New world orders
Foodstuffs, the country’s largest supermarket operator, finally gets with the 21st century.
Foodstuffs, our largest supermarket operator, gets with the 21st century.
‘ Click and collect” is the new online retail battleground. In the US, Amazon Fresh is planning bricks-andmortar drive-up hubs where groceries will be delivered by robots into the boot of customers’ cars. In Sweden, Volvo has been experimenting with in-car delivery services, including groceries, in partnership with online retailer Mat.se. It’s now rolling out the service globally, delivering packages ordered online to a car owner’s boot within hours.
Closer to home, innovation from our supermarket duopoly is a little more modest, but it is coming. Woolworthsowned Countdown and Foodstuffs’ Pak’nSave and New World brands are about to slug it out for shares of an online grocery market estimated at more than $400 million.
Countdown has done online shopping for 20 years, since two personal shoppers first filled orders at a Manurewa store in 1996. It won’t reveal revenue figures but says it now fulfils more than 23,000 weekly orders and has 80,000 regular online shoppers and 100 delivery trucks. In May, it offered a click-and-collect service at supermarkets nationwide and in mid-September expanded collection to five public-transport facilities around Auckland in a six-month trial.
The pre-emptive strikes come as Foodstuffs launches an online service in early November in Auckland as part of a planned national roll-out to all New World and Pak’nSave stores over the next two years.
Foodstuffs North Island chief executive Chris Quin, the telco-turned-foodie boss hired last May for his technology smarts, says the offer surpasses its main competitor rather than just playing catch-up. “We’ve taken a long time considering what customers want, where they buy from and how to get this right. Our technology is a step ahead of our rivals – it is more convenient and has a better user experience.”
Central to Quin’s thinking on how to build on 95 years of success as a bricks-andmortar grocery retailer is how to “sell more personally in a digital way”. He says personalised offers need subtlety: on the one hand people say “don’t waste our time offering us stuff we have no interest in”; on the other hand, they don’t want their privacy breached by “creepy” approaches.
SHOPPERS’ CHANGING BEHAVIOUR
Quin’s planning has had to factor in New Zealand’s fast-changing retail-market dynamics. More than 85% of us have smartphones and nearly three-quarters of Kiwis buy something online monthly.
Generational shifts, health concerns and migration-driven cultural changes are altering food tastes, particularly in Auckland.
Up to 18% of groceries are now bought at supermarket alternatives such as Nosh, Farro Fresh and Tai Ping Trading’s Asian stores. And instead of doing a weekly supermarket shop, customers are making an average of three visits a week, spending less than $60 each time.
Foodstuffs’ online service will deliver orders from the store people normally shop at rather than a central warehouse. Quin is opting for mobile-friendly technology, which will be tested in an Auckland store from November, before being offered throughout the country early next year.
Goods ordered online will cost the same as those in-store, although there will be a delivery charge, which Quin is not revealing yet. In a trial in Wellington of online ordering, about 55% of customers opted for home delivery over collection from in-store lockers.
Foodstuffs is also considering other delivery options after being gazumped by Countdown’s click-and-collect offer to publictransport users. Quin says it will cater for both private and public-transport customers and future delivery options include the likes of “Uber, couriers and drones”, although the last is some way off.
Online shopping has required the biggest technology investment by Foodstuffs for 20 years. Quin won’t reveal the IT spend, but says it’s second only to property. Foodstuffs North Island’s annual report shows property capital expenditure of $62 million for the 2016 financial year and overall capital spending of $106 million, although some IT costs were paid for from the operational budget.
IT spending was stepped up five years ago when the owner-operator co-operative launched “Programme Lightning”, with touchscreen point-of-sale (POS) systems and SAP software to track what customers buy and for inventory and distribution management.
ROLLING, ROLLING, ROLLING
Foodstuffs has German company SAP’s software in 40 stores so far; by the end of 2018, it will have been rolled out to all Pak’nSave, New World and Gilmours outlets. Another solution is being “refined” for Four Square stores.
“It supports having one system that works in every store that tells us the price of each item and how much is in stock,” Quin says. “It also allows us to take it to the next level so we can grab data from the system that tells us more about the customer rather than the product.”
The POS solution completed in March paved the way for October’s North Island launch of the New World Clubcard loyalty programme, which has been running for two years in the South Island.
Customer feedback on existing loyalty programmes was they didn’t offer enough rewards. Quin says Clubcard lets customers choose how they are rewarded, with either Fly Buys, Airpoints or New World dollars. The card has 450,000 South Island users and 80% of in-store spending goes through the programme.
“Previously, through Fly Buys, we didn’t know who our customer was, and this enables us to do that,” Quin says.
Countdown stole some of Clubcard’s thunder in early October by unveiling a revamped Onecard scheme in conjunction with AA Smartfuel, to create the country’s biggest loyalty programme with 3.5 million members. Card-holders can opt to earn grocery rewards through the supermarket or fuel savings from AA partners BP and Caltex.
Quin says Clubcard allows customers to earn and spend rewards at more outlets. For customers, more competition brings its own rewards.
People don’t want their privacy breached by “creepy” personalised approaches.