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How retailers are adapting to the new landscape of online delivery

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Sam Musgrave News & Views, COVID19, FMCG...

How retailers are adapting to the new landscape of online delivery

The COVID-19 outbreak has significantly transformed the market environment and had a tremendous impact on consumer habits and behaviours, propelling retailers into having to introduce new ways to engage with their customers.

Significantly, the biggest change has been to manage the preference of people to have their groceries delivered in a contactless manner rather than purchase them in store, requiring retailers to switch their business model from physical retail to online delivery with unparalleled urgency.

Although ordering online and receiving groceries via delivery is nothing new prior to COVID-19, only 8% of grocery shopping was done online and it was only the big players who took part.

Now the bigger retailers have had to drastically increase their in-house delivery services and smaller retailers have partnered with existing online delivery services.

COVID-19 has seen Aldi make their first move into selling online groceries with their £24.99 food parcels filled with essential items for vulnerable people and those self-isolating during the lockdown.

Waitrose has trebled its ‘Rapid’ grocery delivery slots to cope with the extra demand. The slots allow shoppers to have up to 25 grocery items delivered within two hours or less or on the same day.

Ben Stimson, Waitrose.com Director, commented: “We are now making more online deliveries than Christmas week, every week, and have increased slots to reach 20% more customers than usual.”

Costcutter has partnered with Uber Eats since the coronavirus outbreak started and has seen a reported 350% increase in sales, with milk being the bestselling line.

Uber Eats has seen their sign-up rate double in March as convenience outlets were keen to find new channels to serve customers. European general manager, Stephane Ficaja, told Reuters that the company is currently in talks with other retailers, including large supermarket groups, about joining the platform.

He said: “Classic online channels are mostly completely saturated. Our offer is a bit different, it’s smaller basket, smaller ticket, faster delivery.”

The key question is how much of the surge in online delivery will remain after social distancing restrictions are lifted? The ease of shopping online may be significant enough to permanently move some consumers online and keep them.

There is a key opportunity, as life returns to normal, to retain the customers who retailers have built a relationship with during the lockdown well after the need for the consumer to do so is gone.