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The dangers of brand erosion in retail delivery — and how to stop it

  •   2 min read
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Nearly two years into the COVID-19 pandemic, to say that the retail delivery market has seen unprecedented acceleration in growth — some say by 10 years’ worth — has little shock value. We know the world has changed, not only in shopping behavior, but in work culture, commuting patterns, international travel, and much more. These changes in behavior and preference have prompted significant reevaluations of brand identity across business sectors: airlines tout vaccine mandates in addition to mileage-based status or low fares, while the tech sector recruits engineers promising unlimited work-from-home rather than in-office beer taps and shuffleboard.

But in grocery delivery, brand identity is especially tenuous, and the path forward difficult to chart. Customers who would have never considered delivery before the pandemic — who live within walking distance of a store, who own a car, who enjoy selecting their own vegetables — have now experienced its convenience. Even when the threat of the pandemic fully abates, it’s hard to imagine reverting to a pre-pandemic status quo. Indeed, cities are increasingly taking measures to regulate the increased road congestion caused by delivery traffic. 

For many grocery retailers, keeping pace with increased delivery demand has necessitated a difficult compromise: surrendering their identities as local, customer-focused, “go-to” shopfronts in favor of access to easy delivery infrastructure in the form of gig-economy marketplace apps like Instacart. These days, retailers view their gig-economy partnerships as a necessary evil. Though a solid majority (66% of those surveyed) believe these partnerships are necessary for scale, nearly as many (58%) believe them to be unprofitable. Even worse, marketplace apps put local retailers in direct competition with stores all over the city, with only price as a differentiator: as one retailer put it, “We’re competing with what we perceive to be a partner.”

In other words, short term scale — and market survival — is achieved at the expense of long-term profitability and brand recognition. Eighty-four percent of retailers surveyed reported losing touch with their customers, limiting their ability to tailor and update their offerings and driving further brand erosion. Prior to the pandemic, some smaller, city-based retailers focused on enhancing the in-store experience through things like free samples, espresso bars, and beer tastings to compete with big-box encroachment. Now, store owners need new ways to rebuild customer loyalty in the age of 10-minute delivery.

Taking delivery operations in-house seems at once obvious and out of reach: though managing orders and deliveries would prevent customers from straying to other retailers featured in gig marketplace apps, and would avoid the ~10% fee charged by gig marketplace apps, an in-house, branded delivery service creates a new host of challenges. There are drivers and vehicles to manage, delivery routes to optimize, customer expectations for lightning-fast service to meet. But overcoming these challenges — with the help of software solutions directly targeted to retailers recruiting and managing drivers — may be the only way forward for retailers looking to preserve their identities and margins. With gig marketplace apps building warehouses and entering the fulfillment industry, it may be only a matter of time before brands tied to brick-and-mortar stores are fully subsumed.

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