Despite the impact of the pandemic and the rapid acceleration in online shopping, less than one in ten convenience stores in the UK currently offer a home delivery service.
Data from Lumina Intelligence’s new UK Wholesale Market Report 2020/21 indicates that just 8% of convenience stores currently offer home delivery, however for those that do, it is a significant revenue stream, equating to 7% of total sales on average.
Online grocery delivery has grown phenomenally throughout the pandemic, with demand for delivery from supermarkets outstripping supply during the Spring of 2020, creating an opportunity for convenience stores to offer ‘on demand convenience’ services. Whilst some retailers have set up their own delivery services, many have turned to third-party providers, such as Snappy Shopper, Deliveroo, Uber Eats and Appy Shop.
Alice Dolling, Senior Insight Manager at Lumina Intelligence, commented: “2020 saw an acceleration in online shopping that we could never have predicted. Nearly one-in-five shoppers changed their primary method of grocery shopping to online, highlighting the opportunity available.
“As demand increases, convenience stores have a great opportunity to drive greater basket spend and expand the potential catchment area of their store by offering delivery.”
The report also highlights that nearly half (48%) of convenience store retailers have used new technologies when shopping online with a wholesaler or in depot since the pandemic began.
The most popular tech solutions used were barcode scanners (41%), supplier apps (13%), and supplier loyalty schemes (8%).
Dolling added: “The pandemic has placed significant strain on retailers, who have faced incredibly high demand and footfall over the last year. As a result, efficiency has been key to ensure they remain in their stores as much as possible. Barcode scanners and apps are great ways of streamlining the shopping process for retailers. Furthermore, this behaviour is now second nature and will likely continue once restrictions ease.”
Lumina Intelligence’s report identifies the channels retailers use to purchase stock, which has not changed significantly overall in spite of the pandemic. Whilst there has been a long term move in favour of online/delivered route to market, delivery slots have been limited and many retailers have opted to go to the depot to ensure availability for their customers, therefore maintaining the importance of the depot in retailer’s purchasing behaviour.
On average, just over half of a retailer’s stock is purchased from a wholesale depot and just over a quarter from wholesale websites. The remaining proportion of stock is sourced from a combination of wholesaler apps, supermarkets, online retailers and sales reps/vans.
The top three reasons for retailers not using online wholesale regularly were:
- Don’t feel comfortable going/navigating online
- Minimum order requirements
- No convenient delivery options
Dolling commented: “Digital investment is key for wholesalers, but they must understand the needs of retailers to maximise its potential. Site taxonomy and ease of navigation are key to a positive user experience. Meanwhile, with more retailers conducting distress top-up missions through the delivered channel, this could indicate an opportunity for a premium subscription for faster delivery or loyalty schemes offering a lower minimum order requirement.”
NAM Implications:
- Home delivery matters…
- …drawing from my personal experience in my parents’ mom & pop store.
- i.e delivering orders to customers’ homes represented a major competitive edge over rivals…
- …besides adding personal leverage in terms of weekly account collection.
- Lessons never forgotten…
- i.e. no bad debts in 40 years of NamNews trading!
