Retailers are putting home delivery services on hold as they continue to battle the ongoing inflationary pressures impacting their businesses, the Association of Convenience Stores has revealed.
CEO James Lowman told The Grocer that the sector is being “hard-nosed” on decisions to develop these services further as they “look down the barrel” at rising energy costs and staff wages.
“Making a delivery service sustainable is not straightforward,” he said. “There are such acute cost pressures on retailers now, they are less likely to run these services unless they are delivering the right level of return to justify that investment of time.”
Lowman explained home delivery has often been run as a community service, particularly to get essentials to vulnerable people or those who were isolating during the height of the pandemic, rather than as a solution for retailers to make more money.
According to the trade body’s Local Shop Report 2021, it showed out of the convenience stores offering home delivery, 71% had no minimum spend, 82% had no delivery charge, and 86% had no premium pricing.
“In the peak of the pandemic, it was a community imperative and the volumes were high as people were in need of those products,” he said. “And where retailers have got a model for home delivery that’s working, they’re very unlikely to give up that profit.
“But these services are often quite low margin, and we’re hearing retailers are pausing the development of that service to come back to it when there’s a more stable footing.”
He added that convenience stores offering a home delivery service, with staff regularly picking products off shelves, can make it harder to maintain and control a good offer in store as retailers continue to struggle with availability issues as well.
“It’s a complex decision, because you’ve got super-fast delivery specialists popping up in certain areas and retailers want to maintain in this market rather than relinquishing it to them,” Lowman said.
No comments yet