The Last-Mile Delivery Challenge

Giving retail and consumer product customers a superior delivery experience without impacting profitability

Report shows that food and grocery retailers need to catch up with consumer demand for great last-mile delivery services

Consumer products and retail firms in the food and grocery segment have to catch up with consumer demand for better and faster last-mile delivery services while at the same time mitigating associated profitability risks. Our research shows that close to three-fourths of consumers are willing to reward retailers who get the last-mile experience right with increased spend and loyalty while 40% consider delivery service a “must-have” feature for food and grocery products. But, last-mile delivery is the most expensive part of the supply chain. So how can retailers improve their last-mile delivery services without taking a profitability hit?

The new report by the Capgemini Research InstituteThe last-mile delivery challenge: Giving retail and consumer product customers a superior delivery experience without impacting profitability highlights recommendations for how consumer products and retail firms in the food and grocery segment can hone in on the home stretch when it comes to last-mile delivery:

  • Outsource delivery and focus on consumer needs – retailers with a lower store footprint need to begin by initially collaborating with grocery delivery services and focus more on genuine customer needs.
  • Optimize fulfillment locations to lower delivery cost – retailers should equip stores for delivery, increase the use of dark stores for delivery, and encourage the use of last-mile storage and collection points.
  • Automate delivery operations to boost profitability – automated warehouse operations, backroom automation for delivery and click-and-collect orders, and autonomous delivery vehicles provide some automation options.
  • Encourage multiple avenues for fulfillment resources – retailers must collaborate with consumers for crowdsourced delivery platforms, encourage employees to deliver parcels for additional incentives, and use the gig economy for delivery during peak seasons.
  • Enable consumer-centric fulfillment offerings – encourage customers to visit the store for returns, align their brand values with consumers’ expectations, and invest in customer-centric initiatives.

The race is on when it comes to last-mile delivery services.

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Sound Bites

Tom Ward, Vice President of Digital Operations, Walmart

We’re always looking for the best ways to serve customers, so we’re exploring a number of different options for getting groceries from our stores to the customer’s front door – some in-house, some third-party.

Sebastian Steinhauser, CEO and founder of Parcelly

Customers still expect free shipping when they purchase something, but this is changing, particularly among Millennials and Generation Z,” he says. “There will be a point in time when customers would consider free shipping as being very inappropriate from an environmental perspective, operationally, or just because it simply doesn’t exist as a market standard anymore.

Catherine Smith, CFO of Target

Our third-quarter gross margin rate of 28.7% was lower than our expectations. This was the result of higher-than-expected supply chain costs driven by digital fulfillment and the cost of receiving and processing a larger holiday inventory position compared with a year ago.

Key Insights


of consumers say that a two-hour delivery option would increase their loyalty, yet only 19% of firms offer two-hour or faster delivery


of consumers are willing to deliver products to neighbors in their vicinity


of consumers order online because they find retail stores as crowded as public transport is during rush hour