Retailing in the Week Ahead, Week 30

 

Let’s go on a quick virtual tour of Italian grocery retailing.  Most retailers and suppliers I speak to say that they do retail safaris in Italy to gain inspiration on how to do fresh food grocery retailing properly in other countries.  They bring best practices form Italy back to their home country.  Fantastic!  However, why stop there?  Shouldn’t we be able to gain inspiration on more aspects of retailing than just on how to do fresh food well?  The answer is, “Si”, but to get there we need to get past some misconceptions.

 There are two misconceptions about grocery retailing in Italy that should be set right.

First:  That Italians Avoid Foreign Retailers

Second:  That Italians Avoid Internet Shopping

Let’s tackle the first misconception – that foreign retailers fail to perform well in Italy.  The evidence does not support this idea.  Yes, Coop Italia, SISA, Eurospin and Esselunga are big Italian grocery retailers.  However, Carrefour, Auchan are also big and successful grocery retailers in Italy.  Let’s not forget that CONAD had years of support from Leclerc.  More importantly, recent trends have shown success from new sides – Aldi Sued entered Italy at the tail-end of 2017, Amazon’s growth is starting to become obvious to everyone in almost all categories, most recently with the launch of the Music store, Lidl is one of the fastest growing grocery retailers in the market, and a number of bio supermarkets have been popping up everywhere.  So, can we now fully abolish this myth?

Now let’s move on to the second misconception – that Italians avoid Internet Shopping.  Once again, there is little evidence to suggest that eCommerce development in a city like Milan significantly lags that of other cities in the Alpine region such as Munich, Geneva, or Vienna.  Sure, when we compare Milan to Paris or London we see big differences but that is true when comparing any city in Europe to either London or Paris. 

The two challenges we face when comparing Internet shopping in Italy to other places is first that eGrocery development does not happen at a country level – due to the logistics required – it happens at a city level.  Some Italian cities are simply not as ready for eGrocery as other places in Europe for a variety of reasons.  However, that does not mean eGrocery does not exist and is not growing.  It is.  Second, that cities with terrible traffic problems, inconvenient public transport, where it is expensive to drive a car have faster rates of eGrocery development than in cities where the roads are good, public transport is fast and convenient, and it is affordable to own a car and park it in the city center.  Milan, Italy’s capital of eGrocery, has one aspect at a disadvantage – it is actually not that difficult to own a car and drive a car in Milan.  That’s not the case in other Italian cities and certainly not the case in London or Paris.

So, if everyone is ready to move past the two myths related to the Italian grocery market, let’s talk about what other key lessons can be learned from Italy.  These might surprise you.  We will do so by talking about the 4Es of Italian grocery.

Understanding the 4Es

  • Primo E:  Eurospin.  The first E is for Eurospin, Italy’s most successful discounter with over 1,100 stores in every region of the country.  The “E” for Eurospin stands for ‘elementary’.  Eurospin bucks the trend in the rest of the world for long operating hours (24/7).  They cut retail back to just the essentials.  They’re not open on Sundays, do not open early morning or late evenings, and close for 2 hours every lunchtime.  Eurospin focuses on the simple and core elements of grocery retailing and they keep it simple. 
  • Secondo E:  Esselunga.  The second E is for Esselunga, Italy’s most successful grocer measured by sales per square meter (at EUR16,000/sq.m.).  The “E” for Esselunga (which happens to go by ‘S’ in case you are keeping me honest) stands for ‘efficiency’.  Esselunga’s incredible focus on selling space productivity is a lesson that can be translated into any country and any physical retailer in the world.  Just as Eurospin keeps a sharp focus on the essentials, Esselunga is incredibly focused on efficiency and was able to increase operating profits in 2017 despite difficult trading conditions. 
  • Terzo E:  Eataly.  The third E is for Eataly, Italy’s most famous export.  The “E” for Eataly stands for ‘experience’.  With stores in the USA, Brazil, Germany, Turkey, Saudi Arabia, the United Arab Emirates, Japan, South Korea, Sweden, and Russia, as well as big cities across Italy, this company is doing more for grocery than Whole Foods was able to achieve. Eataly’s focus on food experiences is second to none with multiple ways to enjoy Italian food.  If you have time, read Eataly’s manifesto which focuses on the 10 principles of the retailing experience.  You can find it here: (Italian) (English).  These 10 commandments translate to good business sense for any retailer – whether they are about fresh foods or not.
  • Quarto E:  eSpesa.  The fourth E is for eSpesa (online grocery).   The “E” stands for easy, where buying online and having it delivered or picked up is becoming spesa a la Milanese (shopping the Milan way).  We are seeing an explosion of business models arrive, particularly in Milan, particularly in the ‘Bio’ supermarket arena with companies like BioMi, NaturaSi, Piacere Terre, and Bio c’ Bon growing in both locations and in online services.   Take note major supermarkets like Coop Italia and Carrefour have launched their own versions of eSpesa and Bio Supermarkets.

Finally, as we analyze the successes and failures of Italian Grocery retail, one thing that we can all admire is that Italian supermarkets, even the ones that have a low-price message, focus on quality and service in their slogans as compared to grocers in other countries that only talk about economical shopping and saving money.  This is something to admire and it’s not just about fresh food done properly.

Have a look at the slogans of the major “4E” grocery operators in Italy and think about what that might mean for your business planning in the week ahead.

Italian

English Translation

Retailer

La Spesa Intelligente

Intelligent Shopping

Eurospin

La Spesa Comoda

Convenient Shopping

Esselunga Online

La Tua Spesa

Your Shopping

Eataly Online

La Spesa Che Ti Vuole Bene

The Shopping That Loves You

Biomi

 

As always, you will find links to important publications below as well as an invitation to share your feedback on the “4Es” or any other topic you find interesting.

Good luck in the week ahead,

Ray Gaul – ray.gaul@kantarconsulting.com | @RayGaul on Twitter or @KantarConsult | Linkedin

 

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