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Mintel’s Month in Retail highlights the stories that have made headlines in the European retail markets over the past four weeks, with exclusive analysis from Mintel’s expert retail team on potential implications.

UK: Morrisons team up with McColl’s for £1bn supply deal

Convenience store McColl’s and supermarket Morrisons have signed a £1bn wholesale supply partnership deal. Morrisons will revive the Safeway brand by supplying both Safeway products and other brands to 1300 McColl’s shops and 350 newsagents nationally. Morrisons will give McColl’s a year’s worth of exclusive access to the Safeway products. The new supply deal will be rolled out from January 2018 and is set to replace all of McColl’s existing suppliers.

“When entering a new market, a business has broadly speaking two options: build or acquire. In terms of wholesale, we have seen Morrisons take the former and Tesco the latter route. Building an operation is a slow process, but Morrisons has shown, through the deals with Amazon and now McColls and the reviving of the Safeway brand, that it is prepared to take the long route.

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UK: Sainsbury’s trial 30 minute click and collect

Sainsbury’s is set to pilot 30 minute click and collect services in its Pimlico store in London, making use of its Chop Chop app, which allows delivery by pushbikes. Last year Sainsbury’s was the first supermarket to launch a one hour delivery service, and now it is the first to trial a 30 minute click and collect option.

“The online grocery market has been moving toward same-day delivery with first Amazon and Sainsbury’s pushing small-scale same-day delivery schemes in 2016 and Tesco taking same-day national in 2017 with Tesco Now. According to Mintel’s Retail Home Delivery and Collection Services UK 2016, almost six in 10 consumers agree that if more retailers offered same-day delivery, it would remove the need for click-and-collect. Retailers’ first priority should be making the shopping experience as easy and convenient as possible: in the modern age, this means offering a range of buying options and being flexible to consumers changing shopping patterns. Home delivery and collection form a valuable part of this, particularly in the grocery space where we are increasingly seeing shopping habits become more fluid and less-planned.”

Italy: Yoox Net a Porter reports positive first half year

Sales at luxury etailer Yoox Net-a-Porter have hit sales of €1 billion in the first half of the year to 30 June 2017, up 19.5% year-on-year. The pureplay retailer performed well across all categories and markets, particularly in the Asia Pacific region.

“With sales hitting the €1 billion mark for the first time, the merger between Yoox and Net-a-Porter – two very different websites, one dedicated to offseason and one full-price – is proving successful. Since the merger, YNAP has been strategically reinvesting profits into furthering its technological capabilities, recently opening a new Tech Hub in London, as well as partnering with other luxury brands to help them with their online stores and delivery options. Many luxury brands had been wary of embracing technology and online shopping. These results prove that by having a first mover advantage, YNAP has managed to outperform many others in the luxury sector, not facing the same challenges as many physical luxury retailers, such as the slowdown in tourism spend.”

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UK: John Lewis to allow customers to sleep overnight

British department store John Lewis is reportedly set to launch instore apartments that will allow customers to try products overnight. ‘The Residence’, as it is reportedly being called, will allow customers to try mattresses out overnight before deciding whether to purchase them.

“John Lewis has been at the forefront of adding new experiences into its stores to drive footfall, utilise under-used space, and complement the online experience, so this could be seen as the next step on the path to turning the stores into leisure experiences. Indeed, Mintel’s Bedrooms and Bedroom Furniture UK 2016 report shows that that one in three want to visit a store where they can judge the products when buying a bed or mattress.”

UK: Ocado available on Amazon Echo

High end online grocer Ocado has become the first British supermarket to launch an app for the smart home speaker Amazon Echo. The service allows customers to order a food delivery just by issuing a voice command to the voice assistant Amazon Alexa. As well as ordering new products, customers will be able to add a product to an existing order, find out what foods are in season and receive recipe inspiration.

“The fact that Ocado has become the first external grocery partner for Alexa is a significant step, and potentially opens the door for further integration from rival grocery players. It is an interesting move from Amazon who over the past few years has focused on pushing customers towards and trying to tie them into its own ecosystem of products and services, such as Amazon Fresh. In the end the move is likely of net benefit to the Amazon business, as it democratises the shopping aspect of Alexa and allows it to better compete with Google’s more open system. There is certainly demand in the market for voice-controlled ordering of groceries.”

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Germany: Aldi to start selling online video games

Aldi will start selling digital video games online in Germany, coinciding with the start of ‘Gamescom’, the world’s largest video games trade show. Aldi says it will sell games on every major platform, including PlayStation, Xbox, PC and the newly released Nintendo Switch. It has promised to sell games at cut prices with exclusive offers in collaboration with developers.

“Purchasing of video games online is becoming a bigger share of the video game market, so it makes sense for Aldi to launch an online store that allows for multi-console games purchasing, particularly in Germany, a country with a large video gaming audience. In the UK, Mintel research shows that buying physical copies is still the most popular way of purchasing video games. Aldi Life, Aldi’s digital only store in Germany, would do well to stock physical video games alongside its digital offering in order to take advantage of consumers’ spending habits.”