97% of executives surveyed by Capgemini Research Institute say current models for grocery delivery services are unsustainable unless retailers use automation to cut costs.

A study spanning five countries finds that fast home delivery of groceries could make consumers more loyal to the grocers that offer them. But industry executives surveyed say current models are unsustainable.

The study, from the Capgemini Research Institute, included survey responses from 2,874 consumers, along with 500 supply chain executives, entrepreneurs and industry leaders in the United States, France, Germany, The Netherlands and the United Kingdom.

Among the findings:

  • 40% of consumers order groceries online at least once a week and that number is expected to reach 55% by 2021.
  • 20% of consumers will switch grocers if the grocer does not offer delivery services.
  • 40% of consumers say delivery is now a “must-have” grocery shopping option.
  • 75% of consumers say they would spend more and shop more frequency with a retailer that offered timely delivery of online grocery orders.
  • Just 1% of customers are willing to cover the full cost of delivery.

In each of the five countries surveyed, the percentage of consumers ordering groceries online at least once per week is currently 43% or lower. But by 2021, Capgemini expects solid majorities to order groceries online at least once per week in four out of the five national markets. Only in France will the percentage remain below 50%, Capgemini projects.


The consumer survey found offering delivery services increased customer loyalty, with two-hour and same-day delivery speeds having the most significant impact. 55% of consumers said the availability of two-hour delivery would make them more loyal to a retailer and 61% say same-day delivery would have that effect.

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However, two-hour delivery is still relatively rare in grocery retailing, Capgemini found. The executive survey found just 19% of grocers offer two-hour delivery speed, while 80% offer same-day delivery and 95% offer next-day delivery.

Capgemini’s research found retailers currently charge customers only 80% of the overall grocery delivery cost, and deliveries are now the most expensive part of the supply chain for those retailers. Among the executives surveyed, 97% said current grocery delivery models are unsustainable unless retailers use automation or find other means to reduce costs.

“There is some willingness [among consumers] to pay for convenience, but you have to do it right,” says Cyndi Fulk Lago, vice president of consumer products, fashion and distribution for Capgemini, North America.

51% of those surveyed would be willing to buy paid membership for delivery service, the survey found. Without purchasing a membership, consumers are willing to spend an average of 4.6% of the order value to get two-hour delivery or 4.3% of the order value get same-day delivery, Capgemini found.

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Satisfied customers—defined as those with a high net promoter score (NPS)—were willing to pay slightly more for delivery, while less satisfied customers were willing to pay a bit less. NPS is a benchmark for the willingness of customers to recommend a company’s products or services.

Also, Capgemini found 64% of consumers are indifferent about whether retail store employees, private individuals or third-party couriers make deliveries. A majority (55%) are willing to deliver groceries to neighbors in their vicinity in exchange for an incentive.

That willingness to pay for delivery is good news for retailers, Lago says, but the bad news is that “doing it right” does not have a single definition and can be hard to accomplish no matter how it is defined.

Fulfillment, for example, could happen in grocery stores, dedicated fulfillment centers or “dark stores”—locations with store-like layouts intended only to fulfill online orders for delivery or pickup. For example, the retailer’s staff could handle delivery. Or, the retailer could use crowdsourced Uber-like services, other kinds of vendors or autonomous vehicles.

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Delivery via autonomous vehicles could potentially increase profit margins by 14%, Capgemini researchers found. However, it still needs more time before it becomes mainstream. In its survey, 93% of companies are not implementing it and the remaining 7% are only at the pilot phase. 

Last summer, Kroger Co., the largest traditional grocery chain in the United States said it would start delivering groceries in manned, but autonomous-capable Toyota Prius cars starting at a Fry’s Food Stores location it owns in Scottsdale, Arizona. Kroger also joined with autonomous vehicle startup Nuro to test the delivery of groceries in an an unmanned road vehicle that can steer itself from the grocery store to a customer’s home. In December, Kroger and Nuro launched their unmanned delivery service to the general public in Scottsdale. The companies say the service is the first of its kind.

Retailers must figure out what works best for each company and its customers, based on its merchandise mix, its customers and factors like whether to prioritize convenience, price or the quality of the shopping experience, Lago says. Once those things are determined, retailers face countless choices for fulfilling online orders.

Retailers are not ignoring the trend toward online ordering and are taking action to meet consumer demand. For example, Capgemini found 89% of grocers surveyed are investing in mechanization and automation of store backrooms to expedite fulfillment and deliveries. Also, the study found 68% of organizations are experimenting with buy online, pick up in store (BOPIS), but the service is available only in 5% of retail stores.

The omnichannel model will be a challenge for grocery retailers, Lago says, in part because most grocers built their stores before e-commerce took off for the industry. Grocers will have to make significant—and expensive—changes to the layout of their stores, how employees are deployed and trained and other parts of their operations.

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“It’s not going to go away,” Lago says about online ordering.

Customer expectations around delivery and other aspects of omnichannel fulfillment will only increase, she says, so retailers that thrive in the emerging environment will be those that start adapting sooner. 

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