Rapid grocery delivery firms struggle as cost-of-living crisis escalates
Rapid delivery start-ups received heavy investment in 2021, but 12 months on it appears their days are numbered, with consumer use declining, according to NTT DATA.
NTT DATA surveyed 2,000 grocery shoppers in the UK, focusing on inner city areas where rapid delivery is available.
The study found that just under a third of residents use rapid delivery services. Of this proportion, more than half (59%) are now decreasing their use as cost becomes more important than convenience.
92% of consumers state cost is one of the biggest decisions for where and when to purchase their groceries, followed by quality at 77%.
Delivery firms have invested in larger marketing campaigns and discounted delivery to keep customers coming – however the outlook still looks bleak as the cost-of-living crisis continues.
Geoff Lloyd, Director of Retail at NTT DATA UK&I, comments: “As a result of food inflation and the current cost-of-living crisis, consumers are becoming more cost conscious with their purchases and are prioritising this over convenience.”
“As a result, fewer consumers are now willing to accept the higher cost that comes with the Q-commerce model, whether it is through higher pricing of products, or additional costs they need to pay for delivery to their doorstep.”
“As funding stagnates and introductory offers start to disappear, consumers are likely to decide that the convenience is not worth the cost and will move away from these applications.”
“There is a huge opportunity here for legacy retailers and grocers to gain back market share from the Q-commerce challengers and increase sales during this time, as the current economic climate is altering consumer buying behaviour.”
“By using data to help improve deals and targeted offers as part of loyalty programmes, supermarkets can gain the upper hand and increase margins during this difficult retail period.”