Daily Management Review

Discount Grocers To Focus On Home Delivery As Consumer Preferences Change Due To Covid-19


Groceries in the United Kingdom, other parts of Europe and in the United States is anticipating a shift to home delivery of products beyond the end of the novel choronavirus pandemic crisis which has prompted the German discount supermarket chains Aldi and Lidl to accelerate their push into home delivery.
Prior to the retail supermarket industry being hit by the pandemic, the two German retailers had been expanding at a frantic rate particularly in the United States and the UK. However since then, the duo has been steadily losing market share in Germany and France and had stalled in the UK.
And, according to data from research companies Kantar and Nielsen, since the lockdowns were imposed in various markets to prevent the spread of the pandemic in those markets, the two discount retailers have been losing out market share to larger supermarkets because consumers started making fewer trips to supermarkets with preference for those stores that offered a wide range, choice and branded goods.
On the other hand, many older customers are also being attracted for the first time to some supermarket brands because of home delivery and curbside pick-up services.
This shift in consumer preference and trend has forced the retailers to focus on online sale efforts that had been overlooked previously even though it has been contended for long that the costs involved in delivering of fresh food is completely incompatible with the business models of the discount retailers because of their reliance on low prices which consequently yield lower profit margins than the larger supermarket chains.
"The coronavirus outbreak is likely to accelerate the digital transformation," said Maxime Delacour, analyst at retail research group IGD. "We’re expecting to see many more e-commerce developments from both retailers in the immediate future."
One of the major factors that had contributed to the success of the two family owned companies I the ability of the companies to keep running costs low by stocking of a limited range of goods, increasing profit boosting margins by selling a high proportion of own-label products and special offers on non-food products.
It is only in recent years that Aldi and Lidl have started to sell those higher-margin non-food ranges online. Those products include products such as garden furniture, clothing and even `washing machines. But the two companies have refrained from delivering groceries themselves in most of t largest markets.  
However in countries like the UK, there is a rising demand from customers for home delivery. According to market researcher Nielsen, since the arrival of the novel coronavirus pandemic, the online penetration of the grocery market in the UK has almost doubled to 13 per cent.  
"It would make my life much better if Aldi just started doing online shopping," said Shannon Read. A petition to urge Aldi UK to being home delivery of products at a time when she was unable to get any baby formula delivered to her home when Britain was under a lockdown because of the pandemic.
"Our curbside grocery pick-up pilot was quickly embraced by our customers and demand for this service has continued to increase," Jason Hart, chief executive of Aldi in the United States, said in a statement.