Rebecca McFarland, Flybuy:
Hello! My name is Rebecca McFarland and I am the Vice President of Marketing at Flybuy. We’d like to welcome you to our 8th episode of the Flybuy webinar series: “The Rise of Off-Premise in Grocery.” We are going to discuss the current and future state of the industry with experts from Peapod Digital Labs, Harris Teeter, and United Supermarkets. Feel free to leave a question in the comment box for us during the webinar, and we will try to answer as many as possible at the end of the episode.
A few topics we will discuss today are:
- Online grocery growth and the rise of Off-Premise
- Post-Covid operations and customer behavior
- The rise of micro-fulfillment….and
- What’s coming on the Innovation Roadmap
Now, I’d love to introduce the panelists:
Vik Bharadwaj is the senior product manager at Peapod Digital Labs, an
Ahold Delhaize USA Company. Vik oversees mobile applications and the expansion of Click & Collect. Before joining Peapod Digital Labs, Vik led multiple B2B and B2C web and mobile product launches across the globe.
Chris Farr has been at United Supermarkets for 16 years. He is currently the Director of Ecommerce where he is responsible for innovating and expanding their digital platform to provide a seamless online shopping experience and optimizing the store operations.
David Loy is the Supervisor of Digital Technology & Experience at Harris Teeter. David has more than 20 years of experience driving growth and delivering value for the retail, data center, financial services, electronics, and telecom organizations.
And last but not least…I want to introduce you to our very own, Jeff Baskin who will moderate the discussion today. Jeff is the Chief Business Officer here at Flybuy and is responsible for the strategic direction, growth, and expansion of our off-premise solutions. Jeff has more than 20 years of omni-channel retail experience, and prior to joining us was responsible for business development, sales, customer success, product development, and implementation at EVERFI, as well as Simplexity, which was later acquired by Walmart.
Jeff Baskin, Flybuy:
Thank you so much Rebecca. I realize how busy everyone is so I’m very appreciative to get this really stellar group of people together representing some of these iconic brands. It will be great to hear directly from those that are on the front lines of these stores and that are in charge of technology and operations on a daily basis..
It’s been a few months since our last webinar and so much has changed just in that short period of time. It has been an extremely hectic and crazy year dealing with Covid and having to make quick decisions based on increased demand, supply chain, employee and customer safety, and of course alternative ordering and fulfillment methods. Retailers were forced to accelerate or launch off-premise solutions like curbside, BOPIS and same day delivery very quickly. Those that already had these solutions in place had a serious advantage.
As things are starting to improve here in the US and signs of normalcy are closer than ever. The question for those of us in the grocery vertical is “What is this New Normal?” One thing that isn’t changing any time soon, and what we’re focusing on today, is the Rise of Off Premise ordering and fulfillment. According to a recent Bricks Meet Clicks study, 75% of e-consumers will continue to opt for curbside and delivery post covid.
With the rise of eCommerce in the last 18 months, comes the entry, and quick climb, of giants like Walmart, Amazon, Target, and Dollar General, who are newer competitors to the traditional grocery retailer. Old School, or traditional retailers, who don’t think these recent entrants are grabbing market share need to reevaluate. Walmart saw 97% growth in digital sales in Q2 of this year, largely fueled by its quick development of curbside pickup. (source)
In addition to these other mega retailers you now have names like Instacart, GoPuff, Doordash and uber fully entering the grocery vertical. CEO of Uber just yesterday said Uber Grocery is now a $3B dollar business for them.
That’s why innovation in a vertical that has traditionally been slow to move is now moving pretty fast. Research is now suggesting that eGrocery sales will account for an estimated $250 billion annually by 2025 which would be 21.5% of total grocery sales. This is a 60% increase over PRE-Pandemic estimates. If this forecast is even directionally correct, investing in ecommerce and enhanced fulfillment is an absolute must.
Speaking of the best, enough from me. Let me get to our panelists.
Chris, I would love to start with you.
Chris Farr, United Supermarkets:
As a regional grocer in Texas, do you think your strategy is different from that of a national retailer? Are there any advantages or disadvantages that you see? “The goal is to provide a seamless online shopping experience. However, adding cost to provide this experience is an issue. So keeping that cost down is the challenge. Partnering with other grocers and the ability to collaborate with them is huge in innovating these solutions.”
David Loy, Harris Teeter:
Around half of grocery shoppers are now using omnichannel services (source), what are the biggest challenges that you’re seeing when implementing new technology to handle these solutions? “We’ve seen a massive amount of growth and change in the way consumers experience Harris Teeter. Consumers are mindful, and are looking for selection and convenience. Omnichannel and any type of technical integration is very challenging in development. Customers want a seamless experience. Our web experience and IOS app need to work together seamlessly.”
Jeff Baskin, Flybuy:
Vik i want to ask you the same question but also want to congratulate you and Ahold on your earnings that just came out this morning and the news that you’re raising your 2021 earnings outlook after online sales penetration surged 188.3% in the U.S. in the first quarter. That’s great. So what are the biggest challenges you see when implementing new technology to help manage this digital growth?
Vik Bharadwaj, Peapod Digital Labs:
First thing we need to get on ourselves is to understand the meaning of Omnichannel. Omnichannel is being there for the customer in every channel across every mechanism that they interact with our company on. The true sense of omnichannel is creating a great digital experience, while also creating a good physical experience. Keeping both in perspective is the definition of omnichannel. Each brand is unique. A constant constructive challenge is what do we keep at a consolidated level so we can continue to move quickly, but yet take the opportunity to customize it for each brand so that the solution is the right fit for the brand. Trying to go through that balance can be interesting, but these are the kind of problems we are trying to solve at the moment.
Jeff Baskin, Flybuy:
Staying with you Vik, one of the big questions for larger retailers is whether they “build vs buy” new technology. Lately, I see more strategic partnerships out there, similar to ours, rather than large retailers keeping everything in-house. Outside of cost (obviously), what are you looking for when evaluating new SaaS technology, considering Peapod digital already has a large technology group.
Vik Bharadwaj, Peapod Digital Labs:
“I think one of the key things that we constantly talk about is understanding what are the core competencies that we as a company work on. Things that are on e-commerce platforms, mobile apps, our management system, absolutely yes. These are in house competencies that we are going to continue to invest in and innovate. At the sametime, we need to be mindful about these auxiliary services that folks such as yourself, for instance, we recently launched sub-service lockers in a brand across a couple of locations. We partnered with a couple of new vendors in order to bring that experience to life. Constantly always looking to where the industry is evolving, and coming back to what are our guiding principles in terms of the core competencies within our companies verticals, versus auxiliary services that we can tap into. This is something we constantly keep a pulse on. Specifically when we think about outsourcing some of the platform services such as you guys. A few things play a pivotal role. I think #1: is strategic alignment in terms of the vision and the mission of how we want to align our companies in that regard. #2 Current capabilities in terms of offerings and really more so the future roadmap of where the companies are going. #3 Technology implications and integrations. I couldn’t focus more on that, because speed is everything. A lot of things are slowly becoming commodities and how quickly you can go and how efficiently you can get something to the market is super important. So understanding a lot about how speed to market works with some of these vendors is something we really focus on amongst many other variables.”
Jeff Baskin, Flybuy:
Based on surveys, we have seen that your customers love the United Supermarkets omni-channel experience. How have you prioritized staff training for new technology programs to drive adoption and has that led to better customer service?
Chris Farr, United Supermarkets:
Oftentimes when we are looking at a digital space, at the end of the day our focus is always on that guest experience. For so long the grocery business has worked on creating such a great in-store experience, and the challenge is how do you bottle all of that up and put it into a digital platform where you have a minimal touchpoint, whether it be on carry-out or delivery portion of it. So one thing that we’ve been able to really push toward, especially with the help of you guys (Flybuy), is keeping the guests informed on their order, which has driven better guest experience and has also helped our team promote these new technologies. From a delivery standpoint, having that ability to send a notification that your delivery is on its way, I can think from the past, and i’m sure we’ve all had this experience, where when you are getting something delivered they say they are in the hours of 12-5 and now i’m succumbed to having to sit there for 5 hours for someone to show up. So I think us being able to shorten that window of notifying their guest whenever their delivery is on their way. And it’s really become a common place, where you order something online and you have the service to track the location to my house. So I think that was something pivotal for us to have for our guest experience. I think it also helps us transition a bit in 2020 from a contractless delivery perspective of being able to send that delivery notification to the guests that didn’t want any contact what-so-ever. We actually had some guests that would put a tip on their door in a plastic bag with a note that said ‘this money has been sanitized, thanks for everything that you are doing.’ But I don’t think we could have been able to accommodate that if we didn’t have that touch point with it being digital. When you look at the curbside, from the otherside, the guests’ ability to notify us that they are on their way is great. We have improved our service, and it’s really interesting because we promote it as a value to the guest, but it really helps us from an operational standpoint and beforehand the guest couldn’t tell us until they got there, and it was a phone call. They would wait for us to gather their order and rush to get to them. That could be very stressful. So allowing us to be able to prepare that order before the guest shows up has really been able to help us press upon some things that we try to stress onto our teams. Two come to mind, as we’ve been able to go above and beyond with our pickup process, since that process is condensed now, to the point if we have guests that say ‘Hey I forgot to get a gallon of milk,’ we’ve now got that time to run back in and get that gallon of milk, and process that order. We’ve also dedicated e-commerce teams, which helps us build relationships with these guests. So if I know Mrs. Jones is coming preemptively, and I know that she is a dog owner, they will pre-package dog treats. So on that carry-out process, we are actually giving that guest above and beyond service in that one touch point. So I think creating these experiences does become a challenge if guests are waiting long periods of time for these orders to be gathered and carried out. From a store adoption standpoint we are constantly pushing the adoption of this technology. Not only does it directly affect our guest services, but it also affects us from an efficiency standpoint.
Jeff Baskin, Flybuy:
You’ve spent a lot of resources on building a unique, brand-new mobile experience that is frictionless for your customers. How will that change the way they shop?
Vik Bharadwaj, Peapod Digital Labs:
A lot has evolved in the online grocery space in the past 2 years. The covid impact has accelerated the growth and innovation around it. Mobile has been the front and center of most of the innovations. If I just focus on the click and collect space, we’ve made a lot of improvements and added a lot of new features specifically on our curbside experience. What we are starting to see from an evolution standpoint, is people had the option to either buy online or walk into the store and talk to an associate to pick-up. We’ve evolved to the point where you can just come to the parking lot and give us a call and we will be out there to deliver your groceries. And now, by using the flybuy location technology, we say we know exactly when you are going to be leaving home, if you are sharing your location, and we know how close you are, and we have everything packed up and are ready to see you, and when you get to the store we also know when you have arrived. So we’ve taken this experience from what was sort of good to great, and we are seeing a lot of uptake in consumers wanting to use curbside pickup with location technology. In fact, you recently put out a number saying 70% of people want to come back, and we are seeing similar results. Ours is closer to mid 80% ‘s in guests wanting to use curbside in the next 30 days. Which is very reassuring with some of the features we have introduced, and some of the enhancements we’ve made. We are definitely thinking about how to take this to the next level. Some long term habits are forming, and consumers telling us they want to use this curbside again is some good positive reassurance of how some shopping experiences have changed.
Jeff Baskin, Flybuy:
I mentioned earlier how research is suggesting that eGrocery sales will account for an estimated $250 billion annually by 2025, and throughout the pandemic your off-premise order volume has soared. Do you think this projection is accurate based on the level of off premise volume continuing as things start to open up more and more?
Chris Farr, United Supermarkets:
I’ve read a handful of articles that mention how e-commerce this year, really with grocery sales, has really fast-forward 4-5 years, in regards to the e-commerce demand we faced. Living in Texas, we are seeing grocery stores open back up, and because of that we are starting to see e-commerce volume level off a bit, which was expected. I think we have seen a fundamental shift with how guests interact with grocery stores. We have always looked at research as to how we create that stickiness from a customer standpoint. What we have seen is it takes a guest about 4-5 orders for them to fundamentally change their habits, and for them to get used to using a new platform. Really every individual at some point was forced to engage online, and that has led to a shift in guests becoming more comfortable with it. We’ve seen instances where guests say now that they use it, they would never turn away from it because it is too convenient. A challenge is how can we add all of these features to expand the digital demand that these guests are having.
Jeff Baskin, Flybuy:
With the significant increase in online ordering, what have you done with your picking software to make it more efficient? What are the biggest challenges and what features were critical?
David Loy, Harris Teeter:
In 2019 we switched to a real time program for our stores to actually get to know our customers and give them a great level of service. Part of that was getting each employee their own device in their hand. A crowdsource feedback mechanism so our employees could give back real time feedback about where certain items are located to consumers. This helped us integrate more quickly with flybuy. We are now seeing a record low level of wait times as we continue to roll this out.
Jeff Baskin, Flybuy:
I know that contactless handoff last year was a top initiative for you. According to Forbes, over 79% of consumers said that health and safety measures that a store has in place would influence their decision on where to shop. What other technologies (besides Flybuy) are you putting in place to ease your customer’s minds when it comes to having a contactless experience?
Chris Farr, United Supermarkets:
In 2019 we were trying to convince the guests that contactless delivery was a good option. 2020 happened and everyone went to that regard. We think it is slowing down a bit, but we think that guests will still want that contactless delivery option. We had to look at the experience with the guests, and how to make the experience enjoyable, while still being safe. We’ve implemented some automated emails that go out to the guests with a summary of the order that say ‘here are your rewards, here’s your savings, here’s your whatever promotion we may be running.’ Additionally, we go the extra mile and take a phone call if needed if we see a handful of substitutions, and how do we accommodate that guest, and how to address that touchpoint for a curbside pickup.
Jeff Baskin, Flybuy:
David, as I mentioned earlier, there really has not been a drop off in curbside orders as things have started to get back to some normalcy and in fact research shows that 52% of consumers prefer curbside over other off-premise options. (source) Is this what you anticipated, and what have you done to help sustain this level of off-premise orders and particularly curbside?
David Loy, Harris Teeter:
Shoppers are looking for safe, convenient, personalized and fresh great service. In some instances, they are looking to have a relationship. They want to feel served. We launch innovative features to make online orders feel convenient for them. It’s about finding the fresh products that you need for this week or for this day in a convenient manner. The last part of that is really to reduce the wait times for our associates so that the entire end-to-end experience was a good one for our customers. If it starts to get inconvenient, or cumbersome, they may shop somewhere else where it isn’t. Whatever it is, whatever technology, at any point, anywhere, it always needs to be convenient for them. The customers are really happy. We’ve seen record customer satisfaction. I definitely think that curbside is here to stay.
Jeff Baskin, Flybuy:
When building your new apps, how big of a concern was privacy? How do you instill confidence that your customers’ data is safe and that they share their location to both find a store and to utilize your location-based curbside pickup solution?
Vik Bharadwaj, Peapod Digital Labs:
We take privacy and security very seriously. It means really being strong about fundamental and guiding principles. What data to collect, why is it even important to us, and how so is it going to be important for the consumers. And more than anything, being very transparent to the consumers about why we are asking you for this piece of data. We recommend our users only use “allow while using” for the location technology, so we only take the bare minimum tracking information, and only on the day of tracking, and once the order is delivered we stop tracking that location. Our guiding principle is ensuring to consumers that we are only taking the bare minimum of data from them. More than anything, how do we transparently communicate this to the consumers. The more that consumers know about what data is being used and why it is being leveraged, the more trust that is built with consumers wanting to share that data. There is still a cohort of population that is hesitant about sharing location. If consumers are changing their behavior, we need to change in our ways of catering to their needs. The question that needs to be asked is, if they do not share the location, what other piece of information we can use to see when they are coming and to still provide them a positive experience. Thanks to the partnership with Flybuy, we have a mechanism where we send out an sms to the consumer where we give the consumers the ability to just send a text ‘omw’ which gives us enough to work with. It does not give us the exact location, but that’s okay. We are still able to get to a good understanding of where we stand with demand. Helping save a lot of time on the store side of preparation services.
Jeff Baskin, Flybuy:
Micro-fulfillment, Dark stores. Is this the wave of the future?
Chris Farr, United Supermarkets:
There still has to be a bottleneck to some degree. How do I increase my fulfillment center, as I still have to pick the same amount of groceries to some regard on the sales floor that aren’t being fulfilled. I think there is a challenge there, with that being said I do see some benefits of a micro-fulfillment over a dark store. You have the ability to anchor a micro-fulfillment center on the outside of an existing building, or an existing store, so there you are able to leverage some of the labor, some of the synergy that are already in that store from stocking the store or stocking the perishable departments.
Jeff Baskin, Flybuy:
According to the recent Bricks Meets Clicks study, grocers that implement enhanced curbside pickup see an average of 30% reduction in labor costs and an increase of $10K+ profit per store. How do you see your current Click and Collect operations changing or adjusting in the next year in terms of initiatives, etc?
Vik Bharadwaj, Peapod Digital Labs:
Curbside with location-based technology is a true win from an omnichannel perspective. It’s a win for the consumer in terms of being able to save time, it’s a win in terms of convenience and safety. At the same time on the other end of the spectrum, it’s a massive win in terms of store productivity, and store associative experience. Knowing exactly the number of customers coming in the parking area for pickup much ahead of time, gives a lot of opportunity to be extremely predictable which leads to high efficiency in terms of how you pack and stage those items. The fact that you don’t even have to call the store, with location tech right now, enables the store associates who are answering the calls and questions to now use that time for staging and packing more items for more consumers to come, which means you have an opportunity to serve a higher volume of customers coming through for the pickup. Because the store associates see the purpose and efficiency gains with this, they are becoming huge advocates for this for consumers. The best form of outcome is when these store associates become the advocates for these features. We’re definitely seeing an uptick in our store productivity rates, especially in our batch pick rates. We’re also seeing improvements in order accuracy, in terms of what consumers order and are getting. And more importantly, we are seeing quite a bit of uptick in the time it takes to prepare the order and put the order in the consumers trunk. All in all, good operational store benefits that we are seeing, and we are going to continue to invest in location technologies and adapting ourselves to it to ensure our store operations continue to be productive with it.
Jeff Baskin, Flybuy:
The delivery landscape is extremely interesting right now. Consolidation, expansion of product offerings, Doordash, Uber starting to focus on grocery delivery and directly competing with instacart. How do grocers go about choosing the right path? And are grocers viewing this as complimentary services or potentially competition?
David Loy, Harris Teeter:
Delivery was one of the first projects I worked on when I came on with Harris Teeter in 2018. At the time we were actually working with UberRush, and they ended up discontinuing that service, and it is interesting to see how they have gotten back into the game in their own way. The first thing is obviously thinking about what is best for the customer, what will give them the best experience. So you have to balance that with speed to market. There are a number of providers who are looking to get your attention for delivery and geolocation. And they are pretty aggressive in over-promising. They say ‘hey we can get you to market pretty quickly, integration is only a few minutes and you will be up and going.’ You really have to be thoughtful about how your customers are going to be served. At Harris Teeter we have over 230 stores, and it is really important that we can partner with someone who can really serve all of those different customers. With UberRush years ago, we could only serve a small portion. It is really about a relationship, a partnership, working with a team you can trust. Technical integrations can be difficult. Sure it kind of sounds good, but it’s not always that easy. So you want to partner with someone who has really gone through the trenches and worked with other retailers and can enable you to train your staff, support your customers, and give you the insights to optimize that process. You need to know how your customers are being served. We are always trying to see and look at what would be best for our customers, and partner accordingly.
Jeff Baskin, Flybuy:
Today’s grocery stores don’t just sell groceries any more. They are gathering places with beer halls, restaurants and book clubs within a store. You just rolled out your new Texas Takeout service. Did your experience with STREETside (your curbside pickup program with Flybuy) spur your service model for Texas Takeout?
Chris Farr, United Supermarkets:
We were able to create this service called Texas Takeout. One thing we’ve always had a challenge with is how do we encompass everything we sell in the store, and how do we allow the guests to order all of that. In some regard if the guest just did not want to come to our store for anything, how do we package all of that up together. There’s a lot of challenges in trying to navigate hot foods, or even prepare meals to go and putting that into the grocery side of it. We ended up going in a different direction and creating this service. Just like the curbside pickup experience, if we can prepare that order before we know you are going to come up you’re going to get a better experience. Not only are you getting a better experience, but the guest that may be waiting in line for lunch, we’ve now taking some of those guests out of that line and now the in-store experience is getting a good guest as well, or a good experience. After 2020 happened, seeing all the restaurants move towards that curbside pickup option, they knew that was their only available option for sales, it has now become a common place. What’s great is along with curbside pickup our guests can now leverage flybuy to check in. So our teams know they are coming and we can prepare the pizza or the hot meals/dinners to go. Not in a too distant future once we start rolling this out, guests will not only be able to get their groceries but they can also get their hot foods for dinner all within a matter of a few minutes… which is great to see.
Jeff Baskin, Flybuy:
As I mentioned in my opening, there has been a significant rise of non-traditional grocers (like Amazon, Walmart and Target) over the last year or two. How does this affect your strategic outlook moving forward?
David Loy, Harris Teeter:
Our consumers are obviously experiencing online shopping like they never have before. They depend on it. So they are trying out a variety of new experiences. What does this mean to us? It means we have to listen. We have to listen very closely to our customers. We listen to our valued associates, we get all kinds of feedback from them and from our shoppers. It gives our product owners a lot to do. To come through and mine and pay attention to the trends of what is happening. I think in the end, we are better together. I think it’s a good thing for the industry as ecommerce and grocery ecommerce have improved. I know 2025 was a target for a number of predictions, but wow, we are there. 2020 has made the industry lead forward. In the end it leads to a culture of innovation and serving and listening to our customers.
Rebecca McFarland, Flybuy:
Thank you so much for coming today and thank you so much to our panelists for taking the time out of their very busy schedules to share their insight and experiences.
Everyone will receive a link to the recording so you can share it with others at your company, and it will also be posted on our blog at flybuy.com.
If you would like to contact Jeff or any of the panelists, their email addresses and LinkedIn contact information are listed on this slide…and if you’d like to learn more about Flybuy, feel free to reach out to Jeff directly at jeff@flybuy.com.
Thank you for attending today!
