The pandemic significantly boosted the speedy grocery delivery sector, but as times changed, so did the market dynamics.
- During the pandemic, rapid grocery delivery services saw immense growth in demand due to restrictions.
- Post-pandemic, the industry experienced a decline in demand, leading to consolidation and strategic pivots.
- Key players in the market, including Getir and GoPuff, have been navigating shifts in consumer behavior and financial constraints.
- Partnerships and strategic alliances have become crucial for survival in the competitive grocery delivery landscape.
During the height of the pandemic, consumers turned to speedy grocery delivery services, much like they had done for takeout food, due to restrictions and a preference to avoid supermarkets. This led to the introduction of over a dozen rapid grocery apps in the US and Europe by mid-2021. As restrictions eased, however, the market for such services experienced a notable decline, resulting in a series of consolidations, streamlining efforts, and company exits.
One of the most significant consolidations in the industry saw Turkish firm Getir acquiring its rival Gorillas for $1.2 billion in December. Gorillas had been valued at $3 billion the previous year but faced financial challenges, leading to a drying up of funding. The acquisition was seen as a means for Getir to reduce customer acquisition costs and boost operational efficiencies. Despite these strategic efforts, Getir has shuttered numerous stores in the UK and laid off around 300 workers, focusing on its operations in key markets like the UK, while exiting others such as Spain, Italy, and Portugal.
US-based GoPuff aligned itself with the growing demand during the pandemic and expanded into the UK market in 2021. Although it tripled its global sales to approximately $1 billion compared to the previous year, the easing of restrictions presented new challenges. The company withdrew from Spain shortly after its launch there, redirecting focus to its UK operations. GoPuff has been cultivating strategic partnerships to bolster demand, collaborating with Uber to allow ordering through the Uber Eats app and introducing ‘Morrisons Corner’ for own-label product purchases. Additionally, GoPuff’s partnership with logistics firm Wincanton has enhanced its distribution capabilities in London.
Jiffy, a rapid grocery delivery service, made a strategic pivot from consumer operations to becoming a dedicated rapid delivery software provider. This shift involved consultations with staff about their future roles and a gradual downsizing of its store operations. In response to Jiffy’s transition, Zapp engaged in an exclusive partnership to ensure service continuity for Jiffy’s customers and to solidify its market presence in London.
Zapp, which counts Lewis Hamilton among its investors, hasn’t escaped the challenges of the quick commerce sector. In May 2022, it considered laying off 10% of its workforce and has been progressively closing some facilities. Zapp has since followed GoPuff’s lead in partnering with food delivery platforms like Uber Eats and Deliveroo, offering consumers access to a wide array of goods, including specialty items from certain brands.
Major food delivery companies such as Uber, Deliveroo, and Just Eat have also sought participation in the swift grocery market. Uber Eats has forged partnerships with retailers like the Co-op and Waitrose, providing rapid grocery delivery options and exclusive member rewards. Deliveroo has expanded its tie-ins with supermarkets, offering faster deliveries through initiatives like Deliveroo HOP in London, jointly launched with Waitrose and Morrisons. Just Eat has collaborated with several retailers to extend their product availability and increase online reach, catering to a surge in customer demand for rapid grocery services.
The post-pandemic era has driven the speedy grocery delivery market toward consolidation, strategic alliances, and a reshaping of operations.
