Retailers are facing more competition as home delivery services grow in popularity but should C-Stores follow suit?

July 3, 2017
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Home Delivery - Community Care, Profit or Both?


Home Food Delivery

Retailers are dealing with more competition than ever, whether it’s the supermarkets pushing to regain their market share or the speedy service from discounters and other local convenience stores.

The emergence of the ‘Want It Now’ culture, especially in young shoppers, leaves retailers facing new challenges. Amazon Fresh, for example, is a home delivery service and currently available in 69 UK postcodes while Amazon Go, a rethink on the traditional C-Store formula is making waves in Seattle.

It’s not just innovators that are changing the game, however. Major supermarkets such as Tesco are also trialling same-day delivery slots to cater to this growing, impatient market. Suddenly, convenience stores don’t sound so convenient.

Do you offer home delivery?


That’s not to say that C-Stores don’t offer any form of home delivery. In one of our recent surveys, over 45% of respondents reported that a Home Delivery service was already something they provide in some shape or form.

So, is it smart business to offer this service as standard to combat larger competition?


Every retailer has their reasons to offer home delivery which range from hard economics to friendly community service.

We use an app and website called Order Vago. We provide this as this is a means to expand our catchment area and increase basket spend – Shahid Razzaq ‘Mos Convenience Store’ – Scotland

We currently offer our Home shopping service through phone orders, social media messages and in-store purchases that we then deliver. Initially, our thought process around home delivery was that as a Post Office our customer’s age demographic is quite high and there was a definite need. Since starting, we have seen the service expand to local camp sites and even beach deliveries – Vince Malone ‘Tenby Stores’ – Wales.

“Home delivery is via phone, and we offer it mainly to older people who are unable to get out we feel it is morally correct to help the older generations even if delivery is uneconomical – Steve Wright ‘S and J Trading’ – South West.

Overall, home delivery does not equal more turnover. In fact on average retailers that offer home delivery have lower turnover than others in their region. The difference, however, is not stark. 47% of retailers who offered a home delivery service demonstrated turnover up to twice the regional average, but this was offset by the poorer performance of the remaining 53%, this results in home delivery performance below the regional average.


Headline Stats

-13.5%

Home Delivery Shop Sales vs. Regional Average
-12.4%

Home Delivery Shop Footfall vs. Regional Average
-2.61%

Home Delivery Basket Size vs. Regional Average


It’s not all bad news, however, when you take into account regional differences. If you’re located in London, the North East, North West or the South West then offering home delivery could lead to turnover up to 40% above your regional average. This is not the case for other parts of the UK.

Obviously, it’s impossible to say whether home delivery is the driver for the great performance of some and the not-so-great performance on others. The numbers do suggest however that home delivery is certainly not driving turnover. It is important to remember the other big reason that retailers offer home delivery…as a community service.

A C-Store’s most important asset is its local community. Conscientious retailers offer services with little financial benefit as part of their duty to the community. The retailers we spoke to understood the importance of their local community and offered home delivery even though it is not always economical.

So, if you’re thinking of offering home delivery, make sure your heart’s in the right place to avoid being disappointed.

Methodology:

The conclusions above were carried out by analysing the average monthly sales, footfall and basket size for retailers that reported they offered a home delivery service and compared it with other stores in their region.

Our data covers over 2,600 retailers throughout the UK and is updated daily.

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