At a virtual Food Marketing Conference, Kevin Holt, CEO of Ahold Delhaize USA (ADUSA), told attendees that the company is looking for more seamless, convenient ways to target today’s “connected customer,” reported Supermarket News.
“The ‘connected customer’ for us, really, is uniquely local brand solutions to make customers’ everyday lives a bit easier so they can enjoy the moments that matter,” Holt said in his remarks. “… [All of our brands are] guided by this as we move to the future. We believe that this is what consumers will be looking for … Those who can make these connections, offer personalized solutions and deliver on what customers’ needs are will be successful.”
This “connected customer” strategy will guide how the company views its digital and its brick-and-mortar channels, both in terms of how each functions on its own and in terms of the relationship between the two. Holt went on, “We’re looking holistically, both online and in-store, because we believe that both, fully integrated, will be extremely important.”
A large part of this strategy will involve using consumer data to personalize the deals and recommendations that the company shows each shopper. He noted, “At our ADUSA operations last year, we delivered over 9.8 billion personalized offers to consumers. Because of these personalized opportunities that we continue to take advantage of, we’re seeing consistent retention rates in our omnichannel loyalty programs of over 80% … We’ve had over a 400% increase in the amount of new customers that we’ve acquired digital. So you can see why this matters a great deal.”
Amid eCommerce Success, Kroger Aims For Rapid Digital Growth
Supermarket chain Kroger has been experiencing strong digital sales during the last year — digital sales saw a 118 percent increase year over year in Q4 — and now the company has announced plans to double those digital sales by the end of 2023, reports CNBC.
At a virtual conference, Kroger CEO Rodney McMullen shared with investors the company’s plans to make its eCommerce channel more profitable, which will include partnering with United Kingdom-based grocery automation technology company Ocado to improve online order fulfillment.
The chain will use automated warehouses to fulfill online orders, each of which has the capacity of 20 stores for only 60 percent of the labor cost. These “sheds” will be 135,000 to 375,000 square feet, and each one will cost the company $50 million to $100 million to create. The first 11 of the 20 sheds planned will be operational before the end of 2022.
“At maturity, a facility actually has a higher margin than a store,” McMullen told investors.
Additionally, the company intends to offset the operational costs of online order fulfillment by growing its ads business. With its trove of consumer data from its online ordering channels, Kroger intends to sell consumer-packaged goods (CPG) brands more “shoppable” ads that will target relevant consumers, according to Senior Vice President of Kroger Precision Marketing Cara Pratt.
H Mart To Open MFC In New Jersey
Of course, Kroger is not the only chain working on boosting its eCommerce fulfillment capabilities with automated warehouses. Many grocers are looking to micro-fulfillment centers (MFCs) to expand their offerings and drive down costs.
Korean-American supermarket chain H Mart, for one, is creating a new MFC in Carlstadt, New Jersey, reports Grocery Dive. The company, which is the U.S.’s largest Asian grocery chain, is partnering with Norwegian robotics company AutoStore as well as Indiana-based, Toyota Industries-owned systems integrator Bastian Solutions.
“Hmart.com has proven to be an important offering to our customers,” Vince Colatriano, executive vice president of H Mart, said in a statement. “Hmart.com enables our customers to experience the food that makes them feel at home the same as they do in-store. We’ve partnered with the best-automated technology in the field to fulfill our orders quickly and efficiently.”
“H Mart’s investment in e-grocery automation will not only help the bottom line of their online business but will also benefit their customer base as a whole,” Mike Demko, head of AutoStore’s MFC business line, said of the partnership. “We’re excited to work with Bastian Solutions in providing H Mart a solution that gives them greater operational efficiency and order accuracy, so customers receive exactly what they ordered.”
eGrocery Startups Get VC Boost
As brick-and-mortar incumbents build out their ecommerce capabilities, venture capitalists (VCs) are placing their bets on the future of digital-native grocery services, reports The Spoon.
This week alone, Everli, an online grocery company that uses an Instacart-like “picking” model to bring groceries from supermarkets to consumers’ doors, raised $100 million in Series C funding; Chinese grocery app Nice Tuan, which focuses on sourcing from within the communities it serves, raised $750 million in its most recent funding round; and United Kingdom-based Zapp, which operates delivery-only stores that fulfill orders within 20 minutes, has “quietly raised a new round of funding from leading VCs,” according to TechCrunch.
It will be interesting to see how these digital newcomers fare against more traditional grocers in coming years, as companies compete to earn consumers’ online grocery spending, while finding new ways to make the economics of the high-cost model work in their favor.
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