Financial Times Europe - 21.03.2020 - 22.03.2020

10 ★ FTWeekend 21 March/22 March 2020

COMPANIES

In Spain, there are signs that people

arebatteningdownthehatches.ElCorte

Inglés, Europe’s biggest department

store chain, has seen big increases in

demandfortelephones,smartTVs,chil-

dren’stoys,fridgesandlargefreezers.

“People are making these orders

online out of necessity, or out of health

concerns,” the group said. “So custom-

ers who previously were perhaps

uncomfortable with ordering online

before can now see the advantages of

doingso.”

JoëlledeMontgolfier,aretailexpertat

Bain & Co, thinks new consumer behav-

iours can outlast the crisis. “Many peo-

plearegoingtobeexposedtoonlinegro-

cery for the first time,” she said. “It

should result in an acceleration in a cat-

egory that has long resisted going online

because people want to see their prod-

uctstojudgefreshnessandquality.”

Unfortunately for many people, the

online experience has been frustrating.

Websites have been slow and orders

have failed at checkout.Carrefour had

to install a virtual queueing systemon

itswebsites.

Other retailers are being stymied by

lack of delivery capacity or staff. In

Milan, grocer Essalunga has restricted

orders to one per week, and long waits

fordeliveryhavebecomecommon.

The sheer number of people shopping

at the physical outlets at Spain’s Merca-

dona supermarket chain has led it to

stop taking online orders in most of the

country. “The customer experience

during this period risks being severely

degraded,” said Olivier Lamara, a retail

expertatNielsen.

Carrefour is developing new services

to help older people who may not be

tech-savvyenoughtoshoponline.

EvenAmazon is running into prob-

lems: workers haveprotested t itsa

US, France and Italy warehouses after

coronavirus cases emerged, and it esti-

mates it needs to hire 100,000 people to

keepupwithdemand.Ithasalsostarted

temporarilyblocking hipments to itss

warehouses in the US and Europe of all

items other than essentials and medical

supplies.

As the shutdowns lengthen, people

are likely to turn more to food delivery

apps. Experience in markets such as

Hong Kong suggests that consumers ini-

tially shun food delivery and instead

stock up on groceries. Then, after a cou-

ple of weeks, as they tire of cooking the

same dishes at home, online orders

fromrestaurantspickupagain.

That uptick is not yet apparent in

Europe, where consumers are still

confused about what precautions

they should take and what services are

available.

In Paris, many restaurants that usu-

allyofferdeliverythroughtheappshave

disappeared, including big chains such

as McDonald’s and KFC that have cho-

sen to close even though quarantine

rules would permit them to continue

fooddeliveries.

“In the last few days, it’s a disaster —

everyone is panicking and it’s super

hard to operate,” one food delivery

executive said. “Couriers don’t want to

go outdoors and restaurants are clos-

ing... In the short term, it is quite

bumpy so we are not seeing any positive

impactyet.”

With long shutdowns looming,

UberEats has been recruiting more res-

taurants and pitching the platform as a

lifeline.

In France, Spain and Italy this week,

UberEats is rolling out an accelerated

enrolment system to allow restaurants

to start selling through its app within

two days, rather than the usual week. It

is lifting a requirement to take photos

and letting people use their own devices

instead of shipping out a tablet to man-

ageorders.

Tohelpcashflow,itisalsowaivingthe

€600 activation fee until the end of

March and paying merchants daily

insteadofweekly.

“Long term, it is going to change the

habits of people,” said one food delivery

executive. “But once things are back to

normal, we need to make sure we have

stableeconomicsforeveryone.”

‘If the crisis

lasts a long

time, we

are also

thinking of

selling a

basket of

staple items

like ham,

bread, pasta

and jam’

Sales (annual  change)

Italy Spain

*Year to date **Italy imposes movement restrictions in the Lombardy region Sources: Nielsen; Scantrack

Tota l

Supermarkets

Hypermarkets

Online

    

YTD* Feb **

Week 

Week 

Week 

Tota l

Supermarkets

Hypermarkets

Online

 

YTD* Feb 

Week 

Week 

Market penetration, by country ()

Source: Bain

South Korea

China

Taiwan

Japan

UK

France

US

Spain

Italy

Germany

     





A host of factors come in

to play for low online

penetration rates in some

European countries,

including broadband

penetration, availability of

credit cards and strength

of delivery infrastructure

Mean download speed (megabits per

second)







Dec  Jan  Feb 

Source: Speedtest by Ookla

In late January, Chinese

authorities begin to

lock down cities in Hubei

Italy imposes similar

sanctions to the North

of the country

Fixed Hubei

Fixed Lombardy

Mobile Hubei

Mobile Lombardy

Shutdowns boost online shopping in Italy and Spain Online grocery shopping Download speeds dip

L E I L A A B B O U D— PARIS
T I M B R A D S H AW— LONDON
DA N I E L D O M B E Y— MADRID

Geraldine de Wever’s family-run farm
shop in Normandy is doing brisk busi-
ness during the coronavirus shutdown
in France. Her most popular offering:
hernewonlineservice.
“It was just a lucky coincidence that
the site went up last week, and now that
people are worried about coming out or
stuck at home, they’re ordering online,”
she said. “We have to keep up with the
times.”
With much of southern Europe on
lockdown to slow the pandemic, an
experiment is unfolding: will the coro-
navirus be the catalyst that finally spurs
the Italians, Spaniards, andFrench ntoi
theeraofonlineshopping?
Ms de Wever launched her service
through a page on Ollca, a start-up that
helps local butchers, fishmongers, and
fruit and vegetable sellers go digital.
Founder Victor Gobourg said sales on
hismarketplaceoverthepastthreedays
had been as high as during theChrist-
mas period, and that Ollca had added
20 vendorseagertogetonlinefast.
Beyond Ollca, much remains to be
done. Italy and Spain have among the
lowest rates of ecommerce penetration
in Europe at 4 per cent and 5 per cent of
total retail revenues respectively,
according to the Centre for Retail
Research. France is farther along, with
online making up about 10 per cent of
sales, but it falls short of the UK’s 20 per
centorChina’s36percent.
Adoption variesdepending on the
product, analysts say, with European
consumers being more open to buying
clothes,electronicsorbooksonlinethan
food.Other factors also come nto play:i
broadband penetration, credit card
access, strength of delivery infrastruc-
tureandculturaldifferences.
For example, in France, people tend
to buy a fresh baguette at a local bakery
each day, while Italians stock up at trat-
torias and Spaniards at outdoor mar-
kets. Cooking at home — back in vogue
amid the shutdown — had not lost as
much ground to delivery services like
Deliveroo. The restaurant delivery mar-
ket in Italy and Spain is estimated to be
worth less than $1bn each annually
comparedwiththeUK’s$8bn.
But life under quarantine has altered
behaviour. In Italy, under lockdown
since March 9, supermarketCarrefour
said online customers had doubled to
110,000. Sales via its partnership with
logistics start-up Glovo, which delivers
certain items in 30 minutes or less in
Italiancities,areupmorethantenfold.
InFrance,NielsenResearchestimates
online orders for home delivery rose
32 per cent year on year in the week of
March 2, while click-and-collect orders
rose 29 per cent. French chains pio-
neered the click-and-collect modela
decade ago since it worked well with the
large hypermarkets that are found on
theoutskirtsoftownsandcities.
Carrefour’s head of ecommerce
Amélie Oudéa-Castéra said the group
was racing to developservices to help
older people confined tohome. It has
been testing out a new telephone bank
totakeordersfromseniorswhomaynot
betech-savvyenoughtoshoponline.
“If the crisis lasts a long time, we are
also thinking of selling subscriptions to
a basket of staple items like ham, bread,
pasta and jam with a fixed delivery time
eachweek,”sheadded.

French find taste for online groceries

Shutdowns force reluctant market to experiment, along with neighbours in Italy and Spain

Geraldine de

Wever has

launched an

online service

for her

Normandy farm

shop through a

page on Ollca, a

start-up that

helpsbutchers,

fishmongers,

and fruit and

vegetable sellers

go digital

Dominique Auzas/Oolca

G R E G O RY M E Y E R— NEW YORK

Businesses from pet stores to cannabis

growers are presenting themselves as

“essential” to avoid being closed by

authorities seeking to slow the spread

of the coronavirus.

A widening number of cities and states

have issued directives for businesses to

close and people to limit their move-

ments. On Thursday the entire state of

California wasordered o stay homet

exceptforessentialneeds.

Thisweektradegroupswentintohigh

gear to demonstrate how essential their

industries are. The campaigns highlight

the interdependent nature of the econ-

omy, in which a business that might not

seem essential is crucial to one that

clearlyis.

The pushback also reflects confusion

as definitions of what is essential vary

fromplacetoplace.

The US Chamber of Commerce, a

business lobby in Washington, has

urged the Trump administration to pro-

vide a federal standard for states and

citiestofollow.

California’s order, which took effect

onThursday,citedpetrolstations,phar-

macies, groceries, banks and laundries

among essential businesses that could

stay open. It said businesses such as res-

taurants, gyms and nightclubs would be

closed. Workers involved in sectors des-

ignated by the federal government

as “critical infrastructure” — which

include energy, transport and agricul-

ture — are exempt from California’s

stay-homeorder.

However, industry groups point to

vast grey areas over who is and who is

not essential. The US Chamber of Com-

merce has petitioned for a long national

list of essential businesses, from stock

exchangestodrycleaners.

The National Retail Federation trade

group asked the White House for “clear

guidance,” citing “conflicting state and

local orders that are triggering con-

sumer,workerandbusinessconfusion.”

The definition of essential has shifted

in the city of Philadelphia. Of those per-

mittedtostayopen,carmechanicswere

includedbutbicycleshopswerenot.

The city reversed course after pres-

sure from cyclists, who noted that more

peoplewillridearoundthecityaspublic

transport “seemed like not a very safe

place to be”,said Randy LoBasso,of the

Bicycle Coalition of Greater Philadel-

phia,anadvocacygroup.

OnWednesday,Toronto-listedcanna-

bis grower 1933 Industries informed

investors that it would be able to carry

onasan“essentialbusiness”.

Cannabis emand during the pan-d

demic has been undergoing “a huge

surge,” said Alexia Helgason of 1933

Industries. “There’s a lot of anxiety

going on right now and people need

these products to help them through

thesetoughtimes.”

Support services

Businesses

facing forced

closure seek

to prove they

are essential

‘There’s a lot of anxiety

right now and people need

[cannabis] to help them

through these tough times’

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MARCH 21 2020 Section:Companies Time: 3/202020/ - 17:56 User:cathy.pryor Page Name:CONEWS3, Part,Page,Edition:USA, 10, 1