Real has rolled out home delivery of perishable grocery items, Handelsblatt reports. After an initial test in Düsseldorf, Metro’s hypermarket banner has extended the service to ten German cities including Berlin, Hannover, Dortmund, Cologne and Nuremberg. According to Real Manager Henning Gieseke, the plan is to reach millions of German households next year. Real is co-operating with postal service DHL.
Shortly before Amazon Fresh entered the German market, Metro’s Real started to reshape its grocery e-commerce strategy – first of all, by shutting the most essential parts down, reducing it to rather unexciting click & collect services in eight of its stores. This means, the banner closed all its Drive facilities and discontinued its home delivery service for fresh groceries.
Not even six months later, the hypermarket operator has re-established home delivery – focussing on an area that was not understood to be under Amazon Fresh’s immediate radar but the location of Metro's headquarters and some flagship stores: Düsseldorf. Only one month has passed since testing this redefined strategy and the retailer is already announcing its rollout and speaking about an even more striking expansion next year. Real seems intent on moving fast and taking advantage of the rather slow start of Amazon Fresh, which is currently only present in Berlin and Hamburg. However, we cannot help but think that the short timing between the individual steps – from calling off its initial hesitant attempts to take part in grocery e-commerce to an almost nationwide roll-out – sounds like a hasty and impulsive move.
With a selection of fresh, frozen and ambient food items, a minimum order size of EUR40 and delivery costs not exceeding EUR6, Real's online offering appears to be in line with the competition. The retailer is relying on in-store picking for its online grocery operation rather than investing in dedicated facilities and this makes sense to keep overheads low. However, it is nonetheless likely to have an impact on the retailer's cost structure in terms of additional staffing costs – and this is particularly important for an operation like Real which has struggled for years already.
Real's co-operation with DHL to distribute its groceries sounds like a sensible decision, particularly in light of the tight schedule of its massive roll-out plan. DHL Kurier already works with several e-commerce operators in the market (e.g. Amazon Fresh, All You Need Fresh, Rewe) making it a long-established partner with knowledge and expertise in the online grocery channel.
Yet, despite the potential to increase sales by offering more ways to shop, we feel that the challenge for Real could be persuading customers to shop online, when they are already reluctant to shop instore. Real's reputation has suffered from neglected stores in its network, so we cannot help but think that the retailer may require increased investment in its stores if it is to gain the loyalty needed to drive success across multiple channels.
With contributions from Senior Retail Analyst Lisa Byfield-Green.