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European Retail Briefing -  November  2019
Analyst Comment – How Grocers are Partnering with Delivery Apps to Deliver Takeaways and Top-ups
 
“In the UK and Europe we have seen examples of supermarkets partnering with third parties to deliver takeaway meals as well as top-up groceries. With the UK takeaway market in growth, there is an opportunity for supermarkets to tap into this and as such, extend their brands. Existing loyalty schemes could play an important role in driving the takeaway proposition.”
-Priya Chandarana, Senior Retail Analyst

What we've seen
●	Asda was the first UK supermarket to enter the pizza delivery market in November 2018 by partnering with Just Eat.
●	In July 2019 Sainsbury’s began a partnership with Deliveroo to deliver pizza.
●	In the same month, Portuguese supermarket Pingo Doce has partnered with app Takeaway.com to deliver home-cooked meals in Lisbon.
●	82% of Brits say that they buy takeaways/home delivery food.
●	34% of consumers purchase takeaway/home delivery through a third-party ordering service (e.g. Just Eat, Deliveroo etc).
●	93% of Millennials (19-38s) say that they order takeaways; they are the generation most likely to choose the convenient option of ordering food in.

Increasing numbers of UK retailers partner with third party delivery companies
In the last year there have been various new partnerships between grocery retailers and third party delivery companies. We have seen Asda partner with Just Eat to deliver pizzas, and more recently this has been extended to include groceries within 30 minutes. The promise of a 30 minute delivery time taps into the next generation of delivery as the culture for ‘on-demand grows’, as outlined in Mintel Trend Straight To You. The Trend highlights how speed and instant gratification will become differentiators, and Asda is trying to do just that. Read more in our Expert Insight: Asda brings groceries straight to you…in just 30 minutes.

Following in Asda’s footsteps, over the summer Sainsbury’s also announced plans to partner with food delivery company Deliveroo to deliver pizzas and complementary products, such as snacks and soft drinks to customers’ homes. In October 2019, Deliveroo announced that it would be expanding its on-demand grocery service in the UK by signing over 200 convenience stores across London. This allows the convenience sector to tap into online demand, and moreover, expand instant delivery to a national scale, something that we first highlighted as an opportunity back in Mintel’s Online Grocery Retailing – UK, March 2017.

Within the same week in October, Costcutter became the latest grocery retailer to venture into the food delivery service sector in order to expand its reach to customers. With leading supermarkets tapping into convenience and speed more than ever, it is important for the convenience sector to keep up. Interestingly, 34% of current online grocery shoppers feel it is more cost-effective to order a takeaway than use a same-day online grocery service, so rather than online shoppers looking elsewhere for their meal solution, supermarkets can fulfil this need.

Portuguese supermarket Pingo Doce extends into takeaway market
While Asda and Sainsbury’s have entered the takeaway market with hot pizza, further afield in Portugal supermarket chain Pingo Doce has taken this one step further. In July 2019 the grocer owned by Jerónimo Martins began a partnership with Takeaway.com to offer a delivery service of various home-cooked meals from two stores in Lisbon. This has now been extended to more stores, including some in the Algarve.

The meals, which are prepared in the in-store restaurant, meet several growing consumer demands: ready-to-eat, fresh ingredients, and easy-to-order via an app to name a few. In addition, the concept stands out in several ways to make it attractive. There is no delivery fee, delivery is made by bicycle or electric scooter to minimise the environmental impact, meals are made by chefs in-store giving them a home-cooked feel and have no artificial colours or flavourings, and lastly the use of unattractive or ‘wonky’ veg means that the stores can reduce its level of waste within produce. These are exactly the kinds of ways in which the UK supermarkets can promote a takeaway offer as more and more consumers adopt ethical lifestyles. Consumer research from Mintel Report The Ethical Food Consumer highlights that nearly seven in 10 (67%) of UK adults have made efforts to reduce the amount of plastic packaging they buy in the last 12 months.

Meal solutions is a category that Pingo Doce does well in, given that it has four dedicated off-site kitchens. Partnering with Takeway.com is a smart way for Pingo Doce to maximise its in-store and external facilities, whilst also building on its foodie credentials. News that Takeaway.com is merging with Just Eat will serve this new venture well as the two companies combined will create one of the largest food delivery companies in the world.

Just Eat leads takeaway sector
The UK takeaway sector is growing. In Mintel Report Attitudes Towards Home Delivery and Takeaway – UK, February 2019, consumer research revealed that the vast majority (82%) of Brits say that they buy takeaways. What is even more interesting is that as many as one in five (22%) consumers say that they order a takeaway on a weekly basis, which is more than likely going to having an impact on consumer spending in supermarkets.

Looking at third party services, Just Eat is clearly the most favoured company with nearly nine in ten consumers saying that they use it for their takeaway meals. This is followed by Deliveroo and UberEats. Within the UK - its main market – the latest Q3 results showed that orders for the period increased by 8% to 33 million.

FIGURE 1: Third party ordering/delivery services used to buy takeaway services, November 2018
 
"Which of the following third party ordering/delivery services do you use to buy takeaway/home delivery food? Please select all that apply."

Base: Base: 561 internet users aged 16+ who buy takeaway/home delivery food through a third party ordering/delivery service
 
Source: Lightspeed/Mintel

Consumers want more cuisines and favour loyalty schemes
Tapping into the takeaway sector further by using such popular and established delivery apps to extend reach and attract more shoppers is a key way in which the supermarket sector can disrupt and innovate to drive sales. According to Just Eat, it is seeing an increase in demand for more cuisines and meal occasions, something which supermarkets should consider if and when they expand further on the takeaway opportunity.

Mintel has identified that those buying takeaways are risk-averse and rely heavily on past experience when they’re ordering directly from restaurants, or online reviews when ordering from third party services. Supermarkets have an advantage when it comes to trust as shoppers already use them to buy food, be it ingredients for their own meal or ready-made meals. Looking at attitudes towards home delivery and takeaway, 61% say that ‘loyalty schemes would make me order from the same restaurants/takeaways more often’. In light of this, the supermarkets that have loyalty schemes could use this as a tool to engage more shoppers with a takeaway delivery service.

What it means
●	This is only the start of grocery partnerships with third-party delivery companies. We expect that more grocers such as Tesco and Morrisons will tap into this takeaway opportunity, and perhaps even Aldi and Lidl will go down this route to offer a grocery delivery service as Lidl has done in various other markets.
●	The combination of having a takeaway delivered at the same time as groceries from the same supermarket will meet the needs of many consumers, most likely the 37% of 16-34s who say they get a takeaway/home delivery at least once a week.
●	In the UK, whilst hot pizza is a quick win, it is one of the few counters, along with sushi and hot chicken, which lends itself well to takeaway. The current on-site cafe is unlikely to serve up a menu that is going to compete with existing restaurants on such delivery sites/apps so investment would be needed here.  
●	Supermarkets could use space in larger stores/hypermarkets to house kitchens either run by themselves or third parties to make fresh meals which could then be delivered to homes by a delivery company.
●	In the future, there might be potential to see supermarkets add hot food as an option from click and collect hubs.

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