MarketLine Blog

Sainsbury’s trialing one-hour delivery service

Supermarkets in the UK have faced a tough marketplace in recent years. The recession, and the accompanying squeeze on incomes, has led to many consumers becoming shrewd in their purchases and increasingly looking to find the cheapest option. This has led to a climate in which discounters, and in particular Aldi and Lidl, have been able to thrive. All of the ‘Big Four’ supermarkets have seen their market share eroded by the discounters, which led to a debilitating round of price wars in which profits were eroded. As such, there has been a concerted effort by UK supermarkets to look at fresh ways to distinguish their businesses and claw back market share.

While price competition remains an important factor in this market, elements such as quality, customer service, range of products, and ease of shopping are becoming ever more important. The Big Four have begun to accept that focusing solely on price is not going to work in an environment where the discounters always offer the cheapest option. What’s more, Aldi and Lidl have become renowned for offering quality produce, with many award winning offerings. So, as the discounters have moved away from being seen only as the ‘cheapest option’, the Big Four have had to highlight what else they can offer.

Sainsbury’s has long been a supermarket that is associated with quality. Out of the Big Four, Sainsbury’s consistently comes out on top in consumer opinion polls. As such, the company has been able to focus on other areas to distinguish its offering. For Sainsbury’s the focus has become increasingly on offering a multichannel experience for consumers, with shoppers able to buy its products whenever and wherever they like. Online sales for the company have been hugely out-performing overall sales, making a focus on ecommerce and mcommerce a sensible strategy.

Sainsbury’s is currently trialing its one-hour delivery service in three London stores, for customers living within a 3km radius and with a maximum limit of 20 products per order. The plan is for the retailer to roll out the service to a total of 30 stores by Christmas 2016. This delivery option is likely to be particularly successful in London, where there exist a number of successful food and drink delivery services, suggesting that the demand is there.

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