Tesco, Sainsbury’s and Marks & Spencer are under threat of losing hundreds of millions of pounds in sales to rapid grocery delivery companies, analysts have warned.
The explosive rise of firms like Getir, Weezy, Dija and Zapp, which promise to delivery groceries to customers in as little as 10 minutes, are posing a major threat to the UK’s largest grocers according to broker Berenberg.
“Marks & Spencer, Tesco and Sainsbury’s would face the greatest cannibalisation risk”, according to Berenberg analysts, who predicted the grocery giants could lose four per cent, three per cent and two per cent of their total sales respectively if they “do nothing”.
It added that their profits could be impacted even more as each runs their own higher-margin convenience store chains, which “would likely lose out the most”.
According to The Times, which first reported the research, Berenberg predicts that the rapid grocery delivery industry could be worth £4.4 billion by 2025.
It also suggested that customers are willing to spend around 20 per cent more for groceries delivered within 15 minutes to their locations.
While retailers like Tesco have launched their own rapid delivery services in an effort to compete directly, others like Waitrose, Co-op and Aldi have opted to partner with third party firm Deliveroo.
Berenberg warned that this was a dangerous strategy, as “giving away the data makes it easier for the aggregators to adopt a more economic inventory-based model themselves at a later date, thus shifting from a partner to competitor.”
Alongside its dramatic growth, Berenberg also predicted that there will be significant consolidation in the rapid grocery delivery industry, stating: “Despite the availability of seemingly limitless funding, there are already signs that the market will not support so many players . . . and we expect further consolidation in this nascent industry in due course.”