Snooze and you lose digital cash cow

By Rick Pendrous

- Last updated on GMT

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Clarke called for a partnership spirit between retailers and manufacturers
Clarke called for a partnership spirit between retailers and manufacturers
Retailers are gearing up their systems to meet an expected surge in consumer demand for online food and drink purchases, the UK's top grocery bosses have reported.

Speaking at last month's London convention of grocery think tank IGD, Britain's leading retailers spoke of major investments to meet demand for online purchases.

While most predicted that stores would continue to play the most important role in the way consumers purchase food and drink, the retail bosses expected electronic communications particularly using smart phones and smart phone applications to play an increasingly important part both at home and in store in the way they find out about products and make purchases.

"Growth today comes mainly from discount, convenience and online retailing,"​ said IGD chief executive Joanne Denney-Finch. "And tomorrow, e-commerce will accelerate even further."​ She said that while only one in six British shoppers had gone online for groceries at least once during the last year, 44% were expected to do so within 10 years.

Sainsbury's Justin King

A poll of delegates at the convention showed that 50% expected online grocery sales to claim between 20% and 50% of total sales, compared with the current 3%. 31% put the figure at 10 to 20%. When asked, Marks & Spencer (M&S) chief executive Marc Bolland and Sainsbury's Justin King were more conservative, however, putting the figure at between 5% and 10%. But predictions about direct sales from manufacturers to consumers were much lower, with 51% of delegates putting the figure at between one and 5% and 30% between 5% and 10%.

Tesco chief executive Philip Clarke said: "We need an overall rethink in our approach to retailing because the digital revolution has changed the way people shop. My answer is, get personal; we need to personalise everything we offer. Why? Because of smart phones."

Clarke said people were shopping online to take control of their budgets and he predicted that by Christmas one in five purchases would be made using a smart phone. He called on manufacturers to work with retailers to "create fresh ideas about what we sell and the way we sell it"​. He added: "We need to create a new spirit of partnership ​[with our suppliers]. I want to make Tesco much more transparent to our partners."

'Revolution in manufacturing'

Denney-Finch echoed this view: "We need a revolution in manufacturing to deliver personalisation and we need a revolution in retailing to revitalise what it's like to shop."

M&S chief executive Bolland said the retailer would be operating 10 web sites by the end of this year.

Judith McKenna, chief operation officer for Asda, announced that it would be rolling out 'high-field' Wi-Fi in all of its stores by Christmas in response to the digital revolution. It would also be providing all of its store managers with IPads. "There is a complete blending of the offline and online within retailing,"​ she said. "We need to develop mobile apps that make life easier for our customers."

Amazon's vice president of consumables, Ajay Kavan, also spoke of the online retailer's plans to crank up food and drink sales. "We see fast-moving consumer goods as a fundamental part of our future offering,"​ he said.

And while its online sales of food and drink got off to a slow start when they were first launched a few years back, Kavan said it was now selling 700,000 grocery and healthcare items. Expect that figure to snowball over coming years as Amazon seeks more food and drink supplier partners.

However, Unilever president Europe Jan Zijderveld urged the sector not to forget that stores would continue to provide essential routes to market. They needed to be revitalised to fit in with the new electronic age and customer expectations. "We mustn't lose the focus on where a large amount of business is still done,"​ he warned.

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