Countdown's new business Milkrun sells groceries at a considerable premium
A quick grocery shop using Countdown’s new within-an-hour delivery offering could see you paying in excess of 20 percent for a basket of essentials.
Countdown launched its Milkrun online delivery platform as part of its $400 million transformation plan which involves a rebrand to Woolworths from early next year.
Milkrun operates something like ordering groceries on Uber Eats, the difference being Countdown/Woolworths sources its groceries from its own supermarkets.
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A basic grocery order (with personal preferred brands) of two litres of milk, a bag of coffee, a loaf of bread, 12 eggs and a block of butter on the platform comes out at $44.90, compared with $36.20 in store.
This is a 24 percent increase in price even before delivery fees.
The first couple of deliveries, aimed to arrive within the hour are free, but after that it will cost $7 a pop, working out to a 43 percent total difference.
Woolworths New Zealand director of digital and loyalty Mark Wolfenden said Milkrun was “incredibly popular” in Australia and he was excited to share the ultra-convenient experience with New Zealand shoppers.
“We know people are time-poor and are looking for more quick and convenient ways to shop. Milkrun makes last-minute entertaining, topping up the weekly shop or getting those final bits, or forgotten ingredients, for dinner easy.”
As shown by Uber Eats, where eateries and grocery retailers normally tack on a premium of up to 30 percent to cover fees, convenience does cost money and people are willing to pay for it.
The difference here is that Countdown/Woolworths not only owns its own wholesale channel, it also owns the digital platform and presumably isn’t subject to the same fees.
It is however using Uber to fulfil Milkrun orders.
Excluding delivery fees, a similar order from a local New World through Uber Eats worked out to about a 17 percent difference from in-store prices.
Including a $3 delivery and service fee, ordering similar groceries from New World through Uber cost 25 percent more than regular shopping or online click and collect, compared to 43 percent more through Milkrun.
Countdown’s platform has significantly more products than Uber Eats grocery suppliers like New World, including – as it pointed out, more than once in its media statement – hot chickens.
When asked about the different pricing to its standard grocery offering, a Milkrun spokesperson said it was targeted at time-poor New Zealanders and had a different model, pricing and product range than Countdown supermarkets.
Data released by Stats NZ earlier this month showed food prices had increased 12.5 percent in the 12 months to June.
Vegetable prices rose 23.3 percent, meat and fish rose 11 percent, while grocery food prices including dairy (the most relevant figure for this story) rose 12.8 percent.
Countdown’s decision to spend $400m on its brand during the cost-of-living crisis was widely criticised despite its commitment to offer more value for customers, which it planned to do through a new loyalty programme.
Announcing the refresh last week, Woolworths/Countdown New Zealand managing director Spencer Sonn said it had been working hard to become a better business and do more to meet customers’ needs and expectations.
This first step in introducing Milkrun may fall short on the value objective, but certainly hits Countdown's convenience objective.
