Drive thru stores are changing local grocery competition

Drive thru stores are changing local grocery competition

Drive thru stores are expected to expand in rural areas

Competition in retailer market is constantly increasing. On one side big solid players fear agile smaller ones, on the other side brick and mortar are getting slowly disrupted by online ones. Keeping market share is difficult and improving it is even more than a challenge. In a world where customer loyalty is becoming price loyalty, grocery retailers are starting to adopt diversification strategies in order keep a growing customer basis.

We have talked already about Click & Collect, Direct to Consumer and Virtual Reality. Drive thru stores is another successful strategy adopted in the grocery market. Started firstly by Fast Food companies to target specifically a customer range with very little time available to shop, now drive thru is being launched by several pioneer retailers. This practice offers great convenience both for consumers who get what they want in few minutes and for retailers who can drive down costs.

How does it work?

Consumers drive to their closest drive thru store. There are usually two ways to order grocery items. the first option is to do it directly once arrived, ordering in a drive thru window of the store. The second option is doing it online before arriving in the store and then selecting the point of delivery.

Once the order is placed, a grocery worker collect all items desired through a sophisticated belt system. In few minutes the grocery is collected and the driver pay & collect it in a second drive thru window. This process is fast. Indeed it is estimated to be completed in only about 10-15 minutes, compared to the fastest 1 hour Amazon delivery option.

The main players

  • WALMART

Walmart was the first retailers who launched this concept. For 70% of the US population there is a Walmart store every 5 kilometers. Leveraging this strategy, they have decided to launch drive thru stores in smaller markets where online grocery competition is not present. Indeed, due to the lower economies of scales of cities with a low population density fast online delivery cannot be present. For example, Amazon has 1 hour delivery only in denser urban markets. Drive thru grocery then is a big opportunity for brick & mortar players to counterbalance the aggressive strategy that online delivery businesses are playing.

  • AMAZON

Amazon itself has sensed the big opportunity drive thru stores can bring to its business. Business Insider recently reported an opening of an Amazon Brick & Mortar drive thru stores. Consumers place usual orders online and then can pick up them at the closest drive thru window. Why a traditional online company want to enter a non core area of his business? The answer relies partly in Amazon culture principles “customers first”. Market researches show that consumers shopping with Amazon are missing an important in-store experience. Mainly for ordinary fresh grocery products where it is essential to evaluate their quality before putting them in the basket. At the same time, it is shown a big winning area if put together Amazon online convenience with in-store experience.

  • SAINSBURY

Sainsbury is the second largest chain of supermarkets in the United Kingdom. They first started opening an online shop, establishing a delivery system. Their strategy is to focus on customer satisfaction in order to win market shares. However, the initial results were not so good as expected. The first main reason is that customers doesn’t like to wait too long for their grocery to be delivered. Secondly the delivery could happen at an inconvenient time for the consumers. For all those argumentations they are the first chain in UK who have opened drive thru stores, as the DailyMail reported. In this way they are hoping to leverage online convenience together with consumer delivery flexibility

  • FARM STORES

Farm Stores is a US drive thru stores chain. They focus only on drive thru concepts in order to reach high economies of scales. Structured as a franchise offers a high rural growth potential. With more than 60 years of experience they now are planning to become a global company, exporting this concept oversea.

Food Sharing Economy is a Love Story between USA & France

Food Sharing Economy is a Love Story between USA & France

20% of Americans already used sharing economy service and 52% for French!

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[mks_two_thirds]When speaking of collaborative economy, we think of the American giant like Airbnb. But France also happens to stand out ! Indeed, sharing economy platforms operate mostly in France, which alone represents 23% of the world market in the collaborative economy field and keep up with our 8 predictions for 2016. Following BlaBlaCar and Leboncoin, more than 270 sharing platforms are developed in France. Sharing economy concept is widespread but covers very different realities. In the US, Colossus like Airbnb, Uber,  Dogvacay, Relayrides, TaskRabbit are already taking a huge advantage of this trend. In American and French economies, it still represents a very small share of activity but it has great development potential because it is based on fundamental changes in consumer behavior!

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Sharing economy market is growing fast!

The market for collaborative consumption worldwide was estimated at $ 15 billion in 2015. This market is expected to reach $ 335 billion in 2025, with an annual growth rate of 36.4 %. The principle of exchange and sharing of property between individuals limiting intermediaries between producers and consumers and thus lowering costs. Moreover, some services or goods are exchanged even for free ! But what shades can take this new phenomenom? We investigated!

1 – The free movement

The free movement is characterized by the transition from a logic of ownership, based on the protection of property rights and copyrights, to the logic of open access, free and universal user knowledge, skills and material resources. Initially confined to the field of intangible (free software), the free movement influenced today’s traditional production infrastructure. We can observe a drastical development thus, within “hackerspaces” and “Fab Labs” , feature design and manufacturing tools digital (3D printers, etc.), collaborative production model based on the massive use of open source technologies to merge the shares of production and consumption, customers taking part in creating products that they themselves use.

2 – The functionality economy

This economy is designed to optimize the use of property and services, focused on the management of existing resources, in the form of products, knowledge or natural capital. The economic objective is to create value Highest possible use for as long as possible, while consuming as less material resources and energy as possible (…). According to this view, the value a product no longer resides in the possession of the property itself but in the benefit of its use. 

3 – Donation economy

It covers the exchanges in which goods and services transiting are not considered anymore for their value exchange. Beyond the stages of setting prices, it requires here to complete a transaction only based on confidence, to choose the beneficiaries, to define the moments, places and conditions for the transaction. It promotes the work as a gift and organize the recognition of talents and peers recognition.

A Clay footed Colossus

Professionals accuses sharing platform to encourage the development of “underground” restaurants! They are already more than 3,000 in France.  These individuals would trade their culinary skills in France today. The European leader launched by VizEat, French early 2014 startup, already swallowed Cookening, its main competitor, pioneer of the “social dining”. The business model of these startup is simple : register, pay a contribution online and the startups will charge 15%.

vizeat-team

We are not here in a cost-sharing model, but in a business that is completely free from public health issues and any taxation and regulation. Traditional players see their list of rules on protecting consumers lenghten, especially in terms of transparency on hygiene, while sharing economy platforms are freed from it.  

A new sector is realising it will be “Uberised”: the catering!


Sources:
Stahel, W. R. (1986). The Functional Economy: Cultural and Organizational Change. Science & Public Policy, 13(4).
COMMUNICATION DE LA COMMISSION AU PARLEMENT EUROPÉEN, AU CONSEIL, AU COMITÉ ÉCONOMIQUE ET SOCIAL EUROPÉEN ET AU COMITÉ DES RÉGIONS, 2016, page 5-6