Germany's second-largest supermarket chain Rewe opened a new logistics centre on Friday to serve its fast-growing online groceries business as e-commerce competition hots up in the food retail sector.
Rewe, along with bigger rival Edeka, had been cited by analysts as a possible German customer for Britain's Ocado, which has been expanding internationally with a string of deals for its robotically operated e-commerce grocery warehouses.
State-Of-The-Art Logistic Centre
Rewe has spent about €80 million ($94 million) on what it described as "one of the most modern logistic centres" in Europe. The site outside Cologne is the size of more than two soccer pitches and has 38 truck loading bays.
Online grocery shopping has been slow to take off in Germany because the country has a high density of food stores and the dominant discounters, Aldi and Lidl, have been slow to embrace e-commerce.
But Rewe has invested heavily in e-commerce over the past few years and Amazon has also begun delivering fresh food in Germany, its biggest market outside the United States.
A Promising Investment
Rewe said its online grocery service had broken through €100 million of sales last year, still only a tiny fraction of the group's total sales of €58 billion.
Management consulting firm A.T. Kearney expects e-commerce to account for 3% of Germany’s grocery market by 2020, up from only 1% in 2016.
Unlike at Rewe's existing warehouses, where employees walk up to 15 km per shift to pick products from shelves, the new centre has products brought to workers by an automated shuttle system from zones kept at different temperatures.
Rewe said the system is much more economical and should allow for more flexible processes, adding that it hopes eventually to be able to serve online customers with fresh meat and cheese such as that served at supermarket counters.