Coronavirus has had a highly damaging impact on the high street retail sector. With footfall in town centres still a long way below normal, many shops are either lying vacant or face an uncertain future. The structural decline in bricks and mortar retailing was evident long before the Covid crisis took hold, largely caused by the migration of shoppers online. However, somewhat paradoxically, digital platforms may also provide a lifeline to struggling stores.
One ray of hope for shop owners may be consumers’ increasing willingness to pay for the ‘instant’ delivery of a growing range of products. Any number of platforms have developed which connect consumers with local stores and arrange for the delivery of goods in time windows of 60 minutes or less (many claim an average of 30 minutes). As it is impossible to satisfy consumers’ desire for immediate gratification from centralized warehousing, stores are adopting a role of local fulfilment centres.
‘On-demand’ delivery, as it is known, started in the restaurant sector but has expanded from meals to groceries and luxury items. Although originally a very niche business, matching wealthy consumers with a plentiful supply of products at a premium price point, the Covid crisis has turned this model on its head. Many grocery items became in short supply whilst the number of consumers locked down at home willing – or desperate enough – to pay for immediate delivery rose many times over. Many on-demand businesses were just not able to cope with this seismic shift in the short term and ‘instant’ delivery times were pushed out to days if not weeks. However, in the long term, the platforms seem to be benefiting from a change in consumer behaviour as e-retail has been embraced more generally.
This paper provides an update on how the Covid crisis has impacted upon the on-demand sector – positively and negatively. As well as looking at the effect on some of the largest players in their respective markets, it also reviews how the crisis has provided a boost to investment in last mile technologies, such as robots and drones.