Why food retailers are moving into meal delivery

Date : 01 May 2019

Stewart Samuel

Program Director - Canada

As Wegmans becomes the latest North American food retailer to offer meal delivery, we look at how operators are optimising their foodservice investments to build bigger businesses.

Tapping into a growing meal delivery customer base

Wegmans has built a world-leading reputation for its prepared foods ranges. They are a central element of its offer and a major driver of traffic to its stores. With a chef-led team, often in excess of 100 people in each store, it has developed a high-quality proposition spanning multiple cuisines. As food delivery has become a larger component of the traditional foodservice sector, it is a natural step for the retailer to replicate this. It provides existing customers with more choice, while also enabling it to tap into a growing customer base for meal delivery.

Wegmans service available from 40 stores

Food retailers can enter the sector through tapping into the third-party delivery network which has emerged in the US. Following a one-store, year-long trial, Wegmans has partnered with DoorDash to offer the service from 40 stores. Customers within five miles of a participating store order via the Wegmans Meals 2GO app, with delivery available for orders over $20. Customers can also choose to collect their orders through the retailer’s Curbside pickup service.

Growing last-mile meal delivery network

An increasing number of food retailers are starting to offer meal delivery services, reflecting the larger food market than many retailers are now competing within. Albertsons is working with Uber Eats and Grubhub as part of a pilot programme. In Montreal, Canada, Metro has partnered with Uber Eats to offer meal delivery. Kroger, which continues to build its capability with prepared foods, is testing an app which allows customers to order ahead from its ranges.

Source: IGD Research

Consistency critical to success

For food retailers, this is a tough and competitive market where delivery is measured in minutes rather than hours and days. While they can tap into companies such as DoorDash and Uber Eats, they must optimise order taking and food preparation processes to ensure a hot and consistent product is delivered on-time. These are the critical elements where orders can be lost and won.

Opportunity to develop delivery-only ranges

Despite the challenges, as foodservice becomes a larger business for many food retailers, we expect to see more companies move into this space. This will help retailers to improve asset utilisation and start to offer new ranges of delivery-only products, with a focus on catering for families and larger groups.

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