Online grocery shopping goes into high gear due to pandemic

Sobeys is leading the charge, Dr. Sylvain Charlebois writes.

Online grocery shopping is going mainstream and Sobeys knows it. This is why it is rolling out an aggressive e-commerce strategy called Voilà!

For many years, customers were reluctant to empower a stranger in some obscure warehouse to pick out their apples and tomatoes. With COVID-19, this is hardly part of the conversation anymore.

Voilà is the new benchmark in online food retailing in Canada, at least for now. More than 100 delivery vans will roam the streets of the GTA to deliver food to customers who have opted to buy their groceries online from Sobeys, for one reason or another.

At the centre of the entire fleet is a stateof-the-art distribution centre, the size of 40 Olympic-sized pools. That is 250,000 square feet of space filled with robots. Another facility is being built in Montreal.

At the centre of this rollout is Sobeys’ partnership with major British e-commerce player Ocado. When it was announced about two years ago that Sobeys would partner with Ocado, the Stellarton-based grocer was admitting it just did not have the internal capacity to deploy a high-level e-commerce strategy.

The hundreds of robots in the facility can take 10 commands per second via antennae that link them to a system designed by Ocado engineers. The system can process a 50-item order in less than five minutes. No human can do that.

Ocado is one of the key players getting British customers to go online. Almost 10 per cent of all food sales in the UK are conducted online. In Canada, it is at barely two per cent.

According to a report from the Agri-food Analytics Lab at Dalhousie University, 22 per cent of Canadians intend to order food online on a regular basis. By 2025, if the effects of COVID-19 are long-lasting, we could easily see online sales exceed six or seven per cent. That is almost $10 billion worth of food sold online.

For customers, there are always three sticking points when it comes to home food deliveries.

First, there’s accuracy. Throughout COVID-19, many Canadians have experienced the frustration of finding items not ordered, replaced without consent, or simply missing from their order. Voilà, powered by Ocado’s know-how, appears to be addressing these issues.

Second, there’s the cost. Food offered online by Voilà is reasonably priced. Many items are offered on promotion, as well, not typical in food e-tailing. Delivery fees are also reasonable compared to other delivery programs — costing as little as $8 in some cases.

Only time will tell if the discounting and delivery fees will remain competitive.

The third point is delivery time, which is how Voilà sets itself apart from everyone else. You can get your food delivered within an hour, which is really what most expect these days. During COVID-19, some of us had to wait eight to 10 days for a delivery if we were lucky enough to be able to put in an order.

One-hour delivery is what grocers should be aiming for.

In the GTA, Grocery Gateway pioneered the warehouse-to-home model years ago. Owned by Longo’s, with a modest fleet of trucks, it has been delivering food across the GTA for more than a decade, applying a high fixed fee for every delivery. The store in Vaughan almost looked like a grocery store, without the cosmetics.

Sobeys’ new centre is simply different. It really looks like what a modern distribution centre should look like, to support a highly efficient e-commerce strategy. But it is also the product of something else that has been going on in the industry.

Amazon’s acquisition of Whole Foods in

2017 pushed Canadian grocers to think more about convenience and how to offset the looming threat that was Amazon. Amazon is massive and its disruptive force could not be denied.

But that was before COVID-19. Now, it is about convenience and safety. Few saw that coming, and this is why Sobeys expedited its rollout. Sobeys is clearly making a statement with Voilà with a strategy that is fully committed.

Other grocers will respond.

Voilà’s national rollout will have to be quick since you can also expect other grocers will soon catch up — and set even higher competitive standards in the days ahead.

Dr. Sylvain Charlebois is senior director of the Agri-food analytics lab at Dalhousie University.