August 30, 2013

Tesco.com inspires Rewe

photo: Mario Vedder
Cyber prayer: Rewe CEO Alain Caparros is still looking for the promised online land
True to form, flamboyant and sultry Alain Caparros did not scruple to employ his coquettish charm to make a disarmingly forthright speech at the Hessischer Handelstag (Hessian Retail Day) in Wiesbaden this Tuesday.

The CEO of Rewe Group, Germany’s second-largest bricks & mortar food retailer, admitted to mixed feelings about "embarking on the adventure that is online retailing".

But the charismatic Frenchman clearly feels obliged to give "clicks" another push for strategic reasons. Or why else would he have recruited former Tesco.com manager Jean-Jacques van Oosten?

"We are bringing in the best people on the market," says Caparros who has appointed van Oosten Chief Digital Officer as from December 1.

The Belgian manager, who will report to Rewe board member Lionel Souque, was CIO & Non-Food Change Director at trendsetting Tesco.com from 2008 to 2011. Van Oosten has also worked for UK retailer Kingfisher.

His role will be to “boost the digitalisation of the business” in all Rewe formats. This includes marketing and “the development of new online-based business ideas”.

The new kid on the block will certainly have his work cut out for him. Rewe runs an online supermarket in only seven German cities and wants to retain the click & collect points in its stores despite their “not working in Germany”.

In the red


Rewe is also prepared to accept further losses in the digital world. “We will make money with our delivery service once it has reached a critical mass,” says Caparros who pleaded for “staying power and a lot of patience.”

Two big cities will be added to Rewe’s delivery portfolio this year as tests in the provincial town of Homberg point to insufficient revenues in countryside regions.

This will increasingly pitch Rewe against start-up company Food.de which is already in 27 cities and wants to kick off soon in Hamburg and Stuttgart.

All competitors, however, are in the same hard race. Margins in German food retailing are notoriously low, and store densities are among the highest in Europe.

At the end of the day, it hardly matters whether food ordered online is delivered directly, sent by post or collected at a store drive-in: there ain’t much money in it, folks!

Still a niche


Surely this explains why food online retailing remains a niche in Germany where the Institut für Handelsforschung (Institute for Retail Research) estimates that it only has around 0.2 per cent of the national market.

Admittedly, overall online delivery revenues are set to increase by around 10 per cent this year, but that is from a very low base of just a few millions.

“The German food online market is developing slowly…and we are not considering expansion at the moment,” confirms Henrik Haenecke, boss of Tengelmann-subsidiary Bringmeister. The company has been selling food on the web since 1997, but, significantly, limits its services to Munich, Berlin, Dusseldorf.

Against this backdrop it will be fascinating to see whether the international management know-how Caparros has brought in with Jean-Jacques van Oosten will take Rewe.com, if not to victory, then at least into the black. Till then, it may not be blood and tears, but much toil and sweat.

 
Related article in German: Lebensmittel Zeitung, no. 35, 30.08.2013, by Annette C. Müller & Manuela Ohs.

 

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Comments for this article are closed.

  1. Created 16 October, 2013 21:46 | Permanent link

    Hello Mike & hello to everybody else here,

    I like this article very much -- thank you, Mike. I do believe that it will be key for Rewe to combine the best of both worlds -- offline and online. I do not consider a cominbation of online order + home delivery as something that will change the rules of the game and fully agree with your article in this respect.

    I do strongly believe, though, that bricks & mortar food retailers like Rewe will need to leverage online possibilities at the point of sale in order to deliver a really outstanding shopping experience. And this certainly has to go beyond m-payment.

    A shopping experience at the POS which is enriched by online service will massively gain importance and could be a key differentiator that can attract consumers to the stores instead of shopping online -- but only if it's done in the right way.

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