The grocery industry is notorious for tight margins, high perishability and heavy reliance on promotions. It’s a prime target for competition, which is why grocers are facing wave after wave of disruption.
The first came years ago when Amazon and other ecommerce businesses began eating away at the edges of grocers’ already slim profit margins by competing on purchases of nonperishable consumer goods.
The second, bigger wave is hitting now, in 2019, as the “delivery economy” has added additional dimensions for grocers to consider. Grocery delivery can be a cash cow, but it also poses serious logistical challenges, from inventory management to storage. Direct-to-consumer meal-kit delivery services like HelloFresh pose a competitive threat, too. Promising fresh, quality ingredients landed directly on consumers’ doors without the need for grocery shopping, these apps appear to cut out the middle man. That’s why Kroger purchased Home Chef, Albertsons owns Plated, and retail stores accounted for 60 percent of all meal-kit user growth in 2018, according to Nielsen.