I’ve been writing about the future of convenience retail for five years and am thrilled to finally see some new companies emerge outside the traditional business model. Convenience stores (c-stores) are being pushed by three big evolutionary forces. As these forces converge, convenience retail as we know it will be obsolete unless they are positioned in a new light. Find out more in this Retail Mashup insight through the lens of Deliveroo.
Table of Content
Deliveroo operates a local “three-sided” marketplace, connecting 1. local consumers, 2. restaurant and grocers and 3. riders together on purchases in under 30 minutes. Since its 2013 introduction in the UK market, the food delivery service has grown to more than 160,000 partners and expand into 11 markets worldwide.
Number of restaurant and grocer partners as of 2022:0
On October 23, 2022, the service opened its first grocery store located in London, United Kingdom. Named “Deliveroo HOP”, the concept allows customers to shop in-store by:
1. Purchasing through newly designed digital kiosks,
2. Ordering via the Deliveroo application for collection at the store, or
3. Ordering vis the Deliveroo application for delivery within minutes to various locations
This concepts allows the service to satisfy customer needs who only decide on what to have for dinner on the day of or buy some ingredients on their way home with some flexibility.
Beyond building new ways to interact with customers, there are three other concepts to consider: fuel, delivery, and remote work.
The Electric Vehicle (EV) is not going away. Most major car manufacturers are well on track to convert half, or even all new car production to EV by 2030, with many on track for 2025. Governments are funding new focus on our EV charging infrastructure. The vast majority of this charging will happen in homes, city streets, office complexes, shopping centers, big box stores — all places that are not convenience store fuel centers.
Instead of popping down to the local convenience store, more and more people are simply ordering online for delivery. Would you rather go out and get it or order from Deliveroo, Shipt, Walmart, or even have it sent by drone from Walgreens? Last year over 70% of Americans tried home delivery for grocery and convenience products at least once and 3 out of 5 U.S. consumers use it regularly. Speed is the only challenge right now but solutions are continuously improving.
Currently almost a quarter of the U.S. workforce works remotely, a number that has tripled over the last 5 years. And estimates for the future only point upward. Even if your job is hybrid, that’s two or three days less each week you commute. For convenience stores, commuters are their main business driver.
Some c-stores have stepped up to rethink their product mix, experiment with home delivery or amp up their food offerings. But this won’t be enough to weather the impact of a fully engaged EV market, where home delivery can be automatically pre-scheduled, and even more jobs become remote. C-stores have the big advantage of being located deep within communities.
Deliveroo is monetizing this advantage by offering micro-fulfillment services to retail partners and becoming a centralized pick-up/returns point while still giving consumers a streamlined in-store option with a live staff member to ensure a positive customer experience.