For years, profitable rapid home delivery has been the holy grail for grocery retailers and tech entrepreneurs. Companies have tripped over each other in the race towards shorter delivery times and cheaper prices. This ambition has claimed the lives of many optimistic and dynamic brands over the years. The road to glory strewn with the bones of Alchemy Wings, Farmdrop, Jiffy and Send.

During 2020 and 2021, the tide looked to be turning for delivery operations, with lockdowns providing fertile ground for companies to grow at speed. Convenience stores were quick to set up phone ordering at the start of the crisis. Spar, for example, rolled out pay-by-phone capabilities within two days of the first lockdown being announced. Eventually retailers added more sophisticated ordering methods, such as partnerships with Snappy Shopper and Deliveroo.

The land grab was on. Prevailing wisdom was that customer habits had changed forever. Why would anyone go into a store again when you can have groceries bought to your door within the hour? A new wave of tech rivals muscled into the market, such as Gorillas, Getir and Zapp.

Lumina Blonnie WhistAll three are now shedding workers and retreating from various locations. The reason why is clear. According to Blonnie Whist insight director at Lumina Intelligence: “There’s a shift away from delivery. Last quarter, in-store purchasing increased by 0.7%, driven by food-to-go occasions. Delivery items can be up to 15% more expensive.”

15% more against an already out-of-control cost-of-living crisis is not an option for many consumers feeling the pinch. We suspect prices are only going to rise higher, so is this the end of the delivery market for the time being?

Convenience stores buck the delivery trend

Against all odds, convenience stores are continuing to make it work. According to the ACS, 1 in 4 (24%) of convenience stores offer grocery delivery, a figure that has grown by 2% in the past year.

Jason Perry Co opSpeaking at the Convenience Conference last month, Jason Perry, Co-op head of online development, explained how the business has developed a single e-commerce system, which enables them to sell products through its websites. “We’re seeing success because our shoppers understand we’re important to the community,” he said.

This is the crux of why retailers are winning where those digital newcomers are not. The mistake companies make is to assume that grocery shopping is a cold, transactional process where consumers want as little contact as possible. That may work for some, but for the majority, they want to feel a connection to businesses that they know support the community they live in – something that has become even more important since the onset of coronavirus and lockdowns. That doesn’t change just because they are getting their shopping delivered to their door.

It's why the independents that invested in delivery during the pandemic are still doing a roaring trade. They built the habits and earned the loyalty when their shoppers needed them the most.

The delivery market will continue to be stretched by increased costs from every direction over the next 12 months, with operators tweaking their models where needed. For suppliers, it’s best to back the businesses that can move seamlessly between shopping in store and delivery where needed.

Convenience Conference Read more insights from the Convenience Conference: Are your brands best placed to beat own label?