As a household we’ve hardly ever used take-away food delivery services but it probably comes as no surprise that things have changed of late. A recent celebratory meal that would have typically been enjoyed in a restaurant was replaced with a meal from a super little local Polish restaurant Autograf. I’d have normally collected it in person from the restaurant (and supped a pint of Pilsner Urquell while I waited for the order to be completed) but for the first time ever we took the home delivery option.
Such action is being played out across the country (and the rest of the world). Over the course of the past few weeks (which admittedly seems like a lifetime) many businesses and people have much more actively engaged with take-away, online ordering, and click & collect as they have sought to reduce interactions between people.
For many food related businesses the switch away from dine-in to solely focusing on take-away and delivery was a little too short-lived because of the lockdown and concerns over social distancing for employees and customers but lessons for the future will undoubtedly have been learned. For those companies still offering these services the current situation of restricting peoples’ movements will translate into an even more pronounced move towards online ordering and home delivery.
For small independent operators with their own delivery personnel the switch should be manageable although it can still be a stretch to cope. Craft beer specialist Hop Burns & Black (with two physical bar/retail units in South London) like many other businesses had to temporarily suspend its online shop due to unprecedented demand for its craft beers after the closure of its outlets for in-person collection.
For players with scale the move to operating purely online is going to be far from seamless. Web-based businesses are tough to manage on a profitable basis. There are few pure-online retailers that operate with blue ink on their accounts. And as many food operators know to their cost it is proving a tough challenge to make home delivery profitable when using the aggregators Deliveroo, Uber Eats and Just Eat.
In addition, most company’s systems like those of HB&B will be incapable of dealing with the significantly increased volumes now going through their businesses. Riverford Organics included a note with its delivered orders apologising for the closure of its website due to increased demand for food orders. It has made the decision to focus its available resources on its subscription boxes of fruit & veg. It is encouraging people to take up this proposition – that can be more easily accommodated within its delivery schedule – rather than making ad hoc orders.
Proof of how tough the online game is can be seen via the ongoing struggles of the major supermarket groups to cope with increased volumes. Morrison’s turned off its app and even online specialist Ocado has been faltering under high levels of orders. Many retailers are dealing with seriously long ‘virtual’ queues for order placement. And top class operator Next has recently re-opened its online store – having brought in new procedures within its warehouses – and struggled to cope with initial high levels of orders.
Clearly these levels of demand are unprecedented and will subside over time but it is likely that the present scenario will have some long lasting effects on businesses. For starters, a whole new batch of customers are being attracted to online ordering (including even the most ardent of holdouts). Research from CGA found that 13% of people over the first two weeks of lockdown were receiving deliveries from a restaurant or take-away for the first time or more often than usual. And almost three-quarters (72%) say they are likely to continue this behaviour once the crisis is over.
Companies must therefore look to adapt their models in order to take into account what looks like another lurch by consumers towards living a full multi-channel life. This is certainly the view of one of world’s largest investment firms, Blackstone, which has just completed a £120 million deal to buy 22 logistics units across the UK that will be used by retailers to support their e-commerce activities. While I’m sat here at home waiting for my package of beers and food order to be delivered it is hard to argue against this view.
Glynn Davis, editor, Retail Insider