At the intersection of food sales, technology, and consumers is the focal spot that most retailers are working hard to please consumers according to Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.
Johnson stated, consumers are dynamic not static when the consumer moves you must move with them or risk losing customers to another grocery store or another avenue of fresh food distribution entirely.
Today research show that grocery retailers continued to shift their customers toward store pick-up and away from grocery-delivery in 2022 as they seek to unlock the potential profitability of online grocery.
In case you did not know, grocery store pickup and delivery vied back and forth for share of the digital grocery market through the first half of 2022, pickup pulled away as a preferred method of fulfillment for customers during the last several months of 2022, according to research from Incisiv and its Grocery Doppio digital grocery data platform. Overall, 52% of all digital grocery sales in 2022 were fulfilled via pickup as opposed to delivery.
Here is what we found previously written about the shift and wanted to share; “Within, delivery, meanwhile, in-house fulfillment has gained against third-party services, increasing from 23.6% of deliveries in August to 25.8% in December.
Many grocery retailers continued to expand their partnerships with third-party delivery services in 2022, however, as they sought to capture the growing percentage of sales that take place online and, in some cases, meet demand for rapid fulfillment of orders.
Grand Rapids, Mich.-based Meijer Inc., for example, in December reached an agreement with Uber Technologies for the ride-services company to provide grocery delivery through the Uber and Uber Eats apps. That agreement followed similar partnerships between Uber and Smart & Final, Albertsons, Grocery Outlet and SpartanNash.
Meanwhile, Cincinnati-based Kroger Co. recently unveiled a partnership with DoorDash, known for its restaurant delivery services, to deliver sushi from 900 store locations and floral orders at 1,600 store locations.
“By offering customer-favorite sushi options and premium floral bouquets through third-party marketplaces we are continuing to evolve and meet customers where and how they are shopping,” Stuart Aitken, Kroger senior VP and chief merchant and marketing officer, said in a statement at the time.
Kroger also has partnerships with other third-party delivery services, including Instacart and Shipt, and has been aggressively expanding its own capabilities with the addition of “spokes” that expand its delivery reach via its partnership with European e-commerce automation specialist Ocado.
Kroger also has been among the leaders testing autonomous delivery. It launched a partnership with Nuro, a provider of robotic delivery vehicles, in 2018, and last year unveiled plans to expand it in the Houston market. Modesto, Calif.-based Save Mart also has tested the autonomous Nuro vehicles for grocery deliveries.
Discount grocer Aldi, meanwhile, is among the retailers that appear poised to take more of their delivery in-house. In October, the retailer said it was working with German-based Spryker Systems to develop a new online platform for its U.S. locations that would include grocery delivery and / or curbside pickup service. Aldi has long worked with Instacart for both pickup and delivery.
Another model some grocers have adopted is to leverage white-label online grocery fulfillment services, as exemplified by the new partnership between Southeastern Grocers and DoorDash. The Jacksonville, Fla.-based retailer, which operates the Winn-Dixie, Harvey’s and Fresco y Mas banners, described the service as “an extension of shopping our local stores.” It allows the retailer to better align its online and in-store pricing, the company said.
Up-Date Ultra-fast delivery: gains and losses
Several retailers also partnered with third-party firms in 2022 to offer rapid delivery, sometimes in as little as an hour or two, or even less.
Save Mart in October said that Save Mart banner stores in Lathrop and Ceres, Calif., began offering two-hour grocery delivery via Amazon, and that the company planned to expand the service to additional locations.
“The Amazon partnership represents The Save Mart Cos.’ ongoing digital transformation to serve our shoppers and fulfill their needs with innovative and affordable solutions,” Tamara Pattison, senior vice president and chief digital officer for The Save Mart Cos., said in a statement at the time.
That agreement followed a partnership between Ontario, Calif.-based Cardenas Markets and Amazon, announced in September, through which the e-commerce giant began offering two-hour delivery at several locations in California and Nevada.
St Louis-based Schnucks, meanwhile, in October unveiled Schnucks Now, offering delivery in as fast as 30 minutes for a limited assortment of fresh groceries, pantry, household essentials, alcohol, meals, and snacks. The service is available to customers via the Schnucks Rewards App and the Instacart Convenience Hub, an Instacart marketplace product feature.
Schnucks’ launch of 30-minute delivery followed the debut of 15-minute delivery at Lakeland, Fla.-based Publix Super Markets, which partnered with Instacart’s Carrot Warehouses fulfillment solution to offer the rapid-delivery service at a small number of Florida stores.
Customers can access the service either through the retailer’s own mobile app or website or Instacart.
Overall, however, the ultrafast delivery model, exemplified by companies such as Gopuff, Gorillas, Buyk, Getir, Jokr and others, struggled in 2022, after enjoying a surge during the pandemic.
Russian-owned Buyk filed bankruptcy and ceased operations in March after sanctions imposed following Russia’s invasion of Ukraine, and Jokr in June said it was shutting down its U.S. operations.
Gopuff, meanwhile, announced multiple rounds of layoffs and facility closures in 2022.
Other ultrafast grocery delivery services consolidated in 2022, as Getir agreed to acquire rival Gorillas in a transaction reportedly valued at $1.2 billion. Both companies have a broad European presence but only entered the U.S. in 2021. Berlin-based Gorillas, which promises 10-minute delivery from a network of micro-fulfillment warehouses, began operating in New York City in May 2021, while Istanbul-based Getir launched in Chicago in November 2021, followed by New York and Boston.
Don’t over reach. Are you ready for some fresh ideations? Do your food marketing ideations look more like yesterday than tomorrow? Interested in learning how Foodservice Solutions® can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization? Email us at: Steve@FoodserviceSolutions.us or visit us on our social media sites by clicking the following links: Facebook, LinkedIn, or Twitter