wheels fall off fast food delivery bandwagon — Retail Technology Innovation Hub

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As 2022 draws to a close, RTIH brings you its retail technology key points from an extremely eventful year, starting with the first one that was hot so it wasn’t a fast food delivery space.

Last week, after weeks of rumors, Getir officially announced the acquisition of Gorillas.

Markets go up and down, but consumers love our service and convenience is here to stay. The super-fast grocery delivery sector will grow steadily for many years to come and Getir will lead this category created seven years ago, said Nazim Salur, founder of Getir.

The amount of VC money burned investing in the rapid trade space has been staggering.

With this latest move, can we assume that a startup will survive and thrive, alongside traditional retailers like Tesco who saw what was going on and came up with their own offerings?

During the Covid-19 outbreak, many people have started ordering groceries online due to lockdown restrictions. And express delivery options have become extremely popular, particularly in urban areas.

The likes of Getir, Gorillas, Flink, Zapp have been hailed by industry observers and investors as a brave new world for food delivery.

But then the Covid-19 restrictions lifted and much to the surprise people started venturing out of their homes again, taking the opportunity to socialize in pubs, bars, restaurants, cinemas etc.

Throw in a cost-of-living crisis and, well, you can guess the rest. It’s pretty bleak out there for on-demand grocery delivery services, with the path to profitability unclear.

NTT DATA recently surveyed 2,000 UK food shoppers, focusing on inner-city areas where fast-track shopping is available.

It found that just under a third of inner-city residents use express delivery/Q-commerce apps.

However, more than half of app users are decreasing their usage (59%) as cost versus convenience becomes more important.

92% of consumers say cost is one of the most important decisions about where and when to buy groceries.

This is followed by quality with 77% confirming it as a key decision point.

Speed ​​lags far behind with just 17% saying this is a deciding factor on where to buy groceries.

This occurs when analyzing data on web traffic to major Q-commerce brands. NTT DATA analyzed

Data from SimilarWeb found that there has been an average 19% decrease in traffic over the past three months, with Getir taking the biggest hit.

To recruit customers, express delivery companies offered discounts and big market campaigns, just as Uber did, the costs subsidized with the return of a profit as a secondary consideration.

But the outlook for these apps now looks bleak as the cost-of-living crisis continues to grip the nation, says NTT DATA.

Geoff Lloyd, Director of Retail at NTT DATA UK&I, commented: As a result of food inflation and the current cost of living crisis, consumers are becoming more cost conscious with their purchases and are prioritizing this over to convenience.

As a result, fewer consumers are now willing to accept the higher cost that comes with the Q-commerce model, whether it’s higher product prices or the extra costs they have to pay for home delivery.

As funding stagnates and introductory offers begin to disappear, consumers are likely to decide the convenience isn’t worth the cost and will turn away from these applications.

There is a huge opportunity here for traditional retailers and grocers to recapture market share from the Q-commerce challengers and increase sales during this time as the current economic climate is altering consumer buying behavior.

By using data to help improve deals and targeted offers as part of loyalty programs, supermarkets can gain the upper hand and increase margins during this challenging retail period.

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