Hi Chris and welcome to the team! Tell us, why did you join Strongpoint?
Online Grocery is an industry I was a part of from the very beginning. It’s now experiencing a period of incredible growth and innovation and the challenge to increase profitability has become more important than ever. I’m joining StrongPoint because of the strength of their solutions, the leadership team, and their proven track record of driving profitability for their retail customers. I want to be a part of that journey, part of the solution and offer their world-class solutions to more customers around the world.
My career to date has taught me that you must be obsessive about the efficiency of a process, and that technology is the key to solving this challenge. At StrongPoint I’m joining a team that is obsessed with making their technology solutions not just efficient, but hyper-efficient and creating real-world benefits to grocery retailers.
Tell us about your Grocery e-commerce experience and how it will benefit StrongPoint’s customers
I have over 20 years experience working for global software companies including extensive experience working with leading grocery retailers. In fact I started my career working for the grocery retailer ASDA in the UK as a department store manager.
ASDA was one of the pioneers of Grocery Home shopping back in the late 1990’s. Orders were taken by phone, fax and via the internet and fulfilled from two distribution centres. My role back then was to specify and implement the systems used in the distribution centres which included a WMS based order picking solution.
I ended up working for the WMS vendor where I spent the next 15 years of my career. My first project after joining was the implementation of their system for Ocado who started their commercial Grocery delivery service in 2002 using the software to pick, pack and despatch their orders.
During those 15 years my teams and I implemented numerous warehouse management and workforce management systems for Grocers and ecommerce retailers. I saw first-hand the impact a well-designed picking and packing dialogue can have on productivity and profitability.
I believe the breadth of my experience gives me solid insight into the challenges and opportunities for a Grocery retailer and I look forward to working with Strongpoint’s current and future clients.
How has the pandemic affected the international market for grocery e-commerce?
The most obvious trend is that the shift to online is permanent. The pandemic drove many more of us online and despite many people already returning to in-store shopping, online sales remain strong and are going to stabilise to a ‘new normal’.
The huge growth and recent large-scale investments in this sector have led to heightened competition for grocery retailer customers. From ‘quick-commerce’ players, recipe boxes and brands like Nestle supplying directly to consumer, the consumer has never had so much choice.
With more competition comes additional squeeze on profitability and so retailers need to find ways to scale their e-services at speed and do so profitably. This is not an easy job.
Of all the changes triggered by the pandemic, what are the key micro-trends you would highlight as the most important for grocery retailers?
Within the overall market increase there are definitely specific trends that we can already see.
Firstly, there is a shift towards smaller assortments and less variety. When lockdowns first hit, the simple challenge of feeding people required retailers to focus on the essentials.
The shift to online has taught consumers to make better lists, and online shopping’s algorithms and instant carts again narrow what we buy.
When consumers venture out, we tend to shop more locally, and local convenience stores have smaller assortments, so this is also contributing to the trend.
The challenge is to get the optimal assortment for the market and to meet consumer demand.
Secondly, there is a focus on speed and safety redefining how convenience is understood. The pandemic has changed our perception of safety and it has accelerated the rollout of self-service checkouts, digital payments, and payment apps. Overall, there is an accelerated shift towards a cash-free economy.
There is significant growth and consumer interest in the ability to buy online and collect from a safe location such as a grocery locker as It is convenience defined by minimised contact.
Thirdly we are seeing an evolution of store models. The adoption of e-commerce in groceries is impacting store size, store layouts and leading to the repurposing of less profitable stores into dark stores.
The pandemic has shifted many of us to buy more locally and coupled with the need to fulfil online orders more quickly there continues to be a drive towards smaller store formats which is likely to accelerate.
I also see stores redesigning themselves to have more of the fresh items upfront that shoppers prefer to select themselves and more of the packaged items that can be ordered online and picked for delivery or collection at the rear of the stores
How should grocery retailers respond to the sudden growth of q-commerce?
The total addressable market for this sector is huge with low saturation in many markets or regions and a low customer acquisition cost. However, the infrastructure needed to execute at speed and scale demands substantial investment.
Because of this I would tell most grocery retailers that partnering with a quick-commerce player can definitely be beneficial as they can front the investment costs. But this comes with caveats.
Firstly, grocery retailers shouldn’t put all their eggs into one basket and should instead look at multiple partnerships. There is no perfect business model, and the market (as well as customer expectations) is developing fast.
Secondly, grocery retailers need to continuously review whether their quick-commerce partnership continue to be mutually beneficial. Whoever owns the order fulfilment capability and customer relationship is going to be the one with the most long-term financially lucrative opportunities.
Keep your options option, form partnerships and trials to learn, grow quickly and keep up with your competitors. But remember this is just one part of an overall e-grocery strategy and equal attention should be given to customers who are ordering their weekly shop.