Ultrafast grocery delivery start-ups came with a bang but seem to have fizzled out in a jiffy. Their apparent debacle however has somewhat created a little gap in the market which local independent stores are best placed to cater to.
Instant or quick grocery delivery firms burst onto the UK market during the pandemic, becoming the poster child of tech start-up world, their so-called “golden egg”.
Between 2020 and 2021, companies promising to bring essentials to your doorstep in 15 minutes or less collectively raised more than £5.34bn.
This gigantic level of investment gave birth to many new and revamped some existing speedy grocery delivery brands like Gorillas, Zapp, Jiffy and Getir. They hired en masse and expanded into new markets at breakneck speed. Established food delivery brands, notably Deliveroo and Just Eat, also jumped in, venturing into the space, alongside the big supermarket giants themselves.
Usage of rapid grocery delivery apps quickly soared with heavy discounting and attractive introductory offers encouraging rapid customer uptake. These companies were typically marked by flashy branding, aggressive marketing and steep discounts.
During its peak in 2020 and 2021, it was often said that quick or rapid grocery delivery services would eventually change the grocery-buying habits of Brits, thus potentially threatening independent convenience stores. However, in less than two years, the landscape has changed back dramatically. As the threats of Covid subsided and fears of inflation and recession took over, changes had to be made again, this time to cut down on spending. As a result, convenience took a back seat as focus shifted to save extra costs.
Delivery eats itself
Some of the start-ups that enjoyed instant fame during the pandemic have since been acquired by the more successful players while some are barely surviving.
Mergers, closures and a funding slowdown have reshaped the rapid delivery space, leaving fewer players standing. Many of those remaining are scaling back operations and pulling out of geographical markets. One indicator that consumer desire for speedy delivery is slowing down is the reduction of downloads of the apps. All the major speedy grocery apps have seen year-on-year dips in their download rates.
British startup Zapp has seen the biggest drop in downloads between Q3 2021 and Q3 2022, with 91 per cent fewer downloads. Getir dropped 45 per cent, Flink 47 per cent and Gorillas 61 per cent. Only GoPuff saw a less than double-figure drop – with just a 6 per cent fall.
Fleets of drivers to fulfill the promise of speed, the rising cost of fuel, and the running costs of office space, wages, advertising and discounts sucked up the funding. May 2022 is deemed as the crunch month in the industry. In the space of two days, German grocery app Gorillas, Turkish app Getir and British app Zapp laid off workers, closely followed by news of market exits.
Getir delivers groceries in cities in as little as 10 minutes from so-called "dark stores" - city-centre depositories - charging a mark-up on supermarket prices.
Though it secured a £410m cash infusion recently, media reports say the company bleeds an estimated £80m per month. Getir has lost 80 per cent of its valuation since spring 2022.The company recently laid off 2,600 people and shuttered operations in Italy, Spain, and Portugal. The Turkish firm, which has 23,000 staff in markets such as the UK and Germany, said the cuts would improve "operational efficiency".
Today, Getir is said to be “nowhere near” in establishing a clear path to profitability. Quick commerce industry experts like Sujeet Naik, an analyst at Coresight Research, has cautioned the company to “fix its model first”.
Berlin-headquartered Gorillas launched in London in 2021, with an aggressive marketing campaign and fast-paced establishment of dark store locations that quickly cemented it as a major player in the UK rapid grocery delivery scene.
Gorillas, fueled by millions of dollars of venture capital, soon reduced its UK workforce and withdrew from five British towns and cities. It was later acquired by Getir.
Even the acquisition of two of the largest players in the sector saw cuts to their valuations in the deal terms. Experts even state that Gorillas had no other choice but to sell, as despite the rapid head count reduction, the path to profitability was going to take a lot longer than the burn rate.
While Getir’s acquisition of its rival Gorillas was widely seen as a victory, those who came from Gorillas point to systemic challenges they were facing that suggest Getir too is cutting corners. Riders often raise issues like faulty batteries, pressure to hit faster delivery times, against computer-generated estimates that fail to account for traffic, stairs, or a failing battery on a poorly maintained bike.
Buzz on social media was that Getir’s UK arm was reportedly auctioning off motorbikes, helmets and even fridges in an attempt to mitigate cash flow issues. Staff were also asked to go door-to-door offering discounts and free merchandise to boost sales.
Now the Turkish startup once valued at almost £9bn is chasing growth by making its service available via Uber’s platform in a bid to tap a larger user base. Getir says it’s drawing on Gorillas’ network of dark stores to power the grocery delivery partnership with Uber Eats.
It’s not only about Getir and Gorilla. Several instant grocery delivery apps have fallen like a pack of cards over the last 18 or so months.
Founded in London in 2019, Weezy picked up more than about £16m funding in less than two years. It never made a profit, however, its acquisition by Getir spared it from facing the bursting rapid delivery bubble.
London grocery delivery upstart, Jiffy nabbed £23m in Series A funding around half a year after initial £2.6m seed raise. Jiffy had all the typical features of archetypal rapid grocery delivery startups- sending supermarket products straight to consumer’s homes in minutes from dark store locations.
In 2021, Jiffy made just under £2m in revenue compared with pre-tax losses of £9.5m. Jiffy has now changed paths and has pivoted away from its consumer-facing delivery business to focus more on providing software to other ecommerce brands.
Zapp is trying to be unique with a premium model in which it focuses on serving more affluent areas. Costs for consumers are also higher, based on the idea that the products being purchased are of a better quality. It reported losses of £76.2m on turnover of £11.5m in 2021.
Zapp has now realigned all its resources solely to London after exiting markets such as the Netherlands and other British cities like Manchester.
The rise of Locals
Providing last-mile or home delivery to its customer base was not a new concept for local stores and corner shops. They have been doing this for decades, majorly through orders placed through phones and mobiles.
At the time of the pandemic, most local retailers further rose to the occasion while several of them started offering quick and instant grocery delivery in their communities. While many maintain their own fleet of vehicles, including electric bikes and electric cars, with some also coming up with their own independent apps for placing delivery requests, a lot many more resort to third party delivery services like Snappy Shopper.
Snappy Shopper partners with thousands of small business owners who have been serving their communities for years, some for generations, enabling them to not only serve their customers better but grow their own business reach geographically as well.
Dundee-based Snappy Shopper has raised a seven-figure sum to invest in the convenience store home delivery platform’s growth plans and core technology.
The company has achieved triple digit average annual revenue growth since its inception in 2018, hitting the 50 million products sold and more than five million orders placed through the platform milestones during 2022.
Noteworthy here is that the Scottish firm charges the same amount for products as in store, while competitors impose a significant mark-up.
For retailers like Glasgow-based Premier store owner Girish Jeeva, home delivery through Snappy Shopper adds another funnel of extra sales.
"When we first started on the Snappy Shopper platform, we were only doing £500 weekly sales but this has increased majorly reaching £10k- £13k and is still growing to this day,” he says.
“This requires us to have at least 2-3 drivers on shift each day as well as having backup drivers to cover busy periods such as our 1p deals run in tandem with Snappy Shopper. These deals help us to help our customer base during times when a lot may struggle, such as the holidays. We have reached 500+ deliveries weekly and this is increasing week in and week out thanks to the service and experience we provide,” he adds.
For retailer Imran from Londis Kings Park in Glasgow, £8,000 a week comes from Snappy Shopper with 80 per cent coming from new customers who otherwise don’tcome to the shop.
Retailer Raj from Premier Rawmarsh in Sunderland states that the Snappy Shopper sales account for 20 per cent of its overall store sales and over half of them are new customers. The basket spend is really good and Snappy Shopper also gave him a lot of support with the launch with Facebook ads and leaflet drops.
It was reported recently that Snappy Shopper’s partnership with Nisa has delivered £12m in sales since they joined forces in 2020. With a total of 77 Nisa stores across the UK, the number of orders hit nearly 500,000, with an average order value of £26.70.
So far, Snappy Shopper has been focused on the UK convenience sector but plans to expand to other high street retailers.
The business is now planning to capitalise on the slowdown of the dark store operating model and capture consumer demand by enabling existing local shops to offer a quick e-commerce service.
24houralcohol is another innovation that maps all the stores, supermarkets as well as independent stores on a map, and allows shoppers to place order from any through third party services like GoPuff and Beelivery.
These are simply some excellent examples of how e-commerce can work in partnership with local retailers to the benefit of customers- a complete win-win solution for everyone.
Going for it
Q-commerce and food aggregator partnerships are also hot. It allows grocery delivery firms and food aggregators to receive some of the benefits of a merger without actually having to go through a merger, almost like they are dating to test whether a closer long-term relationship can help them reach profitability.
Back in 2020 when instant delivery apps were in boom, concerns were also raised overgrowing number of dark stores, saying they would drain life from the public spaces and eventually create a society of homebound consumers. However, seeing the debacle of instant grocery delivery apps within three years, that forecast seemed to be too far-fetched and a borderline exaggeration.
Brick-and-mortar stores are here to stay for a long time to come though it is always wise to up the game with changing times to give the add-on services to those who desire.
Since consumers are now open and warmed up to this idea of ordering groceries at home, it is need of the hour that indie stores too take the trust that they have earned over decades to the online world and capture their fair share in instant delivery.
Most (70 per cent) of consumers are more likely to visit the high street after online retailers introduce return fees, shows a recent survey, indicating a shift in consumer buying habits.
According to the findings from consumer insights platform Vypr, 70 per cent of shoppers say they are now more likely to visit bricks and mortar stores rather than shop online due to the added costs of returning unwanted items.
The research highlights a growing dissatisfaction with the rise of online return fees, with 47 per cent of consumers stating they would avoid purchasing from retailers that charge for returns as they don’t believe their products are unique enough. A further 27 per cent said they would stop shopping with such retailers as a matter of principle.
While online shopping continues to be a dominant force, the research signals potential cracks in its convenience. Brands like Boohoo and ASOS, which have recently introduced return charges, may be particularly vulnerable as shoppers lack strong brand loyalty.
27 per cent of consumers said they think these retailers offer similar products to their competitors, making it easier to shop around for better deals. 53 per cent of those surveyed will be buying less from ASOS after the charges were introduced and 51 per cent shop less with Boohoo.
The growing frustration with online shopping is further exacerbated by issues with sizing and quality. According to Vypr’s survey, the most common reasons consumers return online purchases are due to items being smaller than expected (26 per cent), lower quality than anticipated (17 per cent), and larger-than-expected sizing (14 per cent).
Ben Davies, founder of Vypr, commented, “The rise in return charges reflects a broader shift in consumer sentiment. As confidence in online sizing and quality inconsistencies drops, many shoppers are reconsidering where they spend their money. One in 10 consumers say they typically order multiple sizes of the same item, knowing they’ll return some.
"Retailers must do more to improve size guides and product descriptions to help shoppers make better-informed decisions from the outset.
"As online shopping becomes more expensive and less distinct, it’s possible we could be witnessing a return to high street shopping — not only as a more reliable option but also as a more sustainable one, given the reduced packaging waste compared to online purchases.”
The research also reveals growing support for independent retailers, with 60 per cent of consumers now preferring to shop with smaller, independent brands over larger, fast-fashion retailers. Additionally, 64 per cent of respondents reported receiving better customer service from independents, compared to the experience with major online retailers.
World foods leader Surya Foods said it has acquired a major stake in leading health snack brand Karma Bites, as part of a series of moves to up its presence in the snacking arena.
Karma Bites produces a range of naturally flavoured, popped lotus seeds, a popular snack with a rich history in Chinese and Ayurvedic medicine - recognised as among the most nutrient dense seeds on the planet.
They have the moreish crunchiness of popcorn, and are packed full of protein and nutrients. The clean label range comes in five sweet and savoury flavours including: Himalayan pink salt, Peri-Peri, Wasabi, Caramel and Coconut & Vanilla. The range is also vegan, gluten free, non-GMO and free of refined sugars.
“My Grandma introduced me to the magic of popped lotus seeds. They have been a staple in my family for three generations, so I have experienced the benefits of these miracle seeds first-hand,” Karma Bites founder Ashwin Ahuja said.
“When I launched Karma Bites I was so excited to share them with the world and spread goodness! Working alongside Surya Foods, my aspiration is to take Karma Bites on the next big step of its journey - to scale up production, distribution, enter multiple markets and expand the range.”
“The superfood credentials of lotus seeds has helped the product take off in health conscious markets across Australia and the US (Los Angeles). The UK market generally follows these trends and there is a definite shift here in people understanding how their food choices impact their health,” Ahuja added.
Surya Foods plans to expand the brand with a swathe of NPD, to up its presence in the healthy snacking arena, and use the contemporary design of the brand to gain greater access to mainstream markets.
Surya Foods achieved an impressive 30 per cent increase in revenue last year and now supplies almost half of the UK’s branded dry rice supply across its leading UK Top 10 rice brands; Laila, Salaam and Mai Thai.
The food giant has also announced significant expansion plans at its Harwich site which will bring 200 additional new jobs to the Essex area over the next three years. It is on course to open a brand new custom-built, 40 acre head office/distribution centre, with 250,000 sq ft of storage facilities in Essex by 2026.
In 2020, Surya Foods made its first move into the snacking category, pouring £2m into a state of the art snack factory at its Harwich site. The factory currently produces snacks for its market leading brands including Laila, Thai Dragon and Kingstons, as well as offering private label services across a broad range of products.
Harry Dulai, group chief executive officer of Surya Foods, said: “We are pleased to have acquired a major stake in Karma Bites, which is a stylish contemporary brand with lots of mainstream potential. It aligns well with our plans to grow our snacking portfolio with several new launches in 2025. We continue to invest in the Harwich site to support our expansion plans and are committed to creating ‘better for you’ snacks, that have an improved nutritional profile.”
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Paški Sir PDO (Pag cheese), a sheep milk cheese from the Croatian island of Pag
The EU will remain a key resource for the UK food and beverage industry despite the challenges imposed by Brexit, according to new insights from UK industry supply chain professionals.
A survey carried out on behalf of the European Commission, which interviewed wholesalers, importers, producers and HORECA (Hotel, Restaurant and Catering) professionals across seven different food and beverage sectors, revealed that the majority will continue to import from the EU over the next 12 months.
Respondents from the wine and dairy/cheese sectors are 100 per cent committed to sourcing additional SKUs from the EU over the coming year, the data revealed. Whilst beer and spirits (80%), charcuterie and meat (80%) and bakery (70%) also showed a clear commitment to the EU.
In contrast, it is the confectionery and fruit & vegetable sectors which expressed the highest level of uncertainty or non-commitment. Both sectors only showed a 30 per cent commitment to sourcing additional SKUs from the EU in 2025, according to the data.
UK industry respondents cited quality (95%), pricing (81%), authenticity (78%) and sustainability (77%) as the most important factors that they consider when adding new SKUs to their product ranges. In parallel, authenticity and tradition were voted the most popular characteristics of EU food & beverage products (79% and 70%, respectively), whilst diversity (64%), good taste (62%), safety (59%), and high quality (54%) also ranked highly by those who were questioned.
When it comes to the wider merits of EU food and drink, more than two-thirds of respondents (66%) agreed that the EU’s Protected Designation of Origin (PDO), Protected Geographical Indication (PGI) and Organic labels are either ‘very important’ or ‘somewhat important’ when sourcing ingredients. Overall recognition of the three labels amongst the UK industry is high – around two-thirds know what they are and what they mean. The European Organic Products label is the most widely recognised (93%), while the PGI label is the least recognised of the labels, however recognition is still high (78%).
The research was conducted in April 2024 against the backdrop of the UK government’s Border Trading Operating Model, which set out a new approach to security controls with the aim of maintaining border security while minimising trade burdens.
“These insights demonstrate that despite the challenges and complexities of new cross-border trade agreements, the EU remains a valued partner and important resource for the UK’s food and drink industry and is likely to remain that way”, says Andrew Crumpton, founder of AMC Consulting and advisor to the ‘More Than Only Food & Drink’ campaign.
Veryan Bliss, managing director of Food Intelligence and fresh produce advisor to the EU’s ‘More Than Only Food & Drink’ campaign supports this view.
“It is clear that the relationship between the UK and EU is incredibly important. In 2023 the UK was the number one destination for EU agri-food, accounting for 22 per cent of exports and with a value of €51.3 billion,” Bliss said.
“The geographical diversity of the EU ensures a steady supply of seasonal produce and often complements the UK’s own growing patterns. When certain crops are out of season in the UK, EU producers support the offer, ensuring that UK retailers can offer a consistent, high-quality selection to consumers throughout the year.
“However responses from fruit and vegetable industry professionals highlight the impact of controls for fresh produce, which have been complex and changeable.”
“But with an easement on fresh produce checks now in place until July 2025 and confirmation that several fruit and vegetable products, which were previously deemed medium risk have now been changed to ‘low risk’, there is an increased potential for UK importers to benefit from the quality of organically and sustainably grown produce from the EU.”
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Vuse celebrates its position as the first global carbon neutral vape brand with a carbon neutral summer voyage down the Thames in 2021
British American Tobacco (BAT) has reported significant progress in its New Categories segment—comprising vapour, heated products, and modern oral—with strong growth in revenue and profitability during the second half of 2024.
In a trading update on Wednesday, the company said it is on track to deliver its 2024 financial year guidance, with the second-half performance acceleration driven by the phasing of New Categories innovation, the benefits of investment in US commercial actions and the unwind of wholesaler inventory movements.
BAT said its flagship vapour brand, Vuse, maintained its position as the global value share leader, achieving a 40.3 per cent share in key markets. Despite challenges posed by illicit single-use vapour products, particularly in the US and Canada, BAT said its investment in innovation and regulatory advocacy has positioned it well for future gains.
“Our Quality Growth imperative is delivering higher returns on more targeted investments across all three New Categories, and that prioritisation and focus is already transforming our business in Europe,” Tadeu Marroco, chief executive, said.
“We are making further progress increasing profitability across New Categories, and I am particularly pleased with the improvements in Heated Products and Modern Oral.”
BAT reinforced its leadership in the US, where Vuse captured 50.7 per cent value share in tracked channels, benefiting from stronger enforcement against illicit products in states like Louisiana. Globally, Vuse’s share remained stable, reflecting its strong brand equity.
Velo, BAT’s modern oral brand, demonstrated robust growth with its volume share in top markets rising to 28.2 per cent. Enhanced portfolio offerings, including new flavours and nicotine levels under Velo Plus, bolstered its momentum in the US and Europe.
Innovations such as glo Hyper Pro have shown promising results in improving BAT’s share in the heated tobacco market, particularly in Japan and Italy.
The company expects low-single figure organic constant currency revenue growth and low-single figure organic adjusted profit from operations growth in 2024. Marroco highlighted the company’s strategic pivot toward becoming a predominantly smokeless business by 2035, reiterating a commitment to sustainable value creation.
“Building on the strong foundations we have established, I am confident that we will deliver an improved underlying performance as we move from investment to deployment in 2025,” he said.
“We will continue to reward shareholders through strong cash returns, including our progressive dividend and sustainable share buy-back, and we remain committed to returning to our mid-term guidance of 3-5 per cent revenue and mid-single digit adjusted profit from operations growth on an organic constant currency basis by 2026.”
A 5p reduction in business rate multiplier will save convenience stores thousands of pounds per year which will help retailers invest in their businesses, ACS Government Relations Director Edward Woodall has said while giving evidence to a Committee of MPs in parliament today (11).
The Non-Domestic Rating (Multipliers and Private Schools) Bill intends to introduce higher business rates multipliers for the largest business properties (those over £500,000 in rateable value) and lower multipliers for retail and hospitality businesses. Following the Budget, the business rates discount for retail and hospitality businesses is reducing from 75 per cent to 40 per cent in April.
One of the considerations of the Bill is the level at which the new retail and hospitality multiplier could be set at. The small business multiplier is currently set at 49.9p, while the standard non-domestic rating multiplier is set is 54.6p.
During the evidence session, Woodall told the Bill Committee that to make a tangible difference to local shops and other businesses, the new multiplier should be set up to 20p lower than it is currently which would result in savings of thousands of pounds a year for essential retailers that could be put to use effectively.
ACS Government Relations Director Edward Woodall said, “The vast majority of convenience stores would benefit from the new retail and hospitality multiplier. For a retailer that sits just outside the threshold of small business rate relief at £15-16k rateable value, a 5p reduction in the multiplier would save them around £1,000 per year while a 20p reduction would save over £3,000 a year.
"This is a significant sum to help retailers invest in their business, either defensively on crime prevention and detection, or positively in their community.
"There are however thousands of stores that are dealing with increased costs in other areas of their business, particularly on employment, so for those businesses it is likely that the money saved on rates will go straight into keeping that store trading.”
ACS wrote to the Chancellor in advance of the evidence session outlining the costs that retailers are facing as a result of the measures outlined in the Budget. Overall, the convenience sector is looking at an increase in operating costs of around £666m, primarily in additional business rates, National Insurance contributions and National Living Wage increases.
During the evidence session, Woodall also highlighted the importance of discretionary rate relief for rural businesses, particularly those that are operating as the last local shop in that village or rural area.
Woodall said, “Reliefs for businesses that are trading in rural areas with communities that rely solely on them are extremely important, but it is challenging for the Bill to be able to address this effectively as there are often more differences within a region than there are between regions.
"We believe that the most effective relief for these businesses is distributed by local authorities, but we know that their budgets are extremely stretched, so it’s important that the Government looks at putting additional resources and trust in local authorities to deliver discretionary reliefs that support the last shop trading in rural areas.”