The British grocery retail sector is experiencing rapid growth in online ordering for home delivery, resulting in considerable supply-side investment in delivery and fulfilment infrastructure. For retailers with a physical store network, assets typically utilise larger format stores as delivery and fulfilment hubs. Proximity to the store network and delivery infrastructure capacity thus drives the availability and choice of online grocery providers at the neighbourhood level.
Food deserts
UK Researchers carried out a nationwide assessment of the provision of online groceries, generally revealing excellent coverage within urban and suburban areas, including those neighbourhoods that may have once been considered urban food deserts. However, rural-urban inequalities are evident, with the most remote and rural catchments experiencing comparatively poor online groceries provision.
The researchers argue that these inequalities give rise to a new form of a food desert: remote and rural neighbourhoods with the compounded effects of poor access to physical retail provision and the added disadvantage of poor coverage by online groceries providers. Many of these neighbourhoods are already the most remote from physical store provision and may also be faced with withdrawal of physical (retail) services.
However, inequalities in provision and choice of provider remain, notably between urban and rural areas, with retailers facing considerable challenges in providing complete-national delivery coverage. Similar urban-rural inequalities have been identified in other forms of food-based online ordering for home delivery, including Just Eat.
Delivery options
The researchers make several recommendations that could support the delivery of online groceries services in these areas and reflect on the tremendous potential for ongoing research into widening inequalities in access to grocery retailing driven by the geography of online groceries.
The analysis is based on the online groceries market in GB, where attended delivery (consumer at home to receive a delivery) is most common. However, many international examples of retailer-led innovations attempt to extend the coverage of online groceries within rural areas. These include greater use of non-store-based collection points or reception boxes in the most remote rural areas, passing some of the costs of the last mile back onto the consumer and improving the efficiency of the delivery network.
Innovative solutions to improve delivery coverage in those (rural) localities with a lack of choice of provider could include delivery pooling. Here one retailer or a trusted third party delivers online groceries orders from multiple retailers. However, the highly competitive nature of the grocery market may make this form of long-term collaboration unlikely. Other delivery pooling opportunities to improve coverage in rural areas could include crowd shipping and social delivery networks.
Source: Andy Newing, Nick Hood, Francisco Videira & Jack Lewis (2021) ‘Sorry we do not deliver to your area’: geographical inequalities in online groceries provision, The International Review of Retail, Distribution and Consumer Research, DOI: 10.1080/09593969.2021.2017321