Deliveroo deal could be problematic for Sainsbury's, says GlobalData
Grocers must be wary of working too closely with food delivery outfits, according to GlobalData.
The data and analytics company’s warning comes as Sainsbury’s announces a partnership with Deliveroo to deliver pizzas and other products to customers’ homes. A trial launched this week and runs for the next two months in five stores: Cambridge, Selly Oak, West Hove, Pimlico and Hornsey.
“A growing list of retailers have been forging alliances with food service 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),” comments Thomas Brereton, Retail Analyst at GlobalData.
However, ceding control over the last mile has its complications, he adds. The Deliveroo partnership puts the most customer-facing side of the Sainsbury’s delivery offering in the hands of an external organisation. There is also the fact that Amazon recently invested £460 million in Deliveroo. If the deal progresses, it may cause a problematic scenario for 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 food service operators are likely to be reviewed and possibly removed,” Brereton concludes.