Disruption Rules at GroceryShop: Albertsons, Instacart, Boxed, Schnucks
Disruptive change was the clear focus of the just concluded GroceryShop event in Las Vegas, where grocers and food brands caught up with the latest innovations in artificial intelligence, computer vision, robotics, machine learning, voice command and autonomous delivery.
GroceryShop is a first-year event launched just six months ago by the same people behind the uber-successful ShopTalk event, which has taken the retail industry by storm over the last few years.
The GroceryShop/ShopTalk approach is to focus on innovation, disruption, advanced technologies and emerging business models with Las Vegas-style drum-banging excitement and flame-dancing intensity.
The state-of-the-art conference features a business-friendly format that welcomes a broad ecosystem of retailers, suppliers, startups, analysts, consultants, investors, accelerators, venture capital fund managers, private equity fund managers, and established giants of the retail industry, who are desperately seeking fresh ideas, partnerships and, potentially, acquisition targets.
This is the kind of conference where Google, Apple, Facebook and Microsoft are attendees even if they are not sponsors or speakers.
The emphasis is on do-it-now decision-making and/or deal-making before it’s too late and, by implication, before your financial future is threatened.
Best of Kroger and Instacart
In addition to mentioning the many technology buzzwords floating around today and looking for places to land, GroceryShop included many references to frictionless, customer-centric, personalization, relevance, last-mile, brand strategy, the funnel and, of course, Amazon and Walmart, which were referenced frequently as market-leading examples.
One of the best speakers at GroceryShop was featured in the opening keynote session, Yeal Cosset, chief digital officer of Kroger, the largest traditional grocer in the U.S.
One of my favorite quotes from Cosset’s sit-down (literally) session was, “If we knew what the grocery store experience would be like in five years I don’t think we would share it.”
Other great quotes from Cosset include:
“At Kroger, we are focusing on two levers. The first part is it to eliminate inefficiency and friction in our operations so we can take full advantage of our scale. The second part is where the industry has not yet capitalized. As you improve the relevance of your offering to the consumer, you change the nature of the engagement. For us, it means higher frequency, higher share of mind, more time in stores, and more transactions. This comes by offering more digital conveniences and it has produced a $5 billion run rate for our online business.”
“We may not be the most state of the art in overall retail for our relevant digital offerings and experiences, but we are for our customers. We don’t want innovation to become a distraction, although we have many opportunities to innovate.”
“We can learn from mobile platforms in Europe and digital payment in Asia.”
“The store of the future will be a lot more experiential and force a reallocation of space. More share of square footage will be dedicated to fulfillment and the rest of the store will be centered on experience, which is critical for long term success.”
“What we have seen in digital transformation in the last five years is table stakes. Personalization based on available data will not work. If the filter of the data is only good you will become obsolete, but if it is great you will have success.”
“Time is the constant dilemma. Should we go faster or should we let the customer get ahead of us? If you get too far ahead of the customer, you will create a lot of tension and friction in your business, but if you get too far behind you lose your business.”
The next strongest session featured Apoorva Mehta, founder and CEO of Instacart, which is now available for 70% of U.S. households in all 50 states and 50% of Canadian households.
Here are some key takeaways from Mehta:
“Customers love their grocery stores. They love the grocery stores they have shopped for generations and we see this in our data. But they don’t just shop at one grocer. They may go to one supermarket every week, but they will also go to other grocers.”
“Online grocery is at the tipping point and it’s a big tipping point. Grocery is the largest retail category, a trillion dollars in the U.S. and Canada, and today less than 5% happens online. But last year everything changed and it went from being a 'maybe' to being inevitable. We have seen unprecedented growth, 135% growth last year. In the next 5 years one in five will be shopping for their groceries online. That is a tipping point.”
“We have $1.2 billion in the bank right now, but we are still raising capital investment. Our last round was an opportunistic round. We want to really double down on innovation and R&D and expanding into more markets. We are also going to double down on marketing as well.”
“The ability for brands to reach consumers is an exciting opportunity for us. The top 25 CPG companies work with us representing over 1,000 brands. CPG is a fast-growing area for us. This year it grew 200% year over year.”
The Best of the Rest
Here are some key takeaways from other sessions at GroceryShop:
“Just become profitable. I’ve heard this before and also heard it’s a choice, according to many well respected business professionals. We are investing in growth, growing 50% this year. But at some point it is important to show you can be profitable.” – Andy Katz-Mayfield, co-founder and CEO of Harry’s
“New channels, new product line extension, and new global markets – these are our growth areas, our diversified avenues of growth.” – Andy Katz-Mayfield, co-founder and CEO of Harry’s
“Innovation must be fresh and new. Innovation can’t be 10 years old. Innovation is what consumers want.” – Nicky Jackson, founder & CEO of RangeMe (Editor’s Note: Only in grocery and food brands, apparently, could a company attempting to be innovative focus on 10-year old innovation.)
“Automated grocery is the new online. Don’t miss it.” – Francois Chaubard, CEO of Focal Systems
“The retailers that make customers the happiest will win.” – Francois Chaubard, CEO of Focal Systems
“Schnucks now has the Simbe Robotics robot, called Tally, in four stores. Today, we are announcing it will go into nine more. One of the interesting things about the implementation is what I call the Tally effect. Not only do employees respond to alerts and fill shelves more quickly than before to solve out of stocks, but they also improve shelf conditions better than ever. Managers tell us shelf conditions have improved dramatically since the implementation of Tally and associates are much more on top of it.” – David Steck, vice president of IT infrastructure & application development
“Boxed has a novel way of picking and packing based on algorithms of how things move in a warehouse on a robotic conveyor. Interestingly, our boxes take selfies before they are shipped and send them to customers. As one of my fulfillment guys who is not a millennial once said, ‘Millennials love that shit.’” – Chieh Huang, founder and CEO, Boxed
“Half of search today is done through voice. Whoever wins the race for voice will own it. This is the year of voice, the year of the race for control. To win we must think in terms of systems – mobile, e-commerce, geolocation, anywhere you can do a transaction.” – Will Hall, chief creative officer, Rain
“The grocery space has had the most number of bankruptcies over the last 20 years. Over that time the big are getting bigger. Today, the top six companies in retail account for 75% of all incremental dollar growth.” – Simeon Gutman, executive director, Morgan Stanley
“There is no playbook for the big changes that are going on in retail.” – Simeon Gutman, executive director, Morgan Stanley
“Costco’s private label business is bigger than all of Publix. Walmart’s private label business is the fastest growing private label in the country.” – Luke Petherbridge, president & CEO of ShopCore Properties
“The big four grocers are growing faster than the smaller operators, which indicates the approaching death of the middle.” – Luke Petherbridge, president & CEO of ShopCore Properties
“Grocery e-commerce is deceptively similar and significantly different. It’s like crossing a street in London. It seems like crossing a street in New York, but when you step off the curb you get hit by a bus from behind.” – Narayan Iyengar, senior vice president of digital & e-commerce for Albertsons
“We need to get groceries to customers at more or less store prices with a small delivery fee and do it at a profit. This means we have to work on picking and stores are not optimized for picking. What we need are micro-fulfillment warehouses and we are announcing here that we are partnering with Takeoff to build robotic micro-warehouses to dramatically drive down pick, automation and delivery costs.” – Narayan Iyengar, senior vice president of digital & e-commerce for Albertsons
“84% of online grocery trips go to non-grocer ‘basket bandits,’ such as online-only retailers like Amazon or Chewy, and only 10% goes to traditional grocers.” – PJ Stafford, vice president of e-commerce for Unify