Posts Tagged ‘flexibility’

The “Home Delivery Trap”

I was watching TV this week – the Money Programme – looking at supermarket spending habits during the recession.  Interestingly, Fairtrade purchases have increased over the last 12 months, ‘Organics’ have fallen off a cliff.

During the programme, one family was asked to stop its weekly Tesco shop, and instead try in turn: shopping on the urban high street (butcher, greengrocer…), Iceland, and purchasing only ‘Value’ items.  All three turned out to be cheaper (in 2 cases, up to 25% less) – however, at the end of the trial, the shopper stated that she was going to carry on using Tesco for her weekly shop.  When asked why, she said that she liked the flexibility and convenience of shopping on line and having it delivered.

Clearly, shopping on line is here to stay, which is a mixed blessing for the retailers.  As a process, it is one of the most inefficient going – supermarkets now have legions of staff walking round their own stores, picking up items that their colleagues have put out a few hours before, bagging them, putting them in plastic boxes, and then passing them to other colleagues to drive them up to customers’ houses.  The economics are nutty.  But the supermarkets are caught in a tight spot – what they would love is for you to pick it up yourself whenever possible, and pay a hefty premium for the convenience of home delivery.  The premium being charged is too low, but is now a ‘market rate’, and scope for increasing appears limited.

How can the supermarkets create a change in customer behaviour that will address these issues?  Slots could be reserved by geographic area – larger vehicles carrying out more drops in a smaller area may help a bit.  Or maybe setting up a dedicated delivery network – Waitrose, via Ocado, have a parallel sales channel, which may have slightly better economics, but it’s not  a breakthrough.

I am not sure the current ways of working can last forever – the supermarkets will look for ways to change customer behaviours, either through rewarding store visits, or limiting home deliveries, to get more of us back into the stores.

But if the Money Programme is to be believed, if we have to go to the stores, we may go elsewhere…

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