Big city life, restaurant delivery wars, and the human toll of instant delivery

Argos is speeding things up

This week, Argos announced a £2.5m investment in a 69,000sq ft distribution centre (DC) in Croydon – the piece de resistance following a series of moves to improve their fulfilment, including the opening of 100 new online order collection points and 14 new stores within stores in Sainsbury’s Locals and supermarkets across London.

These moves are all part of the retailer’s larger strategy to improve its customer experience by speeding up its online sales and deliveries. The DC in Croydon alone is set to give 3.4m people quicker access 15,000 more of its products through same-day fast track deliveries and same or next-day click & collect orders.

“The new battleground is speed and convenience and getting customers what they want, when they want it” – John Rogers, Argos CEO

Need we say more? We’ve spoken before in this newsletter about how retailers are moving DCs closer and closer to cities to ensure a better delivery experience, and Argos – a relative innovator on the high street – is moving on this in a big way. First of many, we suspect.

IKEA is moving to the city

Source: IKEA

Argos isn’t the only retailer that got the memo on making sure its products are accessible to the ever-growing urban population. This week, IKEA announced that it’s sick of the suburban life and needs a pied-a-terre in the city.

With that in mind, the Swedish retailer will be opening 30 new small format stores in city centres over the next two years, refocusing efforts on e-commerce and delivery – the first of which will be in Paris, London, New York City, and Riyadh. They will be changing the layouts of the stores, making in-store shopping more inspiring and experiential.

Their main focus, however, will be on delivery. Following their acquisition of Task Rabbit last year, the company said it’s planning to invest more in delivery and assembly services so as to make the whole experience more convenient to its urban customers. Overall, it seems like these are changes designed not just to change the stores, but to change the way that customers think about IKEA. We all know that in today’s retail world, convenience is key and while for decades Ikea was always the cheap and cheerful choice, it needs to evolve to keep its customers coming.

“We see of course that the world around us is changing, and we want to be part of that,” Tolga Oncu, IKEA Head of Retail.

Restaurant delivery wars

London is proving to be one of the most interesting battlegrounds in last-mile restaurant deliveries. With massive players like Deliveroo, Uber Eats, and Just Eat on the frontlines, it’s no surprise that some players will have to throw in the towel.

And this week, the latest victim is Amazon Restaurants. The company announced the closure of the service in a rather curt and laconic statement:

“We are closing Amazon Restaurants UK. We would like to thank all our customers and merchants, and delivery partners for their support” – Amazon spokesperson

The secret is apparently in the sauce – to be successful in this industry it seems, you have to be more than just a logistics provider delivering food, but rather a food provider delivering logistics. Something Deliveroo (who is rumoured to be preparing for a new funding round to set a valuation floor for a formal takeover bid from rival technology firm Uber) knows all too well.

Is ‘New Retail’ the new retail?

Source: Time Person of the Year

Alibaba’s Jack Ma, who coined the term himself, thinks so. To Ma, ‘New Retail’ describes the increasingly blurred boundary between offline and online commerce as retailers focus on fulfilling the personalised needs of each customer.

In ‘New Retail’, customers should be able to shop online, have their items delivered the same-day and return the item in-store. Or they should be able to shop in-store with the help of VR technology in fitting rooms, skip the queue and purchase the items via a mobile app, and have their items delivered to their doorsteps when they get home. The online/offline variations are endless but one constant remains; variety and convenience for every customer.

In order for ‘New Retail’ to work, retailers must upgrade their business models to create a seamless convergence of offline and online. A great example of this is Freshippo (formerly Hema, previously covered in this newsletter), Alibaba’s supercharged supermarket in China.

“[Freshippo] is an experience centre, consumption centre, plus logistics centre rolled into one” – Hou Yi, Freshippo CEO

‘New Retail’ is probably getting a bit old by now if you count how much, and for how long, people have been talking about it. But Alibaba is that rare beast in the world of retail actually walking the talk, bringing experience and fulfilment together under one roof – so we can forgive Jack Ma the slightly hackneyed terminology.

Recommended Listening

The Human Toll of Instant Delivery from The Daily by The New York Times

With the rise of online retail, expectations about delivery speed have changed. But at what cost? This week, we bring you chilling stories of people who have suffered while doing honest work to help pick and pack our online shopping orders. Please use discretion when listening but listening is important.