Even groceries, among the most location-centric businesses, must now grapple with the demand for delivery in San Francisco. In the Mission, a neighborhood densely populated with grocers of all kinds, that means getting creative, because the cost of doing delivery are high. But the cost of offering nothing in response to the demand for delivery is even higher.

“People in this day and age are willing to pay a service fee to a delivery service to get the convenience factor of having groceries delivered to their door,” said Dmitri Vardakastanis, whose family owns and operates three groceries in San Francisco including Gus’s in the Mission.

It’s not necessarily that customers aren’t interested in supporting local businesses, or that they have no relationship with their grocers. It’s a matter of not having time.

“Shopping local in your community is usually as convenient as it can get…Being able to get items delivered from a neighborhood local merchant is something that people really do enjoy,” Vardakastanis said. “We found that even our regular customers who are locally based just want that service once in awhile.”

At the Bi-Rite “family of businesses,” which includes two groceries, Director of Product Liz Martinez said there is certainly crossover between people who come to the store and people who get delivery. Aside from that, even those who only order online, opt for the local store.

“On Instacart marketplace, customers are faced with 15 different choices in the city, some of which are very much national brands,” she said. “So if they’ve chosen Bi-Rite and never before been into the store, probably some of them chose us because we are local.”

Setting up delivery, however, is not an easy task. For some grocers, it doesn’t match the nature of their business. Third-party delivery providers like Instacart want to see consistent inventory, and not every grocer can promise they’ll have the same thing always in stock.

Eric Liittschwager, who recently opened Grocery Outlet on South Van Ness Avenue near 24th Street, can offer bargain prices because suppliers who need to offload goods know they can turn to him. But what got overstocked one week might not be in as ample supply the next, and Liittschwager can’t promise he’ll always have a certain brand of olive oil or frozen dinner.

“We call it ‘adventure shopping’ because we don’t have the same thing all the time,” he said. “I tell people to shop once a week minimum.”

Liittschwager also has to uphold agreements with wholesalers about a price he’ll sell his goods at, so he’s in a bind when it comes to offsetting some third party delivery companies’ fees.

At Local Mission Market, owner Yaron Milgrom set out to provide goods sourced exclusively from local producers. Keeping inventory consistent with that criterion is near impossible. Worse, when he weighed partnering with a third-party delivery company for his liquor store Local Cellar, they asked him to stock items similar to other stores in the city so they could offer the same goods across the whole city, Milgrom said.

“Places that have individual character will be wiped out by this,” he said. “When you say you’re trying to help small business…Trying to turn them into a large homogenous business…that is not a win to a lot of us.”

Instead, Milgrom pursued a different angle of the on-demand economy. Catering, he said, now sustains the market as a business.

On the other side of the neighborhood, Casa Guadalupe’s Pedro Gil is working on his own answer to delivery. Ten years ago, Gil used to make deliveries to nearly a dozen restaurants. Now delivery is a no-go because of the cost.

Already, Gil said, he has taken an income hit from traffic infrastructure changes along Mission Street that make it harder for customers and delivery vehicles to park  so he can’t afford to hire a driver and pay for the insurance. Plus, he’s’ found there is little room for error.

“People they say, okay, I give you 20 minutes. In 20 minutes you gotta be there,” he said. Still, customers have asked about it.

Instead of delivery, however, Gil is hoping to set up a pickup system in which customers can put together an order of goods online, pay with a credit card, and then simply run in to grab their assembled groceries from staff – a transaction quick enough to do without a parking space.

More than the cost or the practical requirements of delivery, however, grocers mourn convenience at the expense of personal interactions. Having conversations with customers and getting to know them is something Milgrom sees as more dignified work than putting together salads on a conveyor belt.

“Efficiency isn’t better. It’s just more efficient,” he said. “We should care that people have dignified work…Is it going to be worth it in the end when we have empty retail spaces for the sake of on demand delivery?”

Even at a franchise like Grocery Outlet, each store is tuned in to the needs of its clientele. Liittschwager said most of his staff is local, and estimated about half speak Spanish and 30 percent speak Chinese.

“We’re not just selling products, it’s the experience. People come here for the best service, the interaction with the community,” Liittschwager said.

Running into a cashier who is a neighbor could happen to you at Gus’s too.

“Most of our employees are locally based, and that is part of the joy of shopping locally. I think that people are getting delivery do forfeit that,” Vardakastanis said.

And of course, any good retailer is focused on service. Martinez said Bi-Rite struggled with the idea of moving to delivery because of the company’s emphasis on personal, face-to-face service. But in the end, they needed to keep up with the demand, and the average purchase for delivery is now three times as large as an in-store purchase at Bi-Rite.

“We were just losing market share at that point,” Martinez said. “Really if we’re a service-driven business and our guests are asking for this as a service, the right thing to do is to respond.”

The same is true at Casa Guadalupe, even if delivery isn’t in the cards.

“We have to figure out what is the best way to take care of these customers, because we live from the customers,” Gil said. “We have to do the best service we can.”

All is not lost for neighborhood grocers who want to see their customers, however. Delivery may be a trend, but when asked if it will start to overshadow brick-and-mortar operations, Vardakastanis was emphatic.

“No way,” he said. “There wouldn’t be delivery if we didn’t operate the way we need to operate in store.”

Next up later this week: 

Retail accommodations


SF Art Store Struggles Against E-Commerce

SF’s Shop local ethic disrupted by click-here convenience

Shop Local Disrupted: Valencia Cyclery

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1 Comment

  1. customers want unlimited choice, instant access, a minimum of their own time/effort/personal interaction invested. and they want all of this cheap. while some will prosper the long term health report doesn’t look too bright for a majority of small local businesses.

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