With grocery delivery becoming a growing choice for Canadian consumers, will the changing landscape of the industry increasingly move from the use of third-party apps that use a grocery store as a way to get delivery fee commissions to in-house delivery concepts that are being constructed into physical stores?
Sylvain Charlebois, Director, Agri-Food Analytics Lab, Dalhousie University, said it all boils down to risk.
“Some companies are better set up than others and some are actually not as committed so they want to explore the space a little bit more. Amazon just acquired a piece of Grubhub. Those are signs that delivery is really a service you can’t deny anymore really, but how you do it will vary between different grocers,” said Charlebois.
“Some actually are putting a lot of money into building infrastructure. Voila (Safeway and Sobeys) is a perfect example of that while others are trying things out with a partnership like Loblaw for example with DoorDash. And the reason why some people do that is expectations are changing very rapidly.
“I mean, three years ago, getting your groceries delivered in eight days was a standard. Now it’s less than two hours and perhaps in a few years from now it could be in half an hour. And some markets are getting groceries delivered in 15 minutes. So you can see expectations are changing. Committing to infrastructure, committing to do a lot of work internally may be seen as too much of a commitment for now given that the marketplace is changing so quickly.”
Charlebois said there’s a lot of trial and error still going on in the industry but there’s still some consensus out there that grocery delivery is here to stay.
Is there a danger in becoming more efficient in the grocery delivery side of the operation thus taking away from the foot traffic in the store where people browse and end up buying more as they shop up and down the aisles?
“I think it’s less of an issue now. I think the big battleground is going to be loyalty. So it doesn’t matter how you get to the consumer, whether it’s online or in person, I think more and more grocers will be concerned about loyalty in general,” said Charlebois.
“I think that’s going to be the main focus for a while. If it means you need to get them more engaged online and keep them buying your products, so be it. I think that’s basically what’s going on right now.”
Charlebois said experts expect 10 per cent of all food sold retail to be sold online by 2027-2028 if not sooner.
“That’s a huge shift,” he added. “We believe today it’s anywhere between five to six per cent. Before COVID, it was actually less than two per cent. It’s changing really fast.”
Gary Newbury, a retail supply chain and last mile expert, and Rethink Retail’s Top 100 Retail Influencer in 2021 & 2022 | CITT’s Innovator Award 2020, said that during the pandemic, many discretionary category retailers found themselves in some difficulty with maintaining sales during lockdowns. Some finished overdue apps from their teams, some migrated quickly to platforms like Shopify and others found a relatively easy transition to apps like Instacart, DoorDash and UberEats.
“In the short term, the provider would turn up with a tried and tested application/portal. All that was needed was SKU details and the retailer was good to go. Instant e-commerce capabilities, often with two to four hour service,” he said. “The provider would send in ‘personal shoppers’ to pick, pack and ship consumer orders to porches. These providers manage the picking and delivery operations, collect a fistful of consumer data, and could expose consumers to competitor products through their portals.
“As we have emerged from the pandemic, consumers have, often drastically, changed their spending patterns and path to purchase arrangements. Recent Stats Canada’s figures suggest stores have returned to be their ‘go to’ position for instant gratification.
“Recognizing this, and learnings many retailers developed during the pandemic, including the impact on either their bottom line – for free deliveries – , or the consumers’ perception of ‘doing business with retailer X via a third party app’, some scaling back is inevitable and a major focus into developing their own apps for a more integrated consumer experience, along with development of last mile solutions to control the overall execution of the proposition.”
