Member Article

The decline of a ‘Tescopoly’: what are the opportunities?

It’s been hard to miss the gleeful press coverage of Tesco’s recent fall from grace.

Once reigning supreme in food retail, shrugging an apathetic shoulder as it annihilated small local businesses with its huge Extra stores, Tesco’s ego is now rapidly deflating.

From horsemeat-gate to £263m-worth of overstated profits, their announcement earlier this month that they were going to close 43 stores wasn’t exactly a shock. Yet Tesco isn’t the only supermarket struggling. Morrisons recently announced the sacking of CEO Dalton Phillips after a poor Christmas period, as well as the closure of ten of their stores. Sainsbury’s has also reported its worst Christmas in a decade, while Asda has been forced to make £1bn cuts on ‘essential groceries.’

With most of the public still heavily reliant on online deliveries, could this be the opportunity that smaller independent food delivery businesses have been waiting for?

Death of the weekly shop?

Not so long ago, driving to a supermarket to get the week’s food in was the norm. Thankfully, lugging a trolley around the endless aisles for two soul-destroying hours is no more a habitual practice.

According to retail analysis experts IGD, shoppers are no longer loyal to one particular supermarket. Instead, most consumers use around four grocery shops a month, with some even visiting two in one outing.

In a decade where finances have been tight and value for money questioned, there’s been an alteration in how people shop.

This ‘promiscuous’ behaviour has seen shoppers trying out smaller shops, with many going independent and local, lured in by the convenience factor.

This trend has created a riper environment for food delivery companies. Consumers are becoming more adventurous in their tastes and more concerned with where their food comes from, what it contains and who will benefit from their purchase.

Consumer revolution

The ‘segmentation’ of grocery shopping is not only due to economic factors; many shoppers now feel disenfranchised by the supermarket industry. Initially, there were protests against the perceived negative impact that supermarkets were having within communities. Soon after came the horsemeat scandal. 2014 then saw the revelation that Tesco had overstated their profits by £263m, and most recently we have seen Jamie Oliver’s campaign to stop supermarket wastage of ‘wonky fruit.’

This growing disillusionment has led to people seeking alternative means for at least part of their grocery shop, particularly from stores containing produce from local farmers and smaller businesses.

Equally, this has been supported by a growing movement to support small businesses in the UK, including Small Business Saturday; a concept brought over from the States which aims to celebrate and promote smaller British firms

All these factors have created growing small business opportunities in the food delivery industry.

Online shopping and food delivery is still doing increasingly well; Ocado recorded £6m worth of profits in a single day in the run up to Christmas.

With consumers more willing to shop around to find either local, healthy, convenient or cheaper produce, there are now serious prospects for independent food retail.

Food delivery: what are the opportunities?

- Organic veg boxes

‘Going green’ in a food delivery business may well be the way to go. Many folk may want to visit a variety of specialist independent food retailers, but are unable to because of time and distance limitations.

As a compromise, healthy produce can be delivered straight from the farms themselves to homeowners’ doorsteps. Generally, most of these types of ‘green’ food delivery services offer are strictly organic, meaning no pesticides or synthetic nitrogen fertilizers.

Businesses such as Abel & Cole and Riverford Organic are not new to the food delivery industry (they have both been around since the early nineties) but the recent socio-economic climate has seen their sales increase tenfold. In January 2014, Abel & Cole reported a rise in sales by 24% within 8 months.

Finding the right suppliers and nailing a strong brand will be your key concerns – but the business opportunity is ripe for the picking.

- Meals on Wheels

Specialising in meals for the elderly could also be a money spinner. The UK’s population is ageing, with a record 10 million of us now over the age of 65, (and this is expected to rise to 15.5 million by 2030).

A current key player in the elderly meal delivery market is Ronnie Corbett-endorsed Wiltshire Farm Foods. They offer over 250 meals and desserts with the consumer’s tastes in mind. Not only do they offer simple favourites such as cottage pie and bread and butter pudding, but pureed meals too.

Oakhouse Foods are another example, and provide a range of tailored meals to choose from.

Look at your local community – could you close a gap in the market?

- Key ingredients

Juggling work life and healthy eating can be a major struggle – as well as the wastage that can come from impulse buying or purchasing more than you needed for that new recipe you wanted to try.

So, the ‘recipe delivery’ business was born. This generally consists of a box of carefully measured ingredients, based on two or three recipes per week, delivered straight to your door – instructions included.

Current companies competing in this field are Gousto and HelloFresh, established in 2011 and 2012 respectively. The concept is relatively new, and there’s an amenable market with definite room for more contenders.

The tyranny of what has been un-affectionately termed a ‘Tescopoly’ seems to be coming to an end, and with a little entrepreneurial spirit, independent food delivery may be about to have its moment.

This article was contributed by BusinessesForSale.com, the market-leading directory of business opportunities from online media group Dynamis.

This was posted in Bdaily's Members' News section by BusinessesForSale .