The growing popularity of grocery delivery has left a £500m black hole in the profits of UK’s biggest supermarkets which will worsen as more shoppers use the service.
Dan Murphy, a partner at global retail consultants Kurt Salmon, is warning that supermarkets are caught in an “Emperor’s new clothes” scenario and have “blinded themselves to the reality” of the loss-making nature of food delivery.
Read the full article on the This is Money website
- Where at: Regular Kambloggers have been on top of this issue since 2013:
– Tesco £40 minimum delivery spend, an each-way bet on basket-size?
– The Offline Limit to Online Growth
– Eliminating the cost of the last mile
- Retailers now find themselves on an Amazonian treadmill, and cannot afford not to be on board
- Where headed: Overall dilution of net profits – think 2% vs. ideal 5% (UK mults), permanently
- Effect on you: Increased pressure on supply chain for savings, as online/offline balance changes.
- Action: Time for an objective re-assessment of risk & reward, fair share negotiation and making every penny count.