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Online food retailing: Only temporary thrust by Corona measures

Study on German online food retailing in Corona times shows: Despite disproportionate growth, a general trend towards expansion of online food retailing is only weakly discernible.

Prof. Dr. Martina Fuchs

The corona pandemic has led to a strong increase in demand in various segments of online retailing. An interdisziplinary WiSo Professor Martina Fuchs from the Institute of Economic and Social Geography at the University of Cologne, Professor Dr. Peter Dannenberg from the Institute of Geography, and research assistants Cathrin Wiedemann and Tim Riedler, deals with the effects of the pandemic specifically on the German online food retail sector. During the examined period from March 10 to May 15, 2020 there was, as secondary sources show, a disproportionately high growth in online food retailing. According to the market research company Nielsen, in March growth of around 150 percent took place.

The time span examined by Martina Fuchs and her colleagues specifically included the period of introduction and intensification of "stay at home" measures for COVID-19 containment. This had represented a favourable moment ("window of opportunity") for the entire online trade. Since people should not leave home without good reason, ordering via the Internet and convenient home delivery suddenly became interesting for a larger clientele than before. Nevertheless the study results show however only a rather small transition from the stationary food retail trade to the food online trade.  

"The fact that online food retailing could not profit more is due to the limited capacities of the companies, which were not able to react so suddenly to the increased demand, but also to the existing consumption patterns of the customers. For many people, food shopping in particular is an important experience that appeals to the senses, such as feeling the goods. Buying food is also a social experience, which was particularly important during the 'stay home' measures," explains Martina Fuchs.

Both larger and smaller companies tried to cope with the increased demand, but rarely expanded their delivery area. For example, AmazonFresh continues to supply and deliver only customers in Hamburg, Berlin, Potsdam and Munich. REWE also concentrates only on urban regions in Germany. Online grocery retailing therefore takes place primarily in urban regions, also under corona conditions.

The team emphasizes that among other things the unpredictability of the further development of the COVID-19 pandemic acted as an obstacle to expansion. The opportunities arising for the online sector due to the propagated staying at home for health protection also remained limited by the foreseeable short-term nature of the measures. In concrete terms: "Grocery retailers could not foresee that extensive investments would be worthwhile, as a 'return to normality' was looming on the horizon," says Professor Fuchs.

For the investigation the team used a "mixed method" approach based on qualitative interviews, statistics on market development and media analyses. Among other things, the team evaluated web articles on online food retailing in Corona times and conducted online as well as telephone interviews with discussion partners in food retailing (e.g. management, persons responsible for online retailing) and in associations.

Fundamental to the study was the Multi-Level Perspective (MLP). According to this, the COVID 19 pandemic can be interpreted as a crisis that has suddenly changed the overarching economic landscape as well as politics and technology development, thereby also causing longer-term changes.

On this basis, Peter Dannenberg classifies the results: "Our study was able to show that although there has been a general surge in digitization during Covid-19, no upheavel in the food retail sector is apparent. This is - from a geographical point of view - an important point, especially with regard to promoting the supply of rural areas in Germany".

The study was carried out as part of the project "(Spatial) employment effects of the increasing online trade", which is funded by the Hans Böckler Foundation with around 240,000 euros. It started in February 2020 and will run for two years. In this, Peter Dannenberg and Martina Fuchs examine the ongoing digitization of the retail trade and its supply chains and the effects of these changes on local work and its design.

The study was published in the journal Tijdschrift voor Economische en Sociale Geografie.