It is widely accepted that, when faced with challenging environments, businesses must “adapt or perish”; and COVID-19 has certainly proven this to be the case.
Indeed, when one considers the grocery sector, it is impossible to ignore the seismic change driven by social distancing measures. Prior to the pandemic, many people viewed online grocery shopping as a convenient luxury. However, with consumers forced to remain indoors, it became a necessity.
What’s more, evidence suggests that such behaviour is unlikely to be a passing trend. Recent statistics have revealed that 43% of consumers plan to continue to shop for their groceries online as often as they did throughout the pandemic, whilst just 18% stated that they would return to their bricks and mortar retailers.
As such, it is up to retailers to adapt their operations accordingly. For larger supermarkets, this will not present much of an issue. After all, they have ample financial and human resource to develop and invest in sophisticated technological updates to manage stock and deliver an efficient customer service model. However, for smaller retailers, this may prove difficult; they will likely have a smaller turnover and may not be able to afford such high-tech solutions. Consequently, they could find themselves priced out of the online grocery sector altogether.
Positively, however, a solution is beginning to emerge, in the form of third-party grocery delivery apps.
Third-party food delivery services are not a new phenomenon; the fast-food sector, for example, has taken advantage of their services for some time now. However, the previous decade has seen a rapid increase of consumer usage of their services, and the sector has thrived as a result. Indeed, consultancy group McKinsey predicts that the sector will be worth €20 billion by 2025.
This surge in demand for the convenience of food delivery apps has prompted grocery retailers to experiment within the sector, partnering with delivery apps to connect with customers from within their local area.
The attraction of such apps is clear. Firstly, it allows the retailer to tap into a wider client pool. Rather than depending on customers to leave their houses during the pandemic, third-party apps allow grocers to provide the convenience of an on-demand service.
That said, third-party apps also grant grocery retailers access to highly sophisticated technology which improve the overall efficiency of their business. Most apps, for example, offer a robust Point of Service (POS) system, which allow retailers to track their sales, manage their stock, and provide easy payment methods for customers.
Other apps have advanced beyond this. For example, the Grocemania app allows retailers to monitor the national demand of products being sold on the app and adjust their stock accordingly. For example, a “Coca Cola 330ml” product sold on the app is the same data entity – even though they all have different prices across different retailers. This allows retailers to pull up a product report for “Coca Cola 330ml”, across all Grocemania retailers, without needing to use third party software. This makes product management, and tracking consumer preferences much easier for smaller retailers.
Clearly, technological developments are driving great progress within the Grocery Delivery sector. However, it is vital not to overlook the progress being made in other areas of the sector; particularly when it comes to the storage of produce.
The emergence of dark stores
Whilst the technology of third-party delivery services drives the efficiency of grocery delivery, other considerations – convenience and cost to the consumer, for example – are being addressed by the emergence of dark stores.
Dark stores are local fulfilment centres, which offer a cost-effective storage solution for fresh produce such as fish, meat and dairy products, which are sourced from local marketplaces. As such, it is unsurprising to see more and more grocery delivery services, dipping their toe into the sector, as they seek to widen local producers customer base – much to the benefit of all parties involved.
Dark stores grant grocery delivery apps greater purchasing power to buy high quality products at wholesale price, as well as increased autonomy over the products they purchase. Retailers themselves enjoy the promotion which comes with being on a high-profile app, as well as access to a wider scope of local customers. Meanwhile, they allow customers to receive a more efficient service, and access high-quality products at very reasonable prices.
Grocemania have recently entered into the sector, launching our first dark store in Kingston in June, with plans to launch a second in Twickenham in July and we are already seeing the value dark stores hold; not just for ourselves, but for local retailers and customers. Indeed, all fresh produce – from fruit and veg to meat and fish – within our dark stores is sourced locally, so helps to boost that region’s economy and businesses.
Excitingly, we have plans to launch 16 more dark stores across the North of England in September, bringing high quality products to customers beyond the UK’s major cities.
The grocery delivery sector progressed greatly since the beginning of the pandemic; and most importantly, local independent retailers are not being priced out of the market. Grocery delivery apps are allowing such retailers to access technology as sophisticated as larger supermarkets, unlock a wider pool of local customers, and provide an incredibly convenient service.
With convenience now widely accepted as the most important aspect of any delivery service, I anticipate that the pairing of such technology and local retailers themselves, will go from strength to strength over the coming years.