An interview with Dr Darius Zumstein

Digitization has set things rolling and brought about a lot of change, including in the food industry and in gastronomy. We asked Dr. Darius Zumstein about it.

LeShop and coop@home are the two largest digital food players in Switzerland. Can we talk of an oligopoly?

Dr. Darius Zumstein: Yes, the two online supermarkets LeShop and coop@home actually reflect the Migros/Coop Swiss retail trade duopoly. The two players have both had a digital presence for a long time, and are experienced and dominant. In contrast to stationary retail, coop@home has been gaining market share for years at the expense of LeShop. 

But there are also various nice niche players such as mahlerundco.ch and gmuer.ch or subscription box providers like hellofresh.ch or foodist.ch. In addition, new, innovative pure players such as farmy.ch are competing with the market share of the two big names and platforms such as brack.ch.are expanding their food offering.

Sales in the digital food trade are only changing marginally in Switzerland. Can we assume that the market is saturated?

Dr. Darius Zumstein: Absolutely not. Even for food, online sales are growing at an annual rate of 8% to 15%. Although they make up only a small part of total retail trade with a share of around 2.5%, the trend towards online shopping and trading is also reflected in the food sector. This is also evidenced by the growing sales of eat.ch and Uber Eats, which conveniently deliver food to customers' doorsteps.

The proportion of groceries purchased online is already up to one quarter for coffee, chocolate and wine. Especially for foods that are easy to store and deliver, the online market is far from saturated. On the contrary: the number and variety of digital business models in the food sector is increasing, as the diagram shows.

In Holland and Germany, Picnic has been successful with its concept and offering. Would this be transferable to Switzerland?

Dr. Darius Zumstein: Yes, Picnic is indeed pursuing an exciting approach and, in principle, this is also transferable to small Switzerland, where the transport routes are not that long. The same applies to Amazon Fresh, which is currently preparing for market entry. The major challenge is to build and maintain logistics, especially for perishable food such as fruit or vegetables, as well as for frozen and refrigerated products such as meat and fish. Swiss Post, for example, delivers fresh bread from Eichenberger on weekdays in post boxes, thus saving customers a trip to the bakery. This is especially attractive for people who are no longer mobile or have little time or desire to shop.

What would be the advice to a supplier in the field of food delivery for market entry in Switzerland?

Dr. Darius Zumstein: Both providers and food start-ups and must choose the right partners. This starts with the online shop systems and goes beyond the marketing and storage of products to their delivery and possible returns.

Logistics in particular is a key process that online food merchants must be in control of. This is a challenge insofar as the long-established Swiss retailers have built up and optimized proven logistics processes for many years.

Small, digital food start-ups and retailers are much more agile than the big ones and can react faster to changing eating and shopping behaviour. Switzerland needs more courageous, young and digital food start-ups with innovative ideas, products and services.

Darius Zumstein will appear at the Connecta Bern 2019 as a speaker.