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Deliveroo to Launch Global Expansion of Fast Grocery Service

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(Bloomberg) -- Deliveroo Plc is eyeing a global expansion of its new rapid grocery delivery program, targeting multiple new countries after rolling out an initial location in central London last month.

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Deliveroo Hop is looking to expand in the U.K. outside of London, and in new markets including Italy, France and Hong Kong, according to job listings on Deliveroo’s website.

“Deliveroo Hop will enhance our on-demand grocery offering for both consumers and our grocery partners,” a Deliveroo spokesperson said. “We are excited about how this new service will develop over time.”

Shares in Deliveroo recouped some of their losses Thursday afternoon after the news of the plans, to trade down 0.5% at 275.5 pence at 3:19 p.m. in London after earlier falling as much as 1.8%.

Deliveroo has been increasing its focus on groceries, driven by the rising consumer appetite for speedy delivery of convenience items. Its grocery business made up 7% of transactions by value in the first half of this year.

The new service will also help Deliveroo compete with the spate of grocery startups expanding across the globe, from the U.K.’s Zapp to Turkey’s Getir.

“We are super excited about the early days of this, we’re super excited about the model. We see it as another tool for us to drive future growth,” Chief Executive Officer Will Shu said earlier this month while discussing the company’s third-quarter results.

While Deliveroo customers had previously been able to order goods from supermarkets, in September it launched a collaboration in London with Wm Morrison Supermarkets Plc, allowing customers to receive orders in as fast as 10 minutes from a small urban fulfillment center.

U.K. grocer Tesco Plc has also agreed a deal with rival German grocery app Gorillas Technologies GmbH to pilot a partnership, with Gorillas setting up micro-fulfillment centers at five large Tesco stores, according to a statement from the companies on Thursday.

Grocery delivery surged during the pandemic, and venture capitalists have been pouring billions of dollars into startups that operate “dark stores” in cities to offer a smaller selection of items delivered to the door in minutes.

“For us, Deliveroo was every inch the operator for a premium rating except for its lack of exposure to dark stores. With Hop, that gap has now closed,” Jefferies Group LLC analyst Giles Thorne wrote in a report last month.

The initial roll-out of Deliveroo Hop currently offers users in London a choice of about 2,000 products, and operates alongside Deliveroo’s existing partnerships with over 4,600 grocery stores across the U.K.

Other major delivery companies are also seeking to tap into the rapid grocery model, including DoorDash Inc. and Delivery Hero SE. Earlier this week, Uber Technologies Inc. expanded its own partnership with French grocery chain Carrefour SA to offer 15-minute grocery delivery.

(Updates fourth paragraph with shares, Tesco partnership.)

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