Deliveroo’s New Store Adds Grocery Pickup Option to Aggregator Model

As many brick-and-mortar grocers, noting the rise of eGrocery, look to boost their digital offerings, British food delivery company Deliveroo is going the other direction. The aggregator is opening a physical grocery store in Central London in partnership with Morrisons, the U.K.’s fourth-largest grocer, the company announced on Monday (Oct. 3).

The shop, dubbed Deliveroo HOP, will feature digital kiosks to place orders to be brought to customers by in-store pickers. Orders can also be placed the Deliveroo app for order-ahead pickup or delivery. The store follows research from the delivery service that 35% of consumers decide what they will eat for dinner the day, and 29% of those last-minute deciders purchase their ingredients that day.

Opening a physical grocery store could bring the aggregator into competition with non-Morrisons grocers on its marketplace, as the company’s restaurant efforts have rankled some eateries in the past. Consequently, the delivery company is making a point to frame the move as good for surrounding businesses.

Related news: Deliveroo’s Restaurant Efforts Could Spell Trouble for Merchants on the Platform

“Our New Oxford Street store promises a new way to shop for Deliveroo customers, giving them even greater flexibility and choice and should help boost the local area with nearly two thirds of shoppers saying they will visit other nearby shops as they come to shop with Deliveroo,” Chief Operating Officer Eric French said in a statement.

The move from digital-only into physical retail is somewhat counterintuitive, given that the share of consumers shopping for groceries online is sizable and growing larger. Data the July edition of PYMNTS’ ConnectedEconomy™ series, “The ConnectedEconomy™ Monthly Report: The Rise of the Smart Home,” which drew from a survey of more than 2,600 U.S. consumers, showed that 40% of shoppers order groceries online for home delivery every month, and 16% do so every week.

Plus, research from “Satisfaction in the Age of eCommerce,” a PYMNTS and Riskified collaboration based on a survey of more than 2,100 U.S. consumers earlier this year, found that 58% of consumers had increased their number of online grocery purchases during the previous 12 months.

Granted, in the present, the majority of consumers nonetheless prefer traditional in-store shopping. Findings from PYMNTS’ 2021 study “What Consumers Expect From Their Grocery Shopping Experiences,” created in collaboration with ACI Worldwide, which surveyed more than 2,300 United States grocery shoppers about their buying behaviors, reveal that just 18% of grocery shoppers prefer buying digitally to shopping in stores.

Read more: Digital Features Can Help Grocers Win Over 43% of Shoppers

Additionally, the physical shop may not be an end in and of itself but rather a way to deepen consumers’ digital relationships with the brand, driving pickup sales. Deliveroo certainly would not be the first grocer to leverage physical spaces to boost online sales. Last year, for instance, Vivek Sankaran, CEO of United States grocery giant Albertsons, noted that eGrocery sales tend to come through pickup channels, making it essential to focus on the on-site experience.

“Our greatest asset is the store,” Sankaran told analysts on a call. “Full stop. We are like ducks paddling pretty hard every day … to run great stores … When you have that, it gives you a great base to build an eCommerce business, and our eCommerce business is built on those stores.”

See also: Albertsons CEO: Our Greatest eCommerce Asset Is The Physical Store