Foodtech

How 2020 disrupted the online food delivery landscape in the UK

2020 marked a turning point for online food delivery

2020 marked a turning point for online food delivery

The rapid rise of e-commerce and the increasing need for convenience have fueled disruption in the online food industry. With food catering services closed throughout most of the year, and grocery retailers seeing long queues to get in, the pandemic has forced consumers to radically alter their purchasing behaviours, accelerating the penetration of online channels for both prepared meals and grocery. In the UK, the share of online food sales as a percentage of total retail sales rose to 9%, a staggering 70% increase from the previous year (Exhibit 1). And it keeps growing — as of February 2021, 12% of all retail sales were online food transactions (ONS).

We’re starting to see the normalisation of on-demand food, despite the viability of the business model not being entirely clear yet. Incumbents now gain a competitive advantage from last-mile optimisation and lower delivery fees. And with this change, many established retailers have found themselves on the back foot. What does all of this mean for the online food delivery space?