Food Delivery Vs Supermarkets – Woolworths CEO first to get the UberEats threat in Australia.

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The Ultra-Convenience Consumer Trend Disrupting… Everything.

So much has been written about Amazon’s launch into the Australian retail market (we wrote about it ourselves recently) that it has created its own ecosystem of disruptive buzz. There’s no doubt a business the size of Amazon with its challenger mindset has the potential to shake up the market, but a much bigger consumer trend is already doing-so whilst flying beneath the radar.

The consumer trend is ‘Ultra-Convenience’.

Four decades ago we saw the introduction of ‘Convenience’. Convenience stores like 7/11 appeared in our neighborhoods, along with fast food restaurants and service stations selling household staples. These have been followed by 7 day trading, metro format supermarkets, online retail and 24/7 gyms. ‘Convenience’ has been replaced by the concept of ‘Ultra-Convenience’; online retailers are delivering within hours, and your favourite restaurants are delivering meals to your door in 30 minutes. And hang onto your hats with the exploration of drones to deliver everything from pharmacy to food in five minutes.

In 2016, for the first time ever, spending on ‘out of home’ dining in the US exceeded spend on grocery shopping. That is essentially people spending money by choosing not to cook at home is now a bigger industry than people spending money on groceries and pre-prepared supermarket meals. With Australia now the second biggest market in the world for restaurant home delivery thanks to UberEats and Co, this same trend has to be playing out here. My educated estimate (based on owning three fast casual restaurants myself) is that the restaurant delivery services have increased spend in this category by around 30%-40%. This spend has come predominantly at the expense of supermarkets and associated fresh food retailers.

Woolworths’ CEO Gets It

Cutting through the Amazon buzz, Woolworths CEO, Brad Banducci explained “We’re all competing for the family meal, and in that competition for the family meal the Uber Eats or the Deliveroos have made it very easy for you. There are a lot of competitors trying to compete for that, especially in a world where people are time pressed and need a bit more convenience and ease.”

Off the back of a new focus on the quality of their fresh food offer, Woolworths has seen a jump of 5% in comparable sales in the last half of 2017. As with all brand challenges, the first step is identifying the underlying consumer behaviuor. For the first time (at least outwardly) we are seeing a player in the grocery market here really grab the bull by the horns, identify the threat, and look to implement a new strategy for the future.

We’ll watch with interest to see how the Woolworths product and service offering and brand tackle this challenge and take advantage of the potential to lead the rest of the category.

Pic courtesy Eduardo Soares and charlesdeluvio on Unsplash

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