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Food for thought: Innovation within the grocery sector

Delivery

COVID-19 has been the ultimate disrupter for UK businesses, regardless of their sector.  

However, I would argue that it is the grocery sector which has faced the greatest shakeup. Indeed, many consumers who had previously been regular visitors to their local stores were forced to conduct the majority of their grocery shopping online, due to strict social distancing measures. 

What’s more, the consumer shift to online shopping appears to be here to stay; 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.  

To meet this demand, retailers will need to adjust their operations. This may not be much of an issue for larger supermarket chains; after all, they have the financial and human resource to invest in sophisticated technology updates to ensure efficient stock management and tracking software, as well as efficient delivery processes. However, local retailers with smaller turnover and teams may struggle to do so, meaning that they could become priced out of the online grocery market altogether. 

Luckily, however, a third party appears to be evening the playing field and ensuring retailers can access their customers; grocery delivery apps.  

The proliferation of grocery apps 

Third party food delivery services have been around for some time now; particularly within the fast-food takeaway sector. However, the past decade has seen app delivery services being used more frequently by consumers, with the sector growing rapidly as a result. Consultancy group McKinsey predicts that the sector will be worth €20 billion by 2025.  

More recently, however, we are seeing more and more grocery retailers experimenting within this, partnering with delivery apps and connecting them with customers in their local area.  

It is clear to see the attraction of such services. Firstly, it widens the scope of their clientele; rather than depending on individuals leaving their house throughout the pandemic, local retailers can offer consumers the convenience of on-demand delivery services. However, a more important benefit comes in the form of the sophisticated technological advancements, brought about by the app.  

Naturally, some apps are more sophisticated than others. Most come with a strong Point of Service (POS) system, which facilitates a smoother customer journey. These systems allow retailers to track their sales, manage their stock, and provide easy payment methods for customers.  

Others, however, go a step further. 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.  

Evidently, leaps and bounds are being made in grocery delivery technology. However, further innovation has been made in other areas of the industry; most notably, the storage systems of produce.  

Dark stores on the rise 

The technological advancements within the grocery sector have been monumental. That said, other factors also influence the success of the industry. Most notably, the convenience and cost to the consumer. And dark stores appear to be the missing piece of the puzzle.  

Dark stores are local fulfilment centres, where grocery retailers are able to store their produce; they offer a cost-effective storage solution for suppliers. As such, it comes as little surprise that more and more grocery delivery apps are stepping into this sector.  

The emergence of grocery apps within the dark store market benefits all parties. From the app’s perspective, it gives them the purchasing power to buy high quality products at wholesale prices, and greater autonomy over the products they sell. For the retailers themselves, they enjoy the promotion that comes with being on a high-profile app, and access to a wider scope of local customers. Meanwhile, customers enjoy a more efficient service, and access to high quality local products at a reasonable price.  

Grocemania are admittedly fairly new to the game with this, having launched our first dark store in Kingston earlier this month, with plans to launch a second in Twickenham in July. However, we certainly appreciate 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 outside of major UK cities.  

The grocery sector has seen monumental change throughout the start of the pandemic. But, most importantly, independent local retailers are not missing out on such developments. The rise of third-party grocery delivery apps is evening out the playing field, allowing such retailers to access a wider customer base and manage their stock more efficiently. In a world where convenience is key, I anticipate that such technology, and consequently local retailers themselves, will go from strength to strength over the coming years.  

Askar Bulegenov in the founder of Grocemania is a grocery delivery platform enabling consumers to purchase groceries from local retailers via an app or online platform. Launched in February 2018, it has partnered with hundreds of UK stores – including Budgens, Nisa, Londis and Costcutter stores – as well as independent retailers.