E-Commerce Globus Steps on the Brakes at Drive

Matthias Queck (Research Director)
29 March 2017
German hypermarket operator Globus is ending its click & collect pilot for online groceries. The only remaining facility in Ensdorf in the federal state of Saarland will be closed from 15 April, the family-owned retailer said in a statement to the press.

The concept, first launched in 2011, was not able to attract enough customers to be profitable, according to the company. “We are now terminating the test phase and integrating the insights into our national multichannel strategy,” Drive Manager Anja Weirich said.

Shoppers were able to choose from a range of 6,000 products online. Another pick-up point in Gensingen was already closed down in 2014.
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Matthias Queck (Research Director)
Matthias Queck (Research Director)

Opinion Pioneers in What Doesn’t Work

29 March 2017
If you have never heard of Ensdorf before, you have now. Globus’s Drive location was installed in a small German town with no major conurbations around it, but, more importantly, just a few kilometres away from France. The retailer, which is based in the region itself, must have hoped that, if not French shoppers, the proximity should have made the concept more familiar to German consumers.

After all, a Drive is the French version of a click & collect point specifically for automobilists, and there are thousands of them in France where they are extremely popular. Time-stressed office employees, often working mums, order their groceries during lunch break and pick them up by car on the way home. No need for an exhausting hike through a 20,000 square metre hypermarket just for buns and butter.

In contrast, there must be around 30 Drives in total in Germany – if that. The concept doesn’t work there. Much bigger grocers have tried it as well, with limited success. Rewe Group currently has 17 locations, and Edeka a handful, both relying mainly on the work of independent shopkeepers that doesn’t really pay off. Grocery stores can be found at every crossroads, and they are much faster to navigate, especially the discounters with their dedicated parking places. German shoppers won’t pay extra for extra costs. But if they do pay, they want full service – groceries delivered to their homes.

If the customer doesn’t come to the Drive, the retailer must come to the customer – at any cost. Even if the last mile is by far the most expensive one, this is the online business that is finally gaining traction as the leading retailers are extending their services. Rewe is now present in 75 cities with home delivery, Edeka just bought Bringmeister from Tengelmann, the big box retailers Kaufland and Real just started their own delivery services.

It is not about profits, it is about gaining experience in this field, they say. So, one could argue: The grocers are venturing into territory that is unprofitable for all, just to be prepared for this tricky concept’s possible take-off – a concept they have in fact created themselves? Not quite. Because if they don’t do it, someone else will; Amazon Fresh, for instance, whose market launch is expected in Germany any day now. The issue: Food, which is a core business for the grocers, may just be a side gimmick for Amazon, which doesn’t even need it to be profitable. So they are gearing up for an unequal fight.

“Our sales are growing faster than our losses”, Rewe Group’s Board Member Jan Kunath said recently. This was meant as a sign of confidence. But more than a confidence boost, at second glance, the statement only reveals how low expectations remain. What a long way left to go!
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