Grocery Delivery Firms Retreat After COVID Lockdown Boom

The grocery delivery industry, which exploded during the lockdown, is undergoing a hard period of adjustment, with investors predicting that only a few firms will survive in each market, Toby Sterling and Nadine Schimroszik reported for Reuters.

Photo Insert: An estimate of seven or eight smaller companies have been forced to seek buyers or shut operations so far this year.

Investors poured billions into "quick commerce" grocery firms that promised to deliver products ranging from pasta to soap powder within 15 minutes from bespoke hubs known as dark stores while the COVID-19 pandemic kept consumers behind closed doors.

With lockdowns easing, consumers grappling with rising living costs, and profitability remaining elusive, the flood of capital has slowed to a trickle, and firms have shifted from expansion to retrenchment.

Getir of Turkey, the largest and oldest of the fast grocery delivery companies, Gorillas of Germany, and Zapp of the United Kingdom have all announced layoffs in recent weeks, while Berlin-based Flink has also slowed hiring.

Jiffy, based in London, announced last month that it was ceasing delivery operations, with Zapp, which raised $200 million in January, assuming its customers.

"The current macroeconomic climate has become incredibly challenging, with very little visibility of when things will improve," Zapp told Reuters in an email.

Citi analyst Monique Pollard estimates that seven or eight smaller companies have been forced to seek buyers or shut operations so far this year.

"It's happening quicker than we could have imagined," she said. Despite that, investors and executives say there is still a solid business case for grocery on demand, given the convenience it offers consumers.

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