retail news in context, analysis with attitude

The Boston Globe has a piece about how supermarket chain Roche Bros. is getting some grief for having decided to outsource deliveries to an outside contractor called The Grocery Runners, which is using gig workers to make deliveries in their own cars.

According to the Globe, "A few of the staff drivers quit, and others have been kept on to deliver to major customers, the drivers said. But the rest have been relegated to in-store positions, without the opportunity to earn tips — $20 to $50 on an average day, drivers said, climbing to as much as $250 during the pandemic. Some clean or stock shelves, others shop for online customers or take orders out for curbside pickup, in some cases handing off groceries to the very people who replaced them."

The Globe notes that 21-store Roche Bros. was early to the e-grocery game, having "started its delivery service in 2005 — adding 25 full-time employees and 16 temperature-controlled delivery trucks, according to news reports at the time."  At the time, "online grocery sales made up only about .6 percent of total US grocery sales. Last year, online sales grew 54 percent, accounting for 7.4 percent of total grocery sales, according to the research firm Inside Intelligencer. And the new shopping habits formed during the pandemic are expected to stick. By 2023, 11.2 percent of total US grocery sales are expected to be online orders."

The Globe quotes But Flickinger of Strategic Resource Group as saying that "outsourcing delivery is a 'smart, strategic move.' Seventy percent of weekly grocery sales occur between Friday and Sunday, and on-demand drivers can meet the need as it arises, he said, allowing the company to shift delivery drivers to other roles. And with food and energy prices through the roof, grocers are trying to reduce expenses, he said: 'They’re looking at ways to cut costs without giving shoppers a higher grocery bill'."

However, Steve Striffler, director of the Labor Resource Center at the University of Massachusetts Boston, takes the opposite view, saying that while "the practice of cutting labor costs has intensified during the pandemic," it is a "'particularly bad look' for grocery stores, which saw profits rise about 10 percent on average during the pandemic,."

"It seems totally unfair and unnecessary to go after the very drivers who risked their lives during the pandemic, particularly because they grew the business,” Striffler said. “They should be getting rewarded.”

KC's View:

I think the Globe did a reasonably fair job of laying out the various arguments, though the headline, which quoted a former driver as saying, "I thought I was a hero, but I’m expendable," didn't do the retailer any favors.  (It appears that Roche Bros. management did not provide any quotes for the story.)

Flickinger makes an excellent point, which in many ways is sort of the closing argument - at a time when inflation is causing prices to go up, and labor is getting more expensive, an independent retailer like Roche has to find ways to keep prices down, which means looking for efficiencies wherever and whenever possible.  That may be the only way to compete with retailers that have deeper pockets and big ambitions to dominate the market.

That said, my biases on this subject have been stated here many times - I think that retailers do run a risk of being disconnected from an important part of the customer experience when they outsource delivery services.  But it may be that the folks at Roche would argue that at this time, it is a tough call, but one that has to be made.