The e-commerce boom has not only affected the retail industry dramatically, but grocery delivery aims to be the latest ‘key disruptive” trend of 2021.
Uber Eats, Postmates, and Instacart set the foundation for app-based food delivery services but recent consumer demand for essential items has unveiled the need for a more strategic way of delivery. Grocery delivery startups are beginning to take off as they gobble up smaller, centrally-located, retail spaces in an effort to meet demand faster.
Recent data points to an exponential growth of U.S. online grocery orders from 4.5% of consumers saying they placed online grocery orders in 2019 to 30% in 2020, and now hovering around 45% of consumers.
“Most grocers agree that online orders with home delivery or customer pick-up at the store are here to stay, and are planning accordingly,” says Rick Weinberg, executive vice president at commercial real estate services firm CBRE. “Statistics back up the assumption, as pre-pandemic online grocery sales were averaging 2 to 3 percent [of total sales], currently averaging 10 to 12 percent, while future projections are as high as 20 percent.”Weinberg
Proximity is everything for the success of new startups popping up in massive markets. For example, Zero Grocery (@zerogrocery) and Good Eggs (@goodeggs) are establishing fulfillment centers in the Bay Area and Southern California, while 1520 (@1520mins) and Fridge No More (@fridgenomore) are gaining steam in New York and giving supermarkets a run for their money.
The grocery delivery startups could be a lucrative venture for many real estate agents listing smaller 1,000 SF – 5,000 SF retail or industrial properties, that could serve as the perfect location for grocery fulfillment centers for a startup like JOKR. The fulfillment centers, or ‘dark-stores’, act as close-proximity locations that deliver within a small radius in order to rapidly deliver goods. They are typically not open to the public but are essential for the business when strategically placed.
“We’re always aiming to secure easily accessible space to be closer to customers and ensure our fastest delivery possible,” says Tyler Trerotola, JOKR’s U.S. co-founder.
The latest statistics from the Food Marketing Institute and Nielsen have projected $100 Billion in growth of online grocery sales by 2022 compared to 2018. The desire for easier access to essential goods was more than likely induced by the pandemic, although e-commerce was already trending up in other industries. And this is prompting investors to boost funding for startups such as the aforementioned.
“We strongly believe that the pandemic has only catalyzed a movement that was bound to happen anyway. People have become more sophisticated and demanding in their expectations of retail in general, and particularly when it comes to their daily essentials.”Trerotola
Certain secondary and tertiary markets, according to Weinberg, have been plagued with retail-vacancy, and much like the “Medtail,” phenomenon, grocery startups want to jump on the lower-than-usual rents. Because supermarkets primarily focus on expanding fulfillment centers into industrial properties, it’s been the vacant, low-rent, retail units that attracts app-based grocery delivery startups. Also, because these locations tend to be in the middle of dense population centers, and not on the outskirts such as industrial property types.