Grocers must be wary of working too closely with foodservice deliverers, says GlobalData

Following the news that Sainsbury’s has moved into foodservice delivery via its new partnership with Deliveroo, Thomas Brereton, Retail Analyst for GlobalData, a leading data and analytics company, offers his view:

“A growing list of retailers have been forging alliances with foodservice delivery companies. For grocers, there are two short-term benefits: it enables a small but immediate foothold in the growing on-demand foodservice industry and it paves the way for potential expansion beyond foodservice to full food and grocery fulfilment (for small basket sizes).

“However, ceding control over the last-mile has its complications. Customer care sits at the core of Sainsbury’s business strategy, but this partnership puts the most customer-facing side of delivery in the hands of an external organization.

“Moreover, e-commerce giant Amazon recently invested £460m in Deliveroo, and if the deal progresses, it may cause a problematic scenario Sainsbury’s in which it is over-reliant on a competitor. If Amazon decides to significantly increase its presence in the UK food and grocery market, supermarket partnerships with certain foodservice operators are likely to be reviewed and possibly removed.”

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