The rapid decline of ghost supermarkets

After the take-off of the ghost kitchens, where the restoration works behind closed doors with orders from apps and riders at home, a model with a similar idea but with market and pharmacy products – except prescription drugs – arrived in Spain. When the pandemic receded and people took off their masks, the “dark shops” arrived with anxiety and haste. They offered deliveries in under half an hour, some even in ten minutes, and began landing just as quickly. Companies like Gorilla, Getir and Goproff have opened shops on the ground floor of buildings in the center of several Spanish cities and their backpacks on the back of the delivery boys have become part of the urban landscape. Protected by multi-million dollar funding rounds, these e-commerce companies have sought to replace traditional supermarkets that deliver on-time and availability-based deliveries and have ushered in a new niche, ultra-fast delivery, which they have dubbed “fast commerce. “or” quick trade “. Q-trade ‘.

The system is designed to start when the user places the order from the app and enters a fulfillment center located within a radius of between three and ten kilometers from the customer. The stocker, called the “picker”, has two minutes to put the items in the cart and bag them. Arranged in numbered lines, this employee pays attention to the ordered codes to get through the store in the shortest possible time. Companies claim to have between 2,000 and 4,000 products available with one click and only offer what’s available on screen. “The ‘dark shops’ hope to create a need in the consumer who buys food, products that we see with greater delicacy,” explains Cristian Castillo, professor of economic studies at the Open University of Catalonia (UOC). “If the user does not feel such a need, it will be difficult for him to buy there. With the work of marketing they could progressively win over the new generations, who are very used to shopping online ».

At the end of his run, the ‘picker’ hands over the baton, i.e. the bags, to the driver, who has up to eight minutes to ring the bell for the person who placed the order. “There is an obsession with speed of delivery that is totally absurd for a service like grocery shopping,” says Gustavo Gaviria, spokesperson for United Distributors.

Shifts, employees say, would be “overworked” if successful. It was not the case. In some shops, they chat bored over a cigarette on the sidewalk until an order arrives. A neighbor from the center of Madrid approaches them. To ask. He wants to come in, they won’t let him. They ask you to download the app.

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The Iberian expansion of these companies that rely on technology for their sales and delivery services started with great enthusiasm on the part of the investment funds, with the background of Glovo and the disappeared Blok and Dija, who already in 2020 had a handful of ghost supermarkets American venture capital companies like Sequoia or Tiger, Germans, Arabs from Abu Dhabi, Swiss and Chinese technology specialists like Tencent have come together. The idea of ​​imitating the distribution of hot food to imperishable products has achieved great transfers. Turkish Getir raised € 700 million in April 2021 and a year later announced it had 40 Spanish stores. At that time, Glovo raised 450 million, the North American Gopuff raised 1.150 million, and the Gorillas another 240 million. However, the model would begin to crumble before it was one year old.

The “fast” had a dozen large Spanish cities in its sights. “We have always seen a great opportunity here,” says Hunab Moreno, head of Getir in Spain, which operates in Madrid, Barcelona, ​​Zaragoza, Valencia, Malaga and Seville. “The Spaniards place a lot of value on their food purchases and our culture is closely related to the optimal use of time. And we sell time thanks to speed ”.

Employment also indicated the increase, because these companies comply with the “motorcycle law”, which requires the hiring of messengers. Among the five, according to the calculations of Redistribudores Unidos, they added about 3,000 on motorcycles and bicycles “at peak time”. Getir hired about 1,000; Glovo, double; Gopuff, about 300, and Gorillas, less than 200, according to this source. “They came as rescuers of motorcyclists after the departure of Deliveroo and Amazon Flex and the reduction of Uber Eats, but they did not employ even a third of those laid off under the new law,” warns Gustavo Gaviria, spokesman for the ki bell boys. who started protesting on the street.

urban punishment

To work, these technologies seek out the ground floor of downtown buildings. Outside the shop windows are barred, showing only a sign with the brand, a slogan like “From the app, in a few minutes” and a QR code. The ideal surfaces were close to 1,000 square meters, with easy access to the road and outdoor parking space. Behind closed doors, motorcycles or bicycles parked nearby give them away. A row of Gopuff blues or Getir purples, for example.

Their presence does not raise as much dust among the neighbors as the hives of the blind kitchens, with their huge smoke exits and the noise of the bellhops, especially late at night. “In Spain, when the cyclist stays off the premises and does everything with such urgency, he annoys the neighbors and generates pollution and traffic,” says Neus Soler, a researcher at the IQS School of Management at Ramon Llull University and UOC.

Punished by the protests that have arisen over ghost kitchens, cities like Madrid and Barcelona have moved towards regulation. Since March, Madrid has authorized these stores in residential centers if they are less than 350 square meters and requires that the bellboys remain inside the facilities. Two months later, the Catalan Competition Authority issued a ban on opening new premises in the jurisdiction of Barcelona, ​​although existing ones could remain.

  • Chiara Moreno | Glovo
    “The customer profile is heterogeneous and, after the pandemic, the average age has increased”

  • Hunab Moreno | Getir
    “The future of the sector is bright, there is a great demand from consumers”

  • Neus Soler | Ramon Llull University and UOC
    “These companies have never made profits and keeping investors costs them”

  • 2,540
    million euros of investments received by four companies in 2021 for the expansion of ghost supermarkets

In the “convenience supermarket” model with “the most purchased products in everyday life”, as Glovo defines it, the customer profile is “very heterogeneous”, says Clara Moreno, manager of Glovo’s Urban Logistics Warehouses (MFC) division. “After the pandemic we see that the average age has increased and that purchases no longer only take place in the densest urban centers, but in any type of population”. What they buy the most from Glovo is beer, soft drinks and toilet paper, while from Getir “fruit, especially bananas and mandarins, and vegetables,” says Hunab Moreno.

rapid fall

But in three months the business collapsed. With a strategy of rapid expansion in a scenario of fierce competition in the same territory and at the same time, the disaster has come at a dizzying pace. This summer Gopuff announced his intention to leave the country; Getir started a retreat and Gorillas left Spain with the dismissal of its staff (the company, via its international press office, refused to participate in this report, while Gopuff did not respond to requests from this newspaper). “The future of the industry is bright, there is a great demand from consumers”, Hunab Moreno (Getir) evokes the threat. “We will continue to seek training to continue to grow sustainably”.

The underlying problem appears to be in the germ. “That a supermarket order arrives home in ten minutes is not a response to a real need and this explains why we do not see a greater use”, continues Professor Cristian Castillo. At street level, the perception among the drivers confirms this. “It’s a minority in the delivery world,” says Gaviria.

Faced with withdrawal, companies prefer to use the words “consolidation” and “strengthening”. In any case, the lenders close their wallets. “These companies have never made a profit and are working at a loss. But they’re leaving because they’re having a hard time holding back investors who see the idea won’t take off and it won’t be something big, “says researcher Neus Soler.

Mutual funds are curbing upward expectations of a possible IPO, the fast track to profits. “The macroeconomic situation is impacting the startup ecosystem and technology-based companies. We have seen it in ‘Q-commerce’ but also in other verticals “, says Clara Moreno (Glovo), whose department has allocated 100 million euros in” urban infrastructure “in” about 400 cities “.

However, these investments have created the “loyalty” of a young audience accustomed to improvisation and apps, with strategies similar to those of mobility, such as Uber. “They started with fares that taxi drivers couldn’t compete against and then raised their prices in search of profitability,” compares Soler. “People at that point already appreciated other things, like the service.” In this sector, Glovo has an advantage because its ghost supermarkets rely on the same app for food delivery.

So there is a possibility that the activity can be maintained, albeit at a different pace. Although there are no openings on the horizon, “fast trade” is facing the perfect storm that threatens its survival.

A dance of millions of shops that open and close

As part of an expansion process, Getir arrived in Spain in September 2021 and acquired another company, Spanish Blok, to manage it. Ten months later it announced the layoff of a sixth of its global workforce, and in the summer, layoffs and the closure of 20 of its stores began, although its intention is to resist. “This model will grow over the next few years,” says Getir’s boss in Spain, Hunab Moreno. What did not last was the German company Gorilla, which settled in four cities and ended its operations six months later. He wasn’t the first to fail. It was preceded by Rocket, a Ukrainian company that opened in November 2021 and closed three months later.

Another starting point is Gopuff, an American company that arrived in Spain in February 2022, after having bought the British company Dija. He promised 40 stores this year, but changed his mind in August, firing around 180 employees and announcing the closure.

The great rival of these ‘Q-commerce’ is Glovo, who has invested 21 million to counter them and put another 100 on the table. “The user has trusted our application for years, now to buy and receive all kinds of products, including those of our supermarkets ”, summarizes Clara Moreno, manager of Glovo.


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