Crunch time for online supermarkets who must feed a nation as coronavirus shuts in millions

March 23, 2020

The capacity to ramp up food delivery many times over is limited. And, in these unprecedented times, cracks have started to appear in the online grocery market.

Downloads of grocery apps has skyrocketed, data from analysts Apptopia shows, with approximately 12,000 downloads of Tesco’s app in one day last week – three times the average - and, last week Ocado, the online grocer, was forced to shut down and retool its website amid a wave of panic-buyers.


Waiting times for slots to deliver groceries are now weeks and even up to a month away for the major grocers.


Although the supermarkets have an army of drivers, this network is not yet ready for a surge in capacity. Morrisons is recruiting an extra 3,500 staff including pickers and drivers to up its home delivery capacity; Co-op appealed for 4,000 to help with online orders, among other things.


For now, sourcing and making the food is not an issue, but people must stop bulk buying for the system to continue functioning. Moni Varma, the founder and chief executive of VeeTee Rice, which supplies all the major supermarkets says: “I have six to seven months of stock. What I don’t have is the milling capacity to mill one year in one day.”


The grocers have, nonetheless, entered the so-called phase two of the crisis, whereby they are cutting ranges to ramp up the volumes.


The challenge is getting those supplies to the doors of millions of people isolating due to coronavirus that will strain companies.


The Government has been speaking privately to the network of food delivery tech firms on how they can augment capacity. Supermarkets could be forced to accept online orders only from those unable to physically go to the shops if panic-buying continues.


It is also not clear how free school meals will be delivered from Today (23 March) after the Government pledged to keep the scheme running despite shutting schools. The Government has said there will be a voucher scheme, while George Eustice, Secretary of State for Defra, hinted supermarkets were being asked to expand “click and collect” capacity as well as a “national volunteer project”.


But one industry source fretted the Government was not showing a joined up approach – with “mayhem” under the surface. 


How might food delivery firms and supermarkets combine their strengths in the event of a total lockdown? Ultimately, supermarkets are well placed to manage deliveries with more lead time, while food delivery companies are best set for urgent, last-minute drop-offs.


“If the network cannot scale with increased demand you may see some setting up some kind of pop-up dark sites,” says Philip Green, a former Amazon and Deliveroo executive and co-founder of virtual restaurant Lean Kitchen Network.


“Like using a Sainsbury’s Local or Tesco – plugging in delivery firms for last mile logistics as your absolute insurance policy.”


Read the full story in the Telegraph

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