Albertsons is testing a delivery subscription service

Albertsons is currently testing a delivery subscription service in about a dozen stores across various markets. The service, which does not yet have an official name, pricing plan or order minimum, began in March. “We are testing different price points,” a spokeswoman said. The orders are fulfilled by Albertsons’ systems and employees.

Speaking at the Digital Food & Beverage Conference this week in Austin, Texas, Kenji Gjovig, vice president of e-commerce marketing and merchandising at Albertsons, said the company plans to expand the service after seeing “off the charts” results in the Phoenix and Southern California markets.

Gjovig said Albertsons’ goal in offering subscription delivery is to secure customer loyalty and get them to order more of their online groceries through the company. “The objective of the program was to increase frequency without having a negative effect on profitability in the transaction,” he said during his presentation.

The program offers a monthly payment plan as well as an annual plan, and Gjovig said both options have exceeded expectations.”We’re seeing a dramatic increase in frequency — above where our forecast was, and an increase in profitability as well across the two cohorts in the annual and the monthly subscribers,” he noted.

Getting the buy-in from customers through subscription services can help ensure that they won’t go elsewhere for their online grocery shopping. But with so many different subscription services vying for consumer dollars — from Netflix to Amazon Prime, which claims more than 100 million members — the trick is convincing customers to pay up.

According to a survey of 2,500 Americans released last year by Waterstone Management Group, respondents spent more than $237 a month on subscription services — much higher than the roughly $80 they estimated they spent.

Will shoppers view online grocery subscriptions as a necessity or a nice-to-have? During a separate presentation at the Digital Food & Beverage Conference, SpartanNash’s director of e-commerce, Matt Van Gilder, said customers approach them differently from other services. “You’re already going to be getting an order every week,” Van Gilder said. “This subscription model isn’t necessarily adding new products into a customer’s life but a new way to get those products.”

SpartanNash currently offers a $49 unlimited grocery pickup subscription through its Fast Lane service, which is available at more than half its retail stores. Van Gilder noted that subscription shoppers are spending 30% more with the company than they did before they used the service.

Competing grocers and delivery services are sold on subscriptions. Walmart is testing a $98-a-year “unlimited” delivery plan in four cities. That’s the same price as a Shipt membership, while Instacart’s Express service dropped from $149 to $99 late last year. And then there’s Whole Foods, which offers free two-hour delivery and pickup to Amazon Prime members in a growing number of markets.

With more and more consumers adopting online grocery, retailers are jockeying to claim their loyalty. Look for more companies to turn to subscription services, and to potentially add perks to sweeten the deal.



Carrefour goes for fast home delivery with Glovo deal

Carrefour has teamed up with Spanish start-up Glovo to provide a fast home delivery service as the French supermarket group looks to deal with growing competition from the likes of Amazon as well as domestic rivals.

Other supermarkets around the world are forming deals with online partners such as Amazon and others to meet growing demand from customers for home delivery services. Carrefour’s French rival Casino already has a partnership with Amazon, while Marks & Spencer has a joint venture with online food retail pioneer Ocado.

Carrefour’s Glovo partnership will cover four countries – France, Spain, Italy and Argentina – and will start operating by early October at the latest. The service will aim to deliver 2,500 products to customers’ homes within 30 minutes.

“With this new partnership, Glovo and Carrefour will offer a 30-minute home delivery service that complements their existing e-commerce offers and allows them to address the needs of new customers,” said Carrefour director Amélie Oudéa-Castéra.

Glovo, which competes with platforms such as Uber Eats and Deliveroo, said in April that it had raised 150 million euros ($168 million) of new funding.

Glovo, founded in 2015, booked a 90 million euro-loss in 2018, according to data provided by Delivery Hero, one of its shareholders. Carrefour, Europe’s largest retailer, is in the midst of a five-year plan to boost sales and profits.

The plan includes 2.8 billion euros of investment in digital commerce and aims to increase online food sales to 5 billion euros by 2022. In 2018 alone, Carrefour’s online food sales grew by over 30% to 1.2 billion euros.



Tesco wants to open 750 stores in Thailand

Tesco is to open 750 convenience stores in Thailand over the next three years in its first major overseas expansion under chief executive Dave Lewis. Thailand is the grocery group’s biggest market outside the UK and its most profitable.

Lewis, 54, who was parachuted into the supermarket chain in 2014 after it ran adrift under previous management, believes that Thailand offers a huge opportunity because of its young, increasingly urban and affluent population. ‘The economics of the country are very attractive. There is a big emerging middle class” he said.

Tesco has been in Thailand since 1998. It employs 46,000 full-time staff there and operates under the Tesco Lotus brand. The group has more than 1,500 Express convenience stores and around 400 larger shops, including some hypermarkets. It also owns shopping malls and until recently was involved in the wholesale market.

Lewis’s move will create up to 10,000 new jobs in the country. He said he sees large scope for growth, as around half of the Thai food shopping market consists of traditional markets, street stalls and small family-owned shops. Profits in Asia, which also includes its Malaysian operation, were down 4.3 per cent last year, though Lewis attributes this to a restructuring in Thailand, including a withdrawal from the wholesale operations. He shut down a bulk selling business in 2017 that serviced independent merchants after concluding it was unlikely to become profitable. ‘We have been making changes over the past two years but now we have a model we are very pleased with,’ he said.

Tesco is likely to face stiff competition from Japanese-US business 7-Eleven, which has thousands of its convenience stores in Thailand, where the brand is run by locally listed company CP All.

In the past, Tesco has run into rough waters with some of its overseas forays. It pulled out of an ill-fated venture into the US through its Fresh & Easy chain on the West Coast in 2013. The failure to win over US shoppers cost it around £1.2billion.

Lord MacLaurin, a former chairman, recently attacked ex-chief executive Sir Terry Leahy, whose decision it was to go into the US market on the eve of the financial crisis, accusing him of having an ‘arrogant’ and ‘extravagant’ management style.

Lewis sees the Thai move as part of his strategy to move the company on after its recovery from the scandal that engulfed it under his predecessors. A £250million black hole in the accounts came to light shortly after his arrival and Tesco posted a record pre-tax loss of £6.4billion in 2015. Under his stewardship, the group has returned to profit, with a 28.8pc jump last year to £1.7billion.



Britain’s Tesco tests checkout-free shopping

Britain’s biggest retailer Tesco is trialing a checkout-free method of payment for its convenience stores, allowing customers to scan products on their mobile devices and then walk out with them.

The supermarket group is testing the smartphone app at the Tesco Express convenience store located in the campus of its headquarters at Welwyn Garden City, north of London.

“Using your mobile device you select some products, put them into your basket on your device and then just walk out of the store,” Steven Blair, Tesco’s convenience transformation director told reporters.

“The feedback is very good on it but it’s super early,” said Blair.

U.S. giant Amazon opened a checkout-free grocery store in Seattle to the public in January, moving forward on an experiment that could dramatically alter bricks-and-mortar retail.

The Seattle store, known as Amazon Go, relies on cameras and sensors to track what shoppers remove from the shelves, and what they put back. Cash registers and checkout lines become superfluous – customers are billed after leaving the store using credit cards on file.

Tesco Chief Executive Dave Lewis said although the Welwyn trial was scalable, security implications had to be considered as there was a danger of increased product theft.

“If the margin in the business is 2 or 3 percent, you don’t have to lose much to make it unprofitable,” he said.

The Welwyn store is also cashless, cutting the time spent on customer transactions.

Blair said the store was serving customers at its checkouts in about 45 seconds, versus 90 seconds for a similar sized store in the estate.

He noted that some Tesco convenience stores in Britain were already down to just 20 percent of payments by cash, making a cashless roll-out likely in the future.



Walmart in Mexico launches grocery orders via WhatsApp

Walmart’s Mexico unit has begun offering grocery delivery from its Superama stores via messaging service WhatsApp, in a new stab at attracting shoppers outside bricks-and-mortar supermarkets.

WhatsApp, the free text-messaging service owned by social media platform Facebook, is ubiquitous throughout Mexico. Superama shoppers can text an order to a WhatsApp number run by Walmart, known in Mexico as Walmart de Mexico.

A Reuters reporter tried the service on Monday, sending a photo of a handwritten grocery list. A company representative responded immediately, punctuating responses with smiley-face and winky-face emojis.

The representative said Superama charges 49 pesos ($2.55) for delivery within 90 minutes, or 39 pesos ($2.03) for a later delivery time, and would accept payment in cash or by card upon delivery.

Superama represents about 92 of Walmart’s 2,459 stores in Mexico, which is the U.S. retailer’s largest overseas market by store count. Superama already takes orders via its website and a Superama app, as well as through Cornershop, a third-party delivery app that sells goods for a variety of other stores.

Walmart’s plan to buy Cornershop, which operates in Mexico and Chile, for $225 million, was blocked earlier this month by Mexico’s competition regulator, which said that Walmart could not guarantee an even playing field for rivals also using the app.


Source: Reuters

Kroger is testing 30-minute delivery

With Kroger Rush, the experiment-happy retailer seeks to win over customers looking for a quick meal or a few last-minute ingredients to round out a dish they’re preparing at home. The service is part of Kroger’s effort to cover a wide range of online shopping demands, and joins its pickup and delivery options along with Kroger Ship, the direct-to-consumer marketplace that launched last year. Altogether, these services will make Kroger products available to every American household by the end of this year.

As the threat from restaurant delivery services like Grubhub and Uber Eats grows, grocers are trying to respond. Some, like Wegmans and Publix, offer dedicated meal delivery, but the speed, brand appeal and quality popular restaurants are delivering at lunch and dinner is tough to match.

If Kroger Rush scales, it will likely need to do so in population-dense areas close to young, tech-savvy consumers. The company will also have to sort out labor. Is it more cost-effective to rely on a third-party company like Instacart or does Kroger need to use its own employees?

The service calls to mind FoodKick, the on-demand offering from New York-based e-grocer FreshDirect that caters to a young, affluent audience. FoodKick launched in 2016 and centers on alcohol, fresh foods and meals for Big Apple consumers.

Kroger Rush also draws a comparison to Ocado Zoom, the on-demand delivery option Kroger’s British e-commerce partner launched earlier this year in London. Zoom — a nimble alternative to the next-day service Ocado provides from its large automated warehouses — offers around 10,000 products and is focused on small- and medium-sized orders.

Depending on how demand evolves, Kroger and Ocado could very well combine their knowledge and resources for super-fast delivery in the U.S. A Kroger spokeswoman acknowledged as much to the Business Courier, noting “maybe Ocado robots will do the picking for a (Kroger) Rush solution.”

That solution is still a ways off, however, as the two companies just broke ground on their first fulfillment center — a $55 million, 335,000-square-foot facility in Monroe, Ohio, set to open in spring 2021.

Ever since it launched its Restock program, Kroger has shown an eagerness to experiment and explore alternative revenue streams. But the company’s core grocery business remains under pressure, and executives have placed significant emphasis on becoming an e-commerce leader in the future.

A progress report will come this Thursday when Kroger reports its first-quarter earnings for fiscal 2019.


Publix ready to launch mobile payment feature

Publix Super Markets customers will soon be able to pay by credit, debit or flexible spending account with the grocer’s mobile app. The current mobile payment option, on Apple devices, is being rolled out gradually in its stores, with plans to expand to Android.

“By integrating a mobile pay solution within the Publix app, we can offer a way for our customers to plan, shop, save and pay with ease,” Publix spokesman Brian West said in an email to the newspaper  The Ledger.

The mobile pay system will integrate coupons and other offers already connected to the app.

Other major retailers have launched their own mobile payment platforms including Walmart, which was at the forefront of the trend when it developed Walmart Pay in 2015. Target debuted its mobile payment app in 2017, and Kroger introduced Kroger Pay just a few months ago. Many other grocers who don’t have their own mobile pay feature accept Apple Pay or some form of mobile payment.


New Whole Foods Format

In the usual course of events, when Amazon or its close sibling Whole Foods opens a new food-retailing format, a huge burst of publicity ensues, often featuring enthusiastic, ill-informed predictions about how the new format will take over the world and everything will change.

Such was the case when the automated Amazon Go convenience stores started to roll out. The stores have no cashiers, so there was much publicity about how many tens of thousands of jobs across food retailing would be lost as the concept took over the entire industry. No such thing happened, nor is it likely to do so any time soon. Then the concept of package-delivery drones was touted as a transformational event. They’re now largely forgotten.

All things considered, it’s strange to see how quietly Whole Foods opened its first-anywhere conventional convenience store in the Chelsea neighborhood of Manhattan. The opening triggered no blare of publicity. To the contrary, there were only a couple of mentions in local publications about neighborhood happenings. The radio silence about the format probably owes to the fact that neither Amazon nor Whole Foods issued a press release about the new format. Why?

The lack of publicity from the store’s owners indicate to me that it’s an experiment, and a very low-risk one at that. The new store is in a small roughly 2,000 square-feet space in the corner in a building at Seventh Avenue and 25h Street. The ground floor is a large, full-scale Whole Foods Market. The proximity of the Whole Foods store means no separate product-distribution chain is required for the smaller new store. Conveniently, the space housing the new Whole Foods format was previously a Whole Body store, operated by Whole Foods, so there’s no new occupancy cost. Then, as now, the store has a separate entrance and exit with no interior customer access to the Whole Foods store that wraps around it.

Let’s take an inside look at the new store to get a better sense of what Whole Foods is up to. My recent tour of the store shows that it features mainly grab-and-go items such as prepared sandwiches, a limited line of baked goods, produce, florals, a cooler case for various beverages, a dairy cooler, a very limited grocery selection and magazines.

The focal point of the store is a staffed beverage bar identified by bright blue overhead Illuminated lettering announcing that it’s a “Coffee and Juice” bar, but many more drinks are available. There are eight bar stools set up across a side-window ledge to accommodate customers who want to consume their purchases at the store. Price points seem to be identical to those at the main Whole Foods store with the Amazon Prime member deals. The store has six checkout points, three intended to be staffed and three customer-actuated self-checkouts.

So, what’s the story here? If this store description seems familiar, that’s because it’s essentially an Amazon Go store without automated features. Like Amazon Go, it’s intended for nearby office workers and apartment residents who may want to pop in on a frequent basis to pick up a quick lunch or a couple of staples that need replenishment.

No surprise, the new store is called “Whole Foods Daily Shop,” according to what little publicity about the store we can find. Oddly, I saw no signage during my visit there. Instead, there was a temporary canvas banner fluttering in the wind heralding that the store was open.

It will be interesting to see if this staffed convenience store integrates the Amazon Go store mix into places where its full automated approach is too costly, customers are more likely to be part of the cash-based economy, or because shoppers are used to personalized service.

Amazon has the deep pockets and confidence to experiment with many store models as it moves more fully into the physical-store realm. Stay tuned, there will be a lot more to come.

Source: The Robin Report

Ocado: Tom Hanks or C. Thomas Howell?

Recently the Wall Street Journal reported that Kroger has struggled to come to grips with the impending online grocery upheaval. While Kroger has tried many new things – from testing digital shelving to embarking on autonomous vehicle delivery, one Kroger investment stands out from the others – Ocado, the UK-based online grocery retailer that specializes in direct-to-consumer automated fulfillment.

The belle of the ball at Shoptalk 2018, Ocado burst onto the scene, bringing with it hopes of unbridled potential for the U.S. market. But, now, flash forward one year later and there are still many open questions about Ocado. Is it worth all the hype? Is it the Tom Hanks of grocery innovation? Or, are we looking at something else? More on that in a minute.

Ocado Debuts in 2018

I will never forget the day as long as I live. There I was at Shoptalk 2018. I had just finished hearing Nike present on the mainstage and up next to present was a company whose name was unfamiliar and hard to pronounce.

That company was Ocado.

It was a surreal experience because nearly 30 percent of the audience filed out of the auditorium after Nike’s presentation thinking they would not see anything of value from this company of which they had never heard. But, boy oh boy, were they wrong.

Ocado CEO Tim Steiner dropped the mic on the crowd that day. He regaled the audience with slide after slide of how successful his company was with e-Groceries over in the UK, how the market continued to grow, and how robotics would be an ever-present part of the Ocado grocery fulfillment secret sauce. The entire crowd oohed and awed throughout the presentation, and especially so when he dropped this robot-filled video on all of us.

Right after Mr. Steiner finished his speech, a former colleague of mine turned to me, took out his keys, and dropped them on the floor, Ben Affleck-style in Boiler Room.

Then just a few short months after Shoptalk, Kroger announced an investment in Ocado, a move some analysts even went so far as to say was “the best investment the Kroger Company’s ever made in the last 25 years,” which may be more of an indictment against Kroger than an endorsement of Ocado, unfortunately. Regardless, excitement abounded. The robots were finally coming, and Kroger wasted little time announcing further plans at the start of 2019 to open a number of new Ocado-style grocery warehouses over the next few years.

But What Do We Really Know About Ocado?

Like so much amid the oft-cited and ridiculous “retail apocalypse” refrain, glossy first appearances can be far different than reality. It is easy to get caught up in the allure of Ocado – the fancy robots, the new business model and even the cool British accents. But human psychology sometimes leads us to make more out of new things just because they are exactly that, new and unfamiliar.

It reminds me of how Hollywood talent scouts likely felt back in 1983, trying to predict the careers of two exciting young actors – Tom Hanks and C. Thomas Howell.

Now, we all know Tom Hanks — Forrest Gump, multiple Oscar winner, member of the Saturday Night Live Five-Timers Club — but it was not always crystal clear that the Bosom-Buddied Mr. Hanks would be the star that he turned out to be. Take one look at this clip from a guest appearance Hanks made in Happy Days as a karate enthusiast with a Fonzarelli-sized score to settle, and, let’s just say, stardom for Mr. Hanks was not a foregone conclusion.

But, in 1983, the world did appear to be the oyster, for C. Thomas Howell. After a small role in E.T. in 1982, Howell secured the lead role of Ponyboy Curtis in Francis Ford Coppola’s 1983 adaptation of The Outsiders.

Howell was smoldering in the role. He made young women and men everywhere swoon and envious sleeveless jean jackets. It wouldn’t have been crazy to bet on Howell over Hanks back in 1983.

Is Ocado Howell or Hanks?

Sadly, Ocado may be more Howell than Hanks. Ocado, like Howell, burst onto the scene, with a bigger resume (E.T. = UK success), a stronger brand name behind it (Kroger = Coppola), and bigger fanfare, but, in the end, it too could suffer the same ignominious doom that was Howell’s horrendous career choice to star in Soul Man – quite possibly the worst idea for a movie plot in human history, and one not even Rae Dawn Chong could save.

Its hype notwithstanding, Ocado has some deeply rooted issues, both in terms of economics and in terms of the psychology of how people actually want to shop. In a large, suburban sprawl market like the United States, centralized fulfillment approaches to direct-to-consumer grocery fulfillment, no matter how automated, robotic, or efficient, the packing and picking process presents a number of challenges. They are incredibly capital intensive to build, do little to defer last-mile delivery costs or to shorten lead times for delivery. We live in a world where consumers have ever-increasing expectations about speed. The Ocado model may work overseas, but the population density in and around the delivery centers there is a far different dynamic than here in the United States.

Other models are far more flexible and agile in their approaches to solving these problems. Shipping direct-to-consumer from smaller, more hyperlocal and automated micro-fulfillment centers, for example, has a number of advantages over the Ocado model. Micro-fulfillment centers are far cheaper to implement, still give retailers similar pick and pack efficiencies, and they also put retailers closer to their customers from a last-mile cost and speed of delivery perspective.

The concept of micro-fulfillment appears to be gaining significant traction too, as Walmart, Ahold Delhaize, and Albertsons have all announced pilots within the space. While building large Ocado warehouses takes time, retailers can stand up and adapt micro-warehouses quickly and cheaply as they run additional experiments year over year, lending themselves to prairie fire-like adoption, once perfected.

Micro-fulfillment Is the Real Forrest Gump America Wants

Micro-fulfillment also does one other important thing that centralized Ocado-style fulfillment will never do – it gives retailers the ability to separate the acts of shopping from buying. Throughout retail’s history, consumers have had to shop and to buy/acquire products within the same mental movements. Consumers have been de facto warehouse pickers, picking items off shelves at their local grocery stores for years. Now, because of the rise of mobile technology, consumers, and millennials especially, no longer have to play this role. They can shop and have the entire world available to them, at a press of a button and on their schedules. They can shop however and whenever they want.

As I have written for The Robin Report, the separation of shopping and buying is the definition of New Retail, and it is already on display overseas in Alibaba’s Freshippo supermarket. Ocado-style fulfillment, however, does not allow this separation.

Within a mobile-guided shopping experience, consumers can shop at their leisure and elect to acquire products however they want. They can pick products themselves old school or they can simply scan products as they shop and ask a grocer to deliver those products to any spot of their choosing. Micro-fulfillment allows orders to be ready and waiting for consumers anywhere onsite, at their cars, or at their homes.

With Ocado-style fulfillment, the only option consumers have is for products to be delivered to their homes simply because it would take too long to have products picked and packed in an offsite warehouse and then brought anywhere a consumer desires while still on site or within a store.

Therefore, regardless of all the excitement surrounding Ocado, Kroger’s investment, and even the coming robot revolution that Ocado’s videos portend, chances are that when we look back decades from now other technologies will come to the fore to give retailers what they need economically and consumers what they want psychologically.

It is far likelier that our industry will come to know micro-fulfillment as the Tom Hanks of our age, while Ocado, like the once famous C. Thomas Howell, instead becomes destined for the retail equivalent of character roles like “Hilltop Resident” in the Walking Dead.


Sprouts beats Q1 estimates, reports 60% delivery growth

Sprouts’ stock rallied on news of earnings per share beating analyst estimates. With revenue in line with analyst expectations, the company is on track to achieve 2019 financial targets, according to the press release.

Delivery is a key growth driver for Sprouts. Lukow said Sprouts has seen a continued increase in average weekly sales on home delivery, and expects that by the end of the year, delivery sales will account for about 1.75 to 2% of total sales. Basket size for home delivery is significantly larger than in-store, and the margin mix is much stronger relative to the mix of products that are being ordered online, Lukow said.

“We’ve had tremendous success rolling out home delivery now across all of our markets. It was really only late in the last quarter that we rolled out into the southeast. We’re seeing pretty significant customer adoption,” Lukow said, noting that Sprouts’ brand and focus on fresh is resonating with customers.

Sprouts opened eight new stores in Q1, bringing the total to 321 stores in 19 states. The company will enter two new states, Louisiana and New Jersey, in June, and is on target to open 28 new stores this year. Eight stores are planned in Q2 and a majority of the remaining stores will open in Q3, Lukow said.

New prototype stores are performing strongly in new and existing markets, driven by enhanced customer experience in deli, meat and seafood, Lukow said on the call. Sprouts currently has six of these new stores, and two more new stores will be built in the new format this year. Beginning next year, every new store that Sprouts opens will follow the new format.

The emphasis on deli is paying off, with the category proving to be a top sales performer for Sprouts in Q1. Lukow said that incremental sales in meat and seafood, deli and bakery are exceeding expectations, and while produce is an important traffic driver, increasingly customers are seeing Sprouts as a full-shop, healthy grocery store.

“There are a number of factors that are giving us a lot of confidence … we’re not just a specialty grocer, this is really about a natural, organic, fresh full grocery shop,” Lukow said.

With interim and co-CEO Jim Nielsen on temporary medical leave, Sprouts will continue to execute on its priorities without disruption, Lukow said. Although the company has not yet identified a new CEO following the departure of Amin Maredia at the end of last year, the board is highly engaged in the search, and Lukow said Sprouts will hopefully have an update soon.

Gross profit for the quarter increased 9% to $484 million, resulting in a gross profit margin of 34.3%, a decrease of 30 basis points compared to the same period in 2018, primarily driven by cost inflation that was not fully reflected in retail pricing due to the competitive landscape, as well as changes in product mix.

Net income for Q1 was $56 million and diluted earnings per share was $0.46, compared with $67 million and $0.50, respectively, in 2018.