnered with third-party aggregator platforms like InstaShop, to facilitate delivery.”

Having a wide presence helped SPAR to predict and manage inventory with its ‘glocalised’ approach. With its presence in China and Italy where the COVID-19 outbreak started before the Middle East, SPAR was able to leverage sales data to predict demand in product categories and replicate it in different markets.

“This helped in demand and inventory planning. For a region like the Middle East, which is a heavy importer, our global sourcing hubs supported inventory management alongside using air freight where necessary. At the same time, we have worked closely with local suppliers. We have been able to leverage our global network presence along with strong partnerships with local producers. We have also been able to move inventory from one country – like Canary Island – to another in order to reduce food waste,” Wasmuht elaborates.

Hence, proximity, digitalisation, glocalisation are key for grocery retail sector’s success, world-over.

Going forward, a huge focus area for SPAR is offering healthy and nutritious foods. “The focus on health and nutrition has been a consistently important trend, which is further accelerated by COVID-19. We have seen a strong growth in the fresh food category across all markets where we operate. Consumers are looking for organic products, locally produced items and immunity boosters. Particularly in the Middle East, we are actively looking at the reformulation of products and reduction of sugar amid health concerns, such as obesity and diabetes,” Wasmuht concludes.

SPAR International ended 2019 with sales of €37.1 billion, representing a 4.35% increase in revenue. In Africa & the Middle East, where the brand has a presence across 14 countries, SPAR has maintained its growth trajectory with sales of €6.06 billion, a 5.26% increase on 2018. 

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Rupkatha B