Friday, March 1, 2024

The Friday Checkout: Quick-delivery industry slows down

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The Friday Checkout is a weekly column providing more insight on the news, rounding up the announcements you may have missed and sharing what’s to come.

The once-smoking-hot quick-commerce industry is rapidly cooling down, changing the calculus for established grocers that had been forced into rapid-reaction mode by a new breed of e-commerce firms bent on redefining the concept of “speedy delivery.”

On Thursday, Food Rocket, a Chicago-based startup that had been looking to bring its 15-minute delivery service to multiple U.S. cities and drew backing from convenience store giant Circle K, said it has shut down after running out of money. The same day, Gopuff cut 2% of its staff in its third round of layoffs in less than a year as it looks to conserve what remains of the billions of dollars it has raised from investors.

Those developments are just the latest in a series of setbacks that have recently rocked the quick-commerce sector, which saw several other newly established players, including Fridge No More, 1520, and Buyk, exit the business last year. The companies’ disappearance, along with the Gopuff’s struggles, could further reduce pressure on retailers to come up with strategies to serve shoppers interested in getting their online orders on the double.

It also means that established retailers like Kroger and Ahold Delhaize may be in the best position to offer rapid delivery service in the years ahead.

Kroger became the first major grocer to push into the quick-commerce sector in 2021. The chain worked with Instacart to launch a virtual convenience store offering 30-minute delivery of a range of products September 2021, and chains including Publix, The Giant Company and Stop & Shop all launched 30-minute convenience delivery services in conjunction with Instacart later that year. Schnuck Markets followed suit last October.

Speaking during an earnings call last week, Kroger CEO Rodey McMullen said the company’s 30-minute service, known as Kroger Delivery Now, has been beneficial for the grocer. “This seamless ecosystem makes any shopping experience simple for our customers,” he said.

Also in late 2021, Ahold Delhaize President and CEO Frans Muller told investors the Dutch grocery chain was looking into whether to launch its own instant delivery service to combat the startups that had rolled onto the scene.

As the quick-commerce sector increasingly accelerates in the wrong direction, however, grocers now face the question of whether steps they have taken to offer faster delivery are necessary to satisfy shoppers, or if reliable, affordable delivery at a more relaxed pace is enough.

In case you missed it

HelloFresh’s earnings droop

Meal kit companies were all the rage during the pandemic, but have since lost momentum and are struggling to remain relevant and profitable. HelloFresh’s fourth-quarter earnings results, released earlier this week, showed a downturn in the company’s active customers in the U.S., which dropped to 3.37 million from 3.52 million in Q4 2021. and a drop in the number of U.S. orders, decreasing 0.3% year-over-year.

The meal kit company’s number of meals delivered in the U.S., though, was up 1.6% year-over-year during the quarter.

Grocery shopping for kids

More than 20% of Gen Alpha parents with children ages four and under reported taking their child’s views into account when purchasing groceries, according to survey data collected by Morning Consult in December 2022. The percentages increased from there, with age groups 5-7, 8-9 and 10-12 all falling between 20% and 30%. However, more than 30% of parents with teenagers reported taking their views into account when shopping for food.

The report also found that three-quarters of parents said kids ages four and under based their requests on specific food brands, noting that brand preferences often emerge at younger ages when it comes to food and TV shows in comparison to other categories, like apparel and electronics.  

A Giant Food store welcomes Nalley Fresh salad chain

The fast-casual salad chain is set to debut in an Ellicott City, Maryland, Giant Food store by the end of this month, according to local news reports.

The company, which serves salads, bowls and wraps, will have its own 325-square-foot section within the store and operate independently of the supermarket.

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