Aldi UK earns praise as it enters grocery delivery space

With appetite for online food shopping growing during the coronavirus outbreak, Aldi UK is wise to find a quick way to enter the space, says GlobalData.

It is significantly behind the big four which have well-established digital channels and have been able to capitalise on the surge in demand in the last few months. But yesterday it started to play catch up with the announcement that it was partnering with Deliveroo to test out grocery home delivery for the first time.

Starting this week, Aldi will offer a rapid delivery service from a store in Nottingham, before extending the trial to seven more stores across the East Midlands in June. It is also considering a roll-out to further locations by the end of 2020.

Customers will be able to order from over 150 Aldi products through the Deliveroo app. The retailer will initially offer a range of essential items, such as bread, milk and fresh produce.

Sofie Willmott, Lead Analyst at GlobalData, comments: “With online food and grocery spend forecast to rocket by 25.5% this year in response to Covid-19, Aldi is keen to get a slice of the pie and is seeking ways to rapidly enter the e-commerce grocery market.”

“The partnership will allow Aldi to gauge demand for home delivery on a small scale and will also enable it to test the process of picking items from stores allowing it to see whether the concept could feasibly be rolled out nationwide.”

Aldi’s move will not be nearly as profitable as its store operation given that Deliveroo’s fees will eat away at already slim grocery margins, she adds. However, the limited product range will make picking orders fairly efficient and the partnership will allow the grocer to bypass the high set up costs involved in an in-house online food operation.

“Although initially on a small scale, the trial could quickly give Aldi access to a share of the fastest growing part of the UK retail market,” Willmott concludes.