In recent years, especially during the COVID-19 pandemic, Canadians have grown accustomed to the convenience of having groceries and takeout delivered to their homes. This shift has significantly contributed to the expansion of food delivery apps, which are now evolving to serve a broader market beyond just food items.
With the initial surge in food deliveries experiencing a slowdown, delivery app companies are pivoting towards retail partnerships to sustain their growth. Significant collaborations have emerged with large-scale chains like Dollarama, PetSmart, and Sephora. According to Vince Sgabellone, a food service industry analyst at Circana, the term “food delivery apps” is becoming less accurate as these companies broaden their offerings to include non-food items.
Skip, a prominent Canadian delivery app, exemplified this trend by removing “The Dishes” from its name last year, indicating its shift away from being solely associated with restaurant deliveries. Paul Sudarsan, senior vice-president of partnerships at Skip, noted that as Canadians return to office routines, they are increasingly seeking products beyond food on the app, prompting the company to expand its services through collaborations with retailers like Shoppers Drug Mart and Dollarama.
As the growth of food deliveries hits a plateau—currently accounting for about six percent of total restaurant traffic, which is double that of 2019—delivery apps are now exploring new avenues. Sgabellone explained that the maturity of food deliveries in restaurants presents an opportunity for retail expansion and increased revenue streams for these apps.
Uber Eats exemplifies this retail expansion by partnering with industries such as convenience, electronics, and personal care, featuring brands like Spirit Halloween and Sephora on its platform. Similarly, DoorDash has collaborated with retailers like Staples Canada and Giant Tiger, targeting the growing demand for convenience among consumers who prefer not to travel to physical stores.
According to Klaas Knieriem, head of retail for Uber Eats in Canada, delivery has become a habitual practice for many consumers, particularly younger Canadians who are accustomed to the convenience of having goods delivered with just a few clicks. Richard Baker, president and founder of Food Distribution Guy, emphasized the potential for delivery apps to tap into a multi-billion dollar market by diversifying into retail, suggesting that even a small market share could yield considerable revenue.
While large retailers typically utilize their own delivery systems or sell through platforms like Amazon, Knieriem pointed out that delivery apps offer distinct advantages in terms of speed and convenience, promising delivery in as little as 30 minutes compared to longer wait times associated with traditional retailers. Conversely, DoorDash caters to consumers looking for quick, on-demand items—such as last-minute grocery essentials—without the need to travel.
Moreover, delivery apps are increasingly accommodating local businesses, from mom-and-pop shops to florists, as they expand their service offerings. However, Sgabellone cautioned that similar challenges faced in the restaurant industry may also arise in retail. While there is a cost associated with utilizing delivery apps, he noted that many retailers have successfully reconciling their profit margins with delivery fees.
In summary, the trend towards retail expansion signifies a shift in consumer behavior and the evolving business model of delivery apps, ensuring that they remain relevant in a competitive and changing market landscape.
