End of the supermarket? Big brands sign up for high-tech service that could cut prices by a third

Katie Morley
31 OCTOBER 2017
Telegraph UK
Britain’s biggest food and household goods brands have signed up to a new shopping service which claims it can slash grocery bills by 30 per cent by cutting out supermarkets.
Manufacturing giants Unilever, Mars, and Reckitt Benckiser, have all signed agreements to say they intend to start selling items directly to consumers through a high-tech digital platform which is launching in the UK next year, it can be revealed.
It means hundreds of household favourites including Weetabix, Walls ice cream, Dettol, Durex condoms and Dolmio sauces could soon be available to buy at much lower prices.
The grocery service designed by tech company INS, is set to pilot in 2018 and is expected to be part of a new wave of shopping firms offering a radically different way for consumers to shop.
Unlike supermarkets, which negotiate prices of goods with manufacturers, the website will let brands decide their own prices.
It will use so-called “blockchain technology” to connect shoppers directly with products, removing the need for supermarkets to act as “middle-men” in the shopping process. INS claims this will allow it to undercut supermarket prices by up to a third.
The service will consist of an online shopping portal through which consumers can find and buy products directly from manufactures, and an outsourced network of warehouses and delivery drivers.
Consumers will be charged for the wholesale cost of items, plus a separate “logistics” fee to cover storage and transportation. This is expected to be anywhere between 10 and 15 per cent of the value of an average weekly shopping basket.
By contrast shelf prices paid by supermarket customers consist of the wholesale price, plus a range of extra costs borne by supermarkets, which can raise costs by extra 50 per cent.
In theory the model should benefit manufacturers as they can charge higher wholesale prices for items than supermarkets are willing to pay, while consumers still receive a cheaper end price.
Brands will also be able to gather data on consumers who buy their products and use it to offer loyalty schemes to individual customers depending on their buying patterns.
INS, founded by the makers of Instamart in Russia, uses so-called “blockchain” technology, which is a continuously updated digital database of who and where individual shoppers are, and what they are buying.
Unlike traditional shops blockchain databases do not need managing by a central administrator, as they manage and update themselves.
Clive Black, head of research at Shore Capital, said blockchain technology offered brands an “enormous potential prize” if they could cut out retailers.
However he added that online shopping provided a relatively “boring” experience and could not fully replace the human intelligence of walking through a shop.