Digital Retail 4.0 Concepts E-Book

Patrick Siegfried

• Herausgeber: BoD - Books on Demand
• Kategorie: Fachliteratur
• Sprache: Englisch
• Veröffentlichungsjahr: 2024

Seitenzahl: 167

Beschreibung

This book deals with retail trends 4.0 with a focus on digitalization. These case studies were worked on and presented by 6th-semester bachelor students of the DHBW Mannheim retail course in a scientific research seminar.

Leseprobe

This book deals with retail trends 4.0 with a focus on digitalization.

These case studies were worked on and presented by 6th semester bachelor students of the DHBW Mannheim retail course in a scientific research seminar.

Content

1. Analyzing Emerging App-Based Trends in the Digital Grocery Shopping Revolution

Ali Aksu

2. Playful Store Concept

Denis Berisha

3. Potential analysis of E-Food in Germany and derivation of possible growth factors.

Niclas Engelhardt

4. Examination of the Development and Implementation of Cashless Payment Concepts in Retail

Saskia Frank

5. Analysing common marketing strategies in the DIY sector based on the marketing mix

David Lengert

6. The disruptive influence of peer-to-peer marketplaces on conventional business segments

Philipp Nuglisch

7. The future of german retail - Examination of the potential and challenges of automated retail stores

Sophie Rack

8. Analyzing the application and development of drones in the distribution of retail trade

Venusankar Sathananthan

1.

Analyzing Emerging App-Based Trends in the Digital Grocery Shopping Revolution

Ali Aksu

Abstract

Purpose: This study aims to analyze emerging trends in app-based digital grocery shopping, utilizing data from Statista to explore growth patterns, business models, revenue trends, and app adoption within the online grocery retail sector.

Research Methodology: A comprehensive literature review is supplemented by the examination of Statista data on online grocery retail, focusing specifically on revenue trends, app usage statistics, and industry growth metrics.

Results: The findings indicate a notable transition towards digital grocery shopping, characterized by sustained revenue growth and increased app utilization leading up to 2022, followed by a period of stagnation from 2023 to 2024. Key trends identified include heightened convenience, expanded product offerings, and enhanced user experiences within the digital grocery shopping landscape.

Limitations: Limitations of this study include the potential for selection bias within the data and the study’s specific timeframe, which may impact the generalizability of the findings. Additionally, not all company data regarding important metrics for assessment are publicly accessible, but only if the company chooses to disclose them.

Contribution: This research contributes to a deeper understanding of the evolving dynamics within the grocery shopping landscape, offering valuable insights relevant to researchers, retailers, and marketers seeking to navigate the digital realm effectively.

Keywords: App-based trends, Consumer behavior, Digital grocery shopping, Grocery shopping apps, Revenue growth, Retail trends, Statista data.

1. Introduction

The realm of online grocery commerce, originating in the late 1990s, embarked on a tumultuous journey of inception. Against the backdrop of the dot-com boom, numerous trailblazers ventured into this nascent domain, only to face setbacks as the speculative fervor subsided. Entities such as Migros and Tengelmann emerged as early investors in the German-speaking sphere, yet their endeavors failed to attain enduring traction (Nissen, 2023). Notably, even Amazon, a titan of online retail, encountered hurdles in replicating its prior triumphs upon debuting Amazon Fresh in the German market in 2017. (Nissen, 2023)

However, the global upheaval wrought by the COVID-19 pandemic precipitated a pivotal juncture for online grocery purveyors. A surge ensued, characterized by an unprecedented proliferation and robust expansion. Suddenly, a cohort of avant-garde startups, exemplified by Flink or Gorillas (Westermeyer & Sümer, 2022), ascended, leveraging assertive marketing strategies and pioneering growth paradigms to redefine the digital shopping experience and engineer novel logistics frameworks. Concurrently, traditional brick-and-mortar grocers embarked on forays into this burgeoning domain, either through strategic investments or autonomous initiatives. (Rest, 2022)

Since the onset of the COVID-19 crisis, an ecosystem characterized by dynamism and rapid evolution has emerged, wherein continual innovation serves as the hallmark. While certain enterprises have achieved commendable market penetration and recorded substantial

growth trajectories (Sonntag, 2023), they now confront the imperative of attaining profitability and orchestrating sustainable expansion initiatives. Concurrently, established industry incumbents have undergone acquisitions or undertaken rationalization measures in response to exigencies of cost optimization. (Klug, 2024a)

Against this background, central questions driving this paper are:

How do app-based grocery shopping trends vary across different demographic groups?

What are the implications of app-based grocery shopping for traditional brick-and-mortar retailers?

What are the challenges and opportunities associated with app-based grocery shopping for retailers and which changes are expected to happen in this market?

2. LITERATURE REVIEW AND HYPOTHESIS DEVELOPMENT

To understand emerging app-based trends in Digital Grocery Shopping necessitates a comprehensive grasp of the factual landscape, particularly within the domains of retail and online grocery sectors. Over the period spanning from 2014 to 2022, discernible shifts have characterized the sales dynamics of Fast-Moving Consumer Goods (FMCG) products (Statista, 2024b), notably evident in the realm of online commerce. The trajectory of online sales for FMCG products has displayed a consistent upward trend during this timeframe, indicative of evolving consumer preferences and purchasing habits. (Statista, 2024a) Concurrently, the online grocery sector has experienced a notable surge in sales, mirroring the broader trend of increased digitalization within the retail industry. This period has witnessed a paradigm shift in consumer behavior, with online platforms increasingly serving as channels for procuring essential goods and groceries. The culmination of these trends underscores the transformative impact of digitalization on traditional retail paradigms. (Smiejczak & Brause, 2023)

2.1 Online Grocery Market in Germany

Recent data from Statista reveals a noteworthy trend in the revenue of online grocery retailers operating in Germany until 2022. Analysis spanning from 2014 indicates a consistent uptick in revenue when compared to the corresponding quarter of the previous year. However, it is important to note a subtle decline in revenue just prior to the commencement of the Ukraine conflict that started in February 2022. Since then, the trajectory of revenue has exhibited a fluctuating pattern, characterized by alternating periods of growth and decline (Statista, 2024b).

Figure 1. Revenue from the sale of groceries online retail in Germany from 2014 to 2022

This oscillating trend in revenue suggests a dynamic and evolving market landscape, indicative of the challenges and opportunities inherent in the online grocery sector. Despite the fluctuations, the market remains promising, underlined by its substantial growth potential (Klug, 2024a). However, it is imperative to acknowledge the hurdles that online grocery retailers face, particularly in light of shifting macroeconomic conditions such as the current inflationary environment.

Furthermore, examining the market share of online grocery retail within Germany from 2015 to 2022 reveals a consistent upward trajectory. This steady increase underscores the growing significance of online channels in the retail landscape, culminating in a market share of 2.9% in 2022 (Statista, 2024b). This data reflects the increasing acceptance and adoption of online grocery shopping among consumers, highlighting the pivotal role of digital platforms in shaping the future of grocery retail in Germany.

2.2 Online Grocery Retailers in Germany

In 2023, the largest player in the German online grocery market is Amazon, with a total market share of 41%, attributed to its platforms Amazon Fresh and Amazon Pantry. Following closely are Edeka with 24% market share and Rewe with 21%. HelloFresh, another significant competitor with a strong focus on its app, holds a market share of 17%.

Among other app-focused companies, Flink ranks seventh with a 13% market share, while Picnic, Getir, and Gorillas each hold 7% market share, placing them at positions eleven, twelve, and thirteen, respectively. (Statista, 2024a)

Although Bofrost and Eismann are not primarily app-focused, they still hold significant market shares of 16% and 13%, respectively. These data underscore the diverse landscape of online grocery retailers in Germany and highlight the importance of app-based strategies for competition in this sector (Statista, 2024a).

2.3 Demographic Differences in the Usage of App-Based Online Grocery Shopping

Understanding demographic differences in the usage of app-based online grocery shopping is crucial for companies to effectively target their audience, meet customer needs, and boost sales. It is also essential to identify demographic segments with untapped potential and devise strategies to convert them into customers (Konrad & Nusser, 2022).

According to this survey conducted by Statista on online buyers who purchased groceries/daily necessities for personal use via the internet in the last three months, the largest age group in Germany in 2023 was the 25-45 age bracket, accounting for 29.6% of respondents. The 1625 and 45-65 age groups were similar, comprising 20.9% and 21.1% of respondents, respectively. Older respondents aged 65-75 accounted for only 11.8%. (Statista, 2024b)

Figure 2. Share of online shoppers who ordered or purchased groceries/essentials goods for private purposes on the internet in Germany in 2023, by age group

The number of households in Germany purchasing groceries online or through online shops has steadily increased from 2019 to 2023, reaching 5.31 million in 2023. Notably, individuals with higher incomes tended to order groceries online more frequently. According to respondents, the most common reason for ordering groceries online was “lack of time.” (Statista, 2024b)

Understanding these demographic patterns provides valuable insights for companies to tailor their marketing strategies and services to specific age groups, income levels, and consumer needs, thereby maximizing their reach and effectiveness in the online grocery market.

2.4 Implications of App-Based Grocery Shopping for Traditional Brick-and-Mortar Retailers

The emergence of app-based grocery shopping has significant implications for traditional brick-and-mortar retailers, prompting them to adapt to the changing landscape of consumer preferences and shopping habits. Recognizing the market potential of online grocery retailing, established retailers like Rewe and Edeka have entered the digital arena, establishing their own online platforms to cater to the growing demand for online grocery shopping. (Klug & Nissen, 2023)

However, alongside this direct involvement in online retail, there is a discernible trend among traditional retailers to invest in innovative startups with app-based delivery models. Companies like Flik and Picnic, with their agile and technology-driven approaches, have captured the attention of investors and consumers alike (Redaktion LZ, 2024). Traditional retailers, keen on staying competitive in the rapidly evolving market, have seized the opportunity to invest in these startups, recognizing their potential to disrupt the industry and drive growth. (Redaktion LZ, 2024)

These investments serve a dual purpose for traditional retailers. On one hand, they enable access to innovative technologies and delivery concepts that align with changing consumer preferences (Sonntag, 2023), allowing retailers to expand their reach and offer more convenient shopping experiences. On the other hand, they represent strategic moves to diversify revenue streams and tap into new market segments.

The proliferation of app-based startups in the grocery sector underscores the broader trend towards omnichannel retailing. Companies like Rewe and Edeka, through their investment in these startups, are not only expanding their digital footprint but also enhancing the integration of online and offline channels (Klug, 2024b). For example, the Rewe app not only facilitates online grocery shopping and delivery but also serves as a tool for in-store shopping, providing a seamless and cohesive customer journey across multiple touchpoints.

However, while these investments present opportunities for growth and innovation, they also raise questions about the sustainability of growth strategies and the long-term profitability of app-based delivery models. As startups continue to attract substantial funding from investors, there is a looming question of when profitability will become a priority over growth. Nonetheless, the trajectory of app-based grocery shopping suggests a broader shift towards a more integrated and customer-centric retail experience, where traditional

2.5 The Economics of Online Grocery Retailers

One method for assessing the financial performance of online grocery retailers involves analyzing key financial metrics. These metrics include:

Revenue Development (Indexed)

EBITDA Margin

Return on Equity

Equity Ratio

Ratio of Financing Cash Flow to Revenue (Markus Sendel-Müller et al., 2023)

However, it is notable that companies like Flink, Getir, and Picnic provide limited financial data aside from their balance sheets, resulting in opacity regarding their financial health. Insights into the performance of these companies often rely on announcements such as new investor acquisitions or changes in service areas. For instance, Gorillas was acquired by Getir, leading to a significant reduction in their delivery area (Knieps et al., 2021) and the dismissal of 2,500 employees (Schimroszik, 2023). Similarly, Flink has recently downsized its delivery area. Currently, Picnic is experiencing rapid growth and expansion (Statista, 2024c).

Efficiency is paramount for online grocery retailers to achieve profitability. This entails maximizing order and delivery utilization, optimizing labor costs, and ensuring efficient warehousing practices (Knieps et al., 2021). Acquiring brand recognition is a significant cost driver, often necessitating promotional strategies such as offering discount codes to attract new customers. However, reliance on promotions may lead to reduced profit margins, prompting companies to adjust their pricing strategies to align with customer needs while maintaining profitability (DVZ Online, 2023).

3. Research Methodology

In selecting sources, a deliberate effort was made to ensure that all information came from recent, up-to-date references, with a strict cutoff of no more than 5 years old. Priority was given to sources offering practical insights, including firsthand information shared by industry insiders themselves. Additionally, significant value was found in tapping into podcasts featuring founders or CEOs of online grocery retailers, as they provided invaluable context regarding the companies’ histories and future trajectories.

Furthermore, a wealth of data, facts, surveys, and studies from respected sources such as Statista and the Lebensmittelzeitung were integrated. To enhance readability and comprehension, findings were complemented with visual aids like diagrams and graphics. These visual elements allow readers to quickly grasp key points and deepen their understanding of the subject matter.

4. Results and Discussions

4.1 Results and analysis on the demographic differences on the app-based grocery shopping

According to a Statista survey of online buyers who purchased groceries or daily necessities for personal use via the internet in the last three months, the largest age group in Germany in 2023 was the 25-45 age bracket, comprising 29.6% of respondents. The 16-25 and 45-65 age groups were relatively similar, accounting for 20.9% and 21.1% of respondents, respectively. Older respondents aged 65-75 represented only 11.8%. (Statista, 2024b)

These results highlight various potentials and trends within different age groups. While the 25-45 age group shows the highest adoption rate of online grocery shopping, there is still considerable untapped potential among other age demographics. For instance, the 16-25 age group, often characterized by digital natives and early adopters of technology, presents an opportunity for further growth as they become more financially independent and establish their own households. Similarly, the 45-65 age group, typically comprising busy professionals and parents, may increasingly turn to online grocery shopping for its convenience as they juggle work and family responsibilities.

The lower adoption rate among older respondents aged 65-75 indicates a potential area for growth through targeted marketing efforts and improved user experience tailored to their needs and preferences. As this demographic continues to adapt to technological advancements and online platforms become more user-friendly, there may be an increase in online grocery shopping among older age groups in the future.

Overall, the results align with expectations to some extent, as younger age groups tend to be more tech-savvy and early adopters of online shopping trends. However, the potential for further growth across all age groups suggests that the online grocery market in Germany is still evolving (Klug, 2024b) and has room for expansion. By addressing the specific needs and preferences of different age demographics and enhancing accessibility and usability, online grocery retailers can capitalize on these potentials and further drive market growth in the

4.2 Conclusion and Outlook

Online grocery retailers are undoubtedly faced with the challenge of continuing to pursue sustainable growth while also keeping an eye on their margins. This requires a balanced strategy where a portion of the growth, especially in marketing, should occur organically to ensure profitability. The need to grow organically is rooted in the opportunity it provides to maintain stable margins in the long run while also building a solid customer base (Markus Sendel-Müller et al.).

In the pursuit of enhanced profitability, online grocery retailers must navigate a dynamic landscape, considering several key factors. First and foremost is the Scalability of Operations. Companies must adeptly design their operations to seamlessly accommodate surges in demand without sacrificing operational efficiency. This strategic scalability can be achieved through the implementation of automated processes and cutting-edge technologies, ensuring a streamlined and responsive system.

Optimization of Delivery Logistics emerges as another pivotal aspect. Efficient delivery logistics play a critical role in cost reduction and the expeditious fulfillment of orders. Online grocery retailers can achieve this by leveraging intelligent route planning systems and fostering collaborative partnerships with local logistics providers. These measures contribute not only to cost savings but also to enhanced customer satisfaction through timely deliveries.

Customer Retention and Repeat Purchases emerge as linchpins for long-term success. Establishing robust relationships with customers is paramount, requiring the implementation of effective retention strategies. Personalized shopping experiences, exemplary customer service, and proactive communication channels are vital components of this strategy. Additionally, loyalty programs act as powerful incentives for repeat purchases, cultivating a sense of allegiance among customers. By offering enticing rewards, discounts, and exclusive offers, retailers encourage customers to maintain a continued relationship with the brand. Collecting and incorporating customer feedback further refines products and services, elevating overall satisfaction and fostering loyalty. Prioritizing customer retention not only increases customer lifetime value but also ensures sustainable profitability.

Lastly, Cost Management assumes a central role in bolstering profitability. Vigilant monitoring and control of expenses are imperative to steer clear of unnecessary costs. This encompasses optimizing purchasing processes, negotiating favorable delivery contracts, and strategically reducing operational expenses. By implementing prudent cost management strategies, companies can fortify their financial foundation, contributing to long-term viability and success in the competitive online grocery retail landscape.

While there is plenty of potential in the online grocery market, it remains intriguing to observe how market shares will redistribute over time. Growing competition and shifting consumer preferences could lead to a dynamic environment where successful companies stand out through innovative approaches and excellent customer service.

In this context, the future role of traditional grocery retailers will also be significant. While they have already ventured into the online market, it remains to be seen how successful they will be in the long run. Their established brand image and existing customer relationships could give them an advantage while they compete with the more agile and technology-driven online platforms.

Overall, the online grocery market holds high potential and offers numerous opportunities for growth and innovation. The coming years will reveal which companies will be successful in the long term and how the industry will evolve, particularly in light of constantly changing market conditions and consumer trends.

5. Limitations and Study Forward

The study largely encompasses information that sheds light on the recent past, and the future course depends on several factors such as changes in labor or borrowing costs and inflation. Another limitation is the quality and availability of data regarding financial metrics such as profitability, average transaction value, and others. Additionally, the

industry’s development relies on investors and their willingness to invest in the current climate. Future studies could delve deeper into the user experience of food apps to understand which features and services are most crucial for consumers and how the apps can be improved. It would be interesting to examine how the increasing prevalence of food apps influences the retail market and what strategies traditional retailers adopt to remain competitive. Furthermore, it will be intriguing to observe which established retailers continue to engage with startups and whether and how the market consolidates, redistributing market shares in this nascent market. It will also be important to monitor how individual companies evolve not only in terms of potential growth but also towards longterm and sustainable profitability.

References

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Klug, D. (2024a). Konzentration im E-Food schreitet voran: Weniger Lebensmittel-Shops – Profitabilität im Fokus – Effiziente Logistik gefragt. Lebensmittel Zeitung(1), 8. https://www.wiso-net.de/document/LMZ__20240105654835

Klug, D. (2024b, January 6). Prognosen für Lieferdienste: Weniger E-Food-Anbieter trotz großem Potenzial. https://www.food-service.de/maerkte/news/prognosen-fuer-lieferdienste-konzentration-im-e-food-schreitet-voran-58351

Klug, D., & Nissen, M. (2023). Rollender Wettbewerb. Lebensmittel Zeitung(36), 25–26. https://www.wiso-net.de/document/LMZ__20230908643824

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Markus Sendel-Müller, Navid Armeli, Alexander Sekanina, & Sebastian Campagna. Wirtschaftlichkeit von Q-Commerce. Nissen, M. (2023). Eine wilde Geschichte. Lebensmittel Zeitung(47), 92–94. https://www.wiso-net.de/document/LMZ__20231124651416

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