Immediacy and ever faster fulfilment have been growing trends in UK retail for many years with every innovation attempting to go faster than the one before. Since the start of 2021, while the UK has been ticking off the last days of lockdown and a return to normality, some major changes to the grocery market have been coming to life – initially in London but with ambitions for further cities around the UK.
Ultra-fast grocery fulfilment is not in itself new but two new players have entered the market with a different operating model and backed by serious private equity financial firepower to bring it to life in a crowded and established market.
Dija and Getir draw their experience from different backgrounds. Dija based on a founding team drawn from experience of rapid delivery at Deliveroo. Getir from delivering rapid groceries on the crowded streets of Istanbul from 2000 fulfilment points. Where they align is that both target 10-minute fulfilment times for a wide range of core grocery products. Customers place orders via an app, they are picked in micro-fulfilment hubs and delivered to customers doors on mopeds.
The key point of difference is that for the first time the product and the delivery channel have been brought under one roof in a new vertically integrated way. This will give both players critical advantages which can leverage the speed of delivery; they control range as they have direct relationships with brands and manufacturers and crucially, they control availability as orders are fulfilled from micro dark stores dotted across the capital.
All attempts at offering a similar model to date have been dependent on a ‘logistics’ provider e.g. Deliveroo, Uber Eats, Chop Chop etc visiting a physical store e.g. Coop, Sainsbury’s to collect and deliver orders. Crucially as the stores have customers constantly shopping their ability to feed on shelf availability through to an app in the customers hands is challenged. Dija and Getir control both elements so will be able to provide a better service for customers. Availability as in all retail is key, if a customer is prepared to pay a premium for fast delivery, knowing that they will get the item they need to complete the evening meal or kids lunchbox is vital. Substitutions do not add value in this space.
The simplicity and flexibility of the fulfilment operation allows new fulfilment sites to be expanded at pace. With many vacant stores, offices and light industrial space available post pandemic and a model that is simpler to deploy than Ocado’s micro hubs, Dija and Getir can expand with customer demand and add new areas to the solution quickly. Without the baggage of an existing store infrastructure and with significant private equity backing they have the potential to steal a march on urban fulfilment while the established players aren’t looking. It is also challenging for the established players to compete for example building the logistics capability is niche and they can’t leverage existing scale. Guaranteeing availability without establishing more stocking locations is a challenge, as is leveraging existing in-store labour. Factoring in a focus to return to ‘business as usual’ and a need to focus on the core could show that Dija and Getir’s timing has been perfect.
The post pandemic return to normal also provides another major opportunity for the disruptors. It is one thing city workers returning to the office and getting to grips with commuting but visiting small Express and Local convenience stores at lunchtime or at the station could be a step too far in a socially distanced world. The ability to have tonight’s meal and other top up essentials delivered swiftly to your desk as soon as you think of them is game changing, add in perfect availability and it is hard to see how the established players can compete.
Dija and Getir are also able to face into the challenge of how to make direct fulfilment profitable. As they can reasonably expect customers to pay for convenience and service speed and crucially do not need to maintain alignment to an in-store price book they can aim for a balanced margin model once they reach scale. With an experienced team of buyers from the top UK grocery retailers aligned to a tried and tested operating model it is not unreasonable that in time this can produce a profitable operating model that can win customer confidence based on price, availability and speed of service.
Dija and Getir are bringing an exciting innovative solution to the UK. Their integrated laser sighted approach unlocks a credible new channel for brands and manufacturers to trade with and a simple solution for customers to use at work and at home. In many ways we are travelling back in time to the local grocer delivering groceries on a bike to your door however this is enabled by cutting edge tech and a seamless customer experience. It is likely that established convenience retailers in London will not see all of their customers return once the lockdown lifts and the trains start to fill up again.
Author:
Chris Moss, senior manager, Bearing Point
You are in: Home » Guest Comment » GUEST COMMENT Ultra-fast grocery fulfilment ready to accelerate post-lockdown
GUEST COMMENT Ultra-fast grocery fulfilment ready to accelerate post-lockdown
by Chris Moss
Immediacy and ever faster fulfilment have been growing trends in UK retail for many years with every innovation attempting to go faster than the one before. Since the start of 2021, while the UK has been ticking off the last days of lockdown and a return to normality, some major changes to the grocery market have been coming to life – initially in London but with ambitions for further cities around the UK.
Ultra-fast grocery fulfilment is not in itself new but two new players have entered the market with a different operating model and backed by serious private equity financial firepower to bring it to life in a crowded and established market.
Dija and Getir draw their experience from different backgrounds. Dija based on a founding team drawn from experience of rapid delivery at Deliveroo. Getir from delivering rapid groceries on the crowded streets of Istanbul from 2000 fulfilment points. Where they align is that both target 10-minute fulfilment times for a wide range of core grocery products. Customers place orders via an app, they are picked in micro-fulfilment hubs and delivered to customers doors on mopeds.
The key point of difference is that for the first time the product and the delivery channel have been brought under one roof in a new vertically integrated way. This will give both players critical advantages which can leverage the speed of delivery; they control range as they have direct relationships with brands and manufacturers and crucially, they control availability as orders are fulfilled from micro dark stores dotted across the capital.
All attempts at offering a similar model to date have been dependent on a ‘logistics’ provider e.g. Deliveroo, Uber Eats, Chop Chop etc visiting a physical store e.g. Coop, Sainsbury’s to collect and deliver orders. Crucially as the stores have customers constantly shopping their ability to feed on shelf availability through to an app in the customers hands is challenged. Dija and Getir control both elements so will be able to provide a better service for customers. Availability as in all retail is key, if a customer is prepared to pay a premium for fast delivery, knowing that they will get the item they need to complete the evening meal or kids lunchbox is vital. Substitutions do not add value in this space.
The simplicity and flexibility of the fulfilment operation allows new fulfilment sites to be expanded at pace. With many vacant stores, offices and light industrial space available post pandemic and a model that is simpler to deploy than Ocado’s micro hubs, Dija and Getir can expand with customer demand and add new areas to the solution quickly. Without the baggage of an existing store infrastructure and with significant private equity backing they have the potential to steal a march on urban fulfilment while the established players aren’t looking. It is also challenging for the established players to compete for example building the logistics capability is niche and they can’t leverage existing scale. Guaranteeing availability without establishing more stocking locations is a challenge, as is leveraging existing in-store labour. Factoring in a focus to return to ‘business as usual’ and a need to focus on the core could show that Dija and Getir’s timing has been perfect.
The post pandemic return to normal also provides another major opportunity for the disruptors. It is one thing city workers returning to the office and getting to grips with commuting but visiting small Express and Local convenience stores at lunchtime or at the station could be a step too far in a socially distanced world. The ability to have tonight’s meal and other top up essentials delivered swiftly to your desk as soon as you think of them is game changing, add in perfect availability and it is hard to see how the established players can compete.
Dija and Getir are also able to face into the challenge of how to make direct fulfilment profitable. As they can reasonably expect customers to pay for convenience and service speed and crucially do not need to maintain alignment to an in-store price book they can aim for a balanced margin model once they reach scale. With an experienced team of buyers from the top UK grocery retailers aligned to a tried and tested operating model it is not unreasonable that in time this can produce a profitable operating model that can win customer confidence based on price, availability and speed of service.
Dija and Getir are bringing an exciting innovative solution to the UK. Their integrated laser sighted approach unlocks a credible new channel for brands and manufacturers to trade with and a simple solution for customers to use at work and at home. In many ways we are travelling back in time to the local grocer delivering groceries on a bike to your door however this is enabled by cutting edge tech and a seamless customer experience. It is likely that established convenience retailers in London will not see all of their customers return once the lockdown lifts and the trains start to fill up again.
Author:
Chris Moss, senior manager, Bearing Point
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