Retailers Eat Costs, Use Food To Win Online Customers

Big retailers are taking a calculated hit to margins to invest in online grocery operations, in the hope they can persuade consumers to add more profitable items like clothes and computers to their orders of fruit and vegetables, according to Reuters.

Food has been one of the last things to move online because complex logistics for fresh, chilled and frozen products make it an expensive business. Retailers are also reluctant to lose the potential for the lucrative impulse buys that occur in-store.

However, retailers in Europe and North America are now ramping up their online food offer to compete with Amazon.com, which is expected to expand its sale of fresh produce beyond a few trial areas with the aim of complementing its non-food sales - and eating other retailers' lunch.

"They are trying to hook customers up to brands for their grocery shop and hope they will spend on non-food which is lower headache and higher margin, which will drive profitability," said Sophie Albizua of retail consultancy eNova Partnership.

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