Sunday, June 18, 2023

Is Grocery Store Deli Delivery the Next Big Thing


Restaurants and Convenience stores operators have to be worried if grocery stores deli’s start doing a good job with online ordering and delivery that their sales and customer frequency numbers just might drop.  According to Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions® grocery store deli’s have the advantage of incremental order size due to the number of meal and meal components each grocery store has to offer customers.

Competing with online delivery services like DoorDash and Uber Eats for single-meal deliveries could be the next move for grocers aiming to capture market share from restaurants, according to Matt Van Gilder, director of e-commerce and digital experience for retailer-distributor SpartanNash.

During a webinar on last week hosted by digital technology provider Upshop, Van Gilder said that’s one of the many approaches the company is focusing on to grow its presence in the digital commerce marketplace.

The online forum “Digital Next: Evolving eCommerce Strategies to Meet Growing Shopper Demands,” also featured Chad Petersen, senior vice president of e-commerce for grocery chain Lowes Foods, was the first in a series planned by Upshop

So, moderator Jeff Baskin, chief revenue officer for Upshop, noted that delivery and curbside pickup are the two points of fulfillment for digital orders, but pickup has grown about 2.5% year over year, while delivery has dropped by nearly 10%.

 Matt Van Gilder, director of e-commerce and digital experience for retailer-distributor SpartanNash, stated, “Our mix has always been quite a bit skewed toward curbside pickup with a smaller portion going to delivery,”  

Van Gilder whose company operates 144 brick-and-mortar grocery stores, primarily under the banners of Family Fare, Martin’s Super Markets and D&W Fresh Market, in addition to its distribution business. “That delivery slice of the pie certainly grew over the last few years because of COVID, but has come back down and normalized again.” 

At SpartanNash’s the approach is through partnering with a variety of last-mile providers to deliver the order on the grocer’s behalf, “so our teams in-store can really focus on the key differentiators, we think, of the service provided to the customer while we’re picking the order. 

That allows the supermarket to “be more efficient with the people we have” and focus on other factors, such as tracking how long it takes to fulfill orders and message customers on out-of-stock items. 

Petersen stated, Lowes Foods is similarly more weighted toward pickup versus delivery through an integrated tech stack. “It eliminates the need to go and find another tech partner to do this and more developers to integrate that,” he said, adding that, “... even larger regionals, we don’t have endless developers to build this stuff.”

Van Gilder went on to say, having in-store pickers who hand off orders to delivery drivers gives his team opportunities to upsell grab-and-go items like pizza and sandwiches along with the grocery order. 

“I think the next phase for us is taking that same menu solution and finding ways to not just make it available for something that can happen alongside the weekly order you may have set for three or four hours from now, but to also make available for that customer to get it on demand 30 minutes from now,” he said.

That allows shoppers to order dinner from the deli section without even purchasing groceries, he said. 

“Having multiple delivery fulfillment types within that channel itself or pickup for the customer, I think, is sort of our next step to compete with marketplaces like DoorDash, UberEats, etc. that a lot of us rely on currently for that on-demand customer meal,” Van Gilder added.

Baskin said third-party delivery providers were a necessity during the pandemic, but many retailers are starting to question the profitability and long-term strategy of relying on them. “I’m not saying there’s not a place for them; there certainly is, but it will look a lot different between now and what will come in the future,” he said. 

Petersen added that e-commerce is leveling out across the board, because of the incremental fees involved in placing orders online. “You don’t have a fee when you come into the store,” he said. 

He said grocers are going to continue their relationships with the various delivery operations. “You want to be on the dashboard when that particular guest or family is beholden to Shipt or Instacart or DoorDash or whatever,” he said. “You don’t want too not be there.”  

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