What does everyone think of the rapid grocery delivery market?

[Xenia Baranova]

In line with this morning’s edition of Watson’s Daily, highlighting that analysts reckon that the rapid grocery delivery segment will reach a 5% share of the UK grocery market – I was wondering whether you think the rapid grocery delivery companies will be successful in the long run and if so why/ why not?

[Andrew Spencer]

Hi Xenia,

I think that the convenience of being able to rapidly order essentials and over the counter medications during the pandemic was a huge driver of success for these companies. As a result, post-pandemic it may require a drastic change to consumer habits for people to start making larger orders given the cost required to rapidly deliver products.

That said, I’ve noticed that buying at wholesale and using ‘dark stores’ may allow these companies to make savings compared to traditional stores which could make it viable in the long term.

So, overall I think that a few companies who can crack the right formula to change consumer habits will be able to establish themselves in the long term, but it’ll be interesting to see if people use them for more than forgotten ingredients on a traditional weekly shop etc.

I’d be interested to hear other thoughts on this!

[Sarah Thind]

No. Their success will be limited, as supermarkets have existing delivery networks and already operate at scale delivering multiple items in a high number of slots throughout each day. The companies which experience the most success will probably be acquired by supermarkets or consolidate to gain economies of scale. The rapid grocery delivery apps do meet a customer need that wasn’t served, but whether this will be a full consumer shift in how groceries are bought remains to be seen.

However, I think that there is the potential for short term success. Could they use the abandoned buildings on the high streets to create more spaces for make-shift warehouses, helping them reach areas in and around smaller towns, to grow their delivery networks? The combination of the warehouse roles and the delivery roles could offer more stable working opportunities than other delivery roles. The fact that workers need to be close to warehouses, may allow companies to retain employees longer. As other delivery roles may see them riding/driving from one end of a city to another. If the rapid grocery delivery apps started to offer chilled prepared food from local bars/restaurants they could compete with restaurant delivery apps, without facing the same issues of restaurant preparation/cooking times.

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