Retailers, delivery services adapt to altered landscape

Meeting stay-at-home shoppers’ demands during — and probably after — the COVID-19 pandemic

When the COVID-19 pandemic began about a year ago, one of its first noticeable economic effects on retail was vastly accelerated growth in ecommerce. People couldn’t go out to shop, so they did their shopping at home. NRF’s figures show that ecommerce, which was about 11 percent of total U.S. retail sales in 2019, rocketed to 21.9 percent in 2020.

Along the way, ecommerce came to include categories like groceries that had largely or entirely been confined to in-store sales or informal, irregular home delivery. Groceries require particularly careful product picking and — given the nature of perishables — fast and accurate delivery. Although some larger chains handle some of their own delivery, the majority of grocers do not: Rather than build the needed communications infrastructure, vehicle fleet and staff, they outsource to delivery services.

Those delivery services are themselves dealing with new challenges, both in terms of increased volume and evolved customer expectations. A lot of people don’t want strangers to come into their homes during a pandemic; they also don’t want their groceries stolen off the front porch. Secure noncontact delivery, therefore, has become a thing.

“Consumers expect more items — whether it’s wellness products, pet supplies or home décor — to be delivered quickly and safely to their homes.”

Rina Hurst, Chief Business Officer, Shipt

Broadening range of products

The actual human interface between grocers and delivery customers is provided by an army of personal shoppers, people who pick up (and sometimes pick out) goods at the store and deliver them.

Deploying these troops — and the attendant vehicles, communications systems, etc. — are delivery service companies that partner with retailers. While some delivery services such as Walmart Grocery or Amazon Fresh are attached to a parent retailer, others contract with multiple retailers to provide delivery.

Shipt, a same-day delivery service that was founded in 2014 in Birmingham, Ala., was acquired by Target in 2017. Shipt serves over 120 retailers; among its partners are Bed Bath & Beyond, CVS Pharmacy, Best Buy and Petco, for whom it delivers across more than 80 percent of the United States.

“Just a few years ago consumers would primarily use same-day delivery services for groceries,” says Rina Hurst, Shipt’s chief business strategy officer. “Now, the landscape is much different. Consumers expect more items — whether it’s wellness products, pet supplies or home décor — to be delivered quickly and safely to their homes.

“They’re also looking for ways to simplify their lives and spend more time with family. Over the course of the past year, we’ve delivered more than 150,000 board games — Jenga is a standout — to our partners’ customers.”

A massive shift

San Francisco-based Instacart reports similar changes in consumption patterns. COVID-19 has created a massive shift for the grocery industry over the past year, the company says. It’s forever changed how people view the necessity of on-demand services, which have become an essential service for millions of families across North America.

While customers are purchasing their usual fresh items from the perimeter of the store, reports Instacart, they are also buying more overall, including center aisle staples. Instacart says it works with retail partners to bring all the aisles of the store online, offering items like alcohol, household goods and prescriptions along with fresh items for delivery or pickup. 

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Rina Hurst
Rina Hurst,
Chief Business Officer, Shipt

The pandemic also has triggered explosive growth in the number of people doing all that delivering. Since March 2020, Shipt has gone from 100,000 to 300,000 shoppers; Instacart’s community of shoppers has grown from 200,000 shoppers at the beginning of March 2020 to more than 500,000 active shoppers today.

Adapting to change

An attraction of these companies to retailers is that, by and large, they manage both the picking and delivering and the communications infrastructure that enables it.

“Many of our retail partners reach customers through our own app and website,” Hurst says, “while some leverage our delivery-only last mile service — Shipt Driven — to fulfill same-day orders from their own website. And, of course, some do both.”

Not surprisingly, the technology and procedures have undergone changes over the last year as companies have adapted to the new COVID-based reality. Some of these changes are directed at consumers, while others address the needs of the shoppers — between these two companies alone, more than 800,000 people.

Innovations cited by Instacart include:

  • Being the first on-demand company to introduce “leave at my door” delivery. Other new delivery options include Fast & Flexible — improved matching of customer orders with real-time shopper availability — and Order Ahead, which allows customers to place an order up to two weeks in advance.
  • Senior Support, basically a tutorial about online shopping, introduced ahead of last fall’s colds and flu season.
  • A partnership with Aldi and the USDA Food and Nutrition Service to allow greater use of EBT SNAP payments for online shopping.
  • New health and safety resources for shoppers, including daily in-app wellness checks, safety supply kits and ongoing pay for shoppers diagnosed or quarantined with COVID-19.
  • A vaccine support stipend that provides shopper and in-store teams with financial assistance as they take time away from work to be vaccinated.

Shipt has also made changes to meet the needs of both customers and the shopper community, Hurst says:

  • To make the service accessible to more consumers, the company launched a pay-per-order option so customers could try it out before committing to a year-long subscription.
  • Immediately after the pandemic hit, she says, the company saw shopping patterns change drastically — with a high number of orders no matter the day of the week. Shipt launched proactive substitutions with a number of retailers; when an item runs low, it asks customers to proactively choose a backup.
  • All shoppers are required to review a daily health check in the app and agree to the terms.
  • Default no-contact delivery: Shoppers leave orders in a secure spot at a customer’s door and text once they have done so.

Looking ahead

Like virtually everyone else in the retail industry, these companies predict the major changes wrought by the COVID-19 pandemic — massive growth in ecommerce, massive shrinkage in delivery times — will be permanent. It seems very likely that delivery services will, in one form or another, be permanent as well.

Their focus on grocery has allowed them to solve the complex operational and technological challenges that come with ensuring consumers get exactly what they ordered from a growing universe of stores. Instacart, for one, expects to continue to play a leading role in online grocery for decades to come.

It’s not alone in that determination.

“To put our growth in perspective, in the last year we tripled our shopper community to more than 300,000, added new partnerships to offer delivery from more than 120 retailers and grew our delivery-only service by nearly 300 percent,” says Hurst.

“We plan to continue expanding our services and capabilities, so we can continue to meet the expanding needs of our partners and customers. We anticipate that online shopping will remain a large driver of retail sales for the foreseeable future.”

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