The Future of Retail and Quick Commerce: Insights from Xavier Martins

The quick commerce market is growing fast, from $83.31 billion in 2023 to an expected $104.10 billion in 2024, with a staggering compound annual growth rate (CAGR) of 25%. By 2028, projections estimate the market could reach $254.99 billion. As customer expectations rise, so does the demand for quicker, more efficient delivery systems. In this context, understanding how retailers are navigating this transformation is critical.

In a recent conversation, Xavier Martins, a key figure from the Deliverect product team, shared his insights on the state of retail's digital transformation, the challenges facing quick commerce, and how Deliverect (and Deliverect Retail) is positioning itself to drive innovation in this space. 

Here’s a closer look at Xavier’s take on where the retail industry is heading and how retailers can adapt to meet evolving customer expectations.

Retail’s Digital Transformation: Speed as the New Standard

Customers are increasingly choosing services based on how fast they can get what they need. COVID-19 accelerated this shift, especially in the restaurant and e-commerce sectors. "People want it quick—and quicker," Xavier observed. This demand for speed places immense pressure on logistics systems, especially as delivery expectations shorten from "next day" to "within three hours."

The rise of platforms like Amazon that focus on getting products to customers as fast as possible has set new benchmarks for other industries, including retail. Quick commerce, the ability to deliver goods in hours rather than days, is no longer a luxury but an expectation for many customers.

As Xavier highlighted, “The trend will be more and more quick and convenient for certain items...not for your washing machine, but for items like AirPods or a cable you need.”

This shift in customer expectations has pushed retailers to adopt new strategies to remain competitive, and many have begun exploring partnerships with delivery platforms to meet the demand for faster service. However, while offering convenience and speed can improve customer satisfaction and increase sales, it also brings new challenges that need to be addressed, especially when it comes to maintaining profitability in the long term. As retailers and delivery platforms rush to meet the rising demand, they must grapple with the logistical complexities and financial implications of operating a quick commerce model.

Is Quick Commerce Sustainable?

While quick commerce is gaining popularity, it faces significant challenges. Maintaining proximity through local warehouses or "dark stores" in urban centers is costly. Xavier pointed out that many quick commerce businesses, like Gorillas, have struggled to sustain this model due to high operational costs. “The real estate for their stores is costly, and the margin per order doesn’t cover the operational costs,” Xavier explained.

However, this doesn’t mean quick commerce is fading away. Instead, companies are shifting from owning stock and space to partnering with retailers with these infrastructures.Platforms like Uber and Deliveroo are collaborating with local retailers to handle logistics while retailers manage stock. This evolution helps both sides tap into the growing market without the burden of owning expensive urban real estate.

Retailers Moving to DSPs: A Natural Evolution or a Forced Adaptation?

With delivery now essential to customer expectations, many retailers are teaming up with delivery service providers (DSPs) like Uber, DoorDash, and Deliveroo. A recent survey by Retail Gazette found that over 65% of major retailers have partnered with at least one DSP to meet the growing demand for quick deliveries. Additionally, a report by Statista highlighted that the global last-mile delivery market is projected to grow to $108 billion by 2030, driven mainly by retailer partnerships with DSPs to cater to evolving consumer preferences. But is this a natural progression, or are retailers compelled to adapt?

According to Xavier, it's a bit of both.

“Retailers are being pushed into this space for two key reasons: market share and customer expectations,” he explains. As consumers increasingly turn to apps for groceries and other essentials delivered in minutes, retailers face a stark choice: adapt or fall behind. As Xavier says, “If your customers are on these platforms, you need to be there too.”

The Impact on Retailers' Own Delivery Channels

While retailers are adopting DSPs for quick deliveries, their delivery channels remain vital for planned, large-scale purchases. Xavier shared an example: "People will still do their weekly groceries through a retailer’s app, but for last-minute or unplanned items, they’ll turn to quick delivery apps for convenience."

This creates a multi-channel approach, where retailers use their platforms for bulk, scheduled deliveries and rely on DSPs for more spontaneous, time-sensitive purchases.

Deliverect’s Role in Supporting Quick Commerce Operations

As retailers navigate these challenges, Deliverect is uniquely positioned to help them streamline operations and adapt to this fast-paced market. Deliverect has a history of managing quick delivery systems in the restaurant sector. Now, it’s applying that expertise to retail through Deliverect Retail—recently launched in the UK.

One of the biggest operational challenges retailers face is managing multiple sales channels and fulfilling orders across various delivery platforms.

Deliverect Retail provides tools to integrate these platforms and optimize in-store operations. “We’re focused on the operations, logistics, and back-of-house complexities that quick commerce brings,” Xavier explained.

Additionally, Deliverect’s Quest App solution helps retailers manage stock and picking operations more efficiently. "The picker knows exactly where to find each item, following an optimized route," Xavier described. This solution ensures that even high-demand, fast-moving items are easily accessible for pickers, improving the overall speed and accuracy of deliveries.

Stock Management: A Critical Piece of the Puzzle

Stock management is one of the biggest hurdles for retailers operating in quick commerce. Retailers must have the proper inventory to meet fast delivery demands without overstocking and increasing waste. Xavier explained how Deliverect Retail is helping solve this problem.

“We help retailers understand what’s being purchased more frequently and ensure they have enough stock in the right places,” he said. By analyzing purchasing patterns and stock levels, Deliverect Retail provides insights that help retailers forecast demand better and avoid out-of-stock situations. Deliverect’s integration with marketplaces also ensures that only in-stock items are shown to customers, preventing failed deliveries and improving customer satisfaction.

What’s Next for the Retail Industry?

As quick commerce grows, retailers must navigate the complexity of managing multiple channels, handling logistics, and meeting customer expectations for speed. Xavier highlighted two key challenges retailers will face: managing exclusivity with multiple platforms and ensuring efficient back-of-house operations.

Retailers who can meet these challenges have significant opportunities. Xavier summed it up well: “It’s all about where your customers are and meeting them there. Retailers need to map their customers' expectations and then deliver on them.”

Conclusion: Preparing for the Future of Retail and Quick Commerce

The quick commerce market is on track to reach $254.99 billion by 2028, driven by increasing customer expectations for convenience and speed. Retailers must adapt to these trends by partnering with DSPs and leveraging tools like Deliverect Retail to manage multi-channel operations and improve delivery efficiency.

As Xavier Martins emphasized throughout the conversation, it’s not just about adopting quick commerce—it’s about excelling in it. With the right tools and partnerships, retailers can navigate this evolving landscape and meet the demands of a fast-paced, convenience-driven market.