business news in context, analysis with attitude

Published on: June 7, 2017

by Kate McMahon

Ever since Peapod customers downloaded software from CD-ROMS to place a grocery order on their desktop computer back in 1989, you could consider them “early adopters.”

Given the current fierce competition in the online grocery sector, which is expected to grow five-fold over the next decade, it’s all the more interesting to see what those consumers want today.

Utilizing search data and customer feedback, Peapod last week expanded its Sort Feature, which allows shoppers to create their own digital aisle based on a variety of filters including brand preference, dietary needs, price and sales.

Peapod added four new nutrition filters – Non-GMO, Sugar Free, Vegan and Vegetarian – bringing to 16 the number of dietary preference filters on its site.

Carrie Bienkowski, the company’s chief marketing officer, noted that Peapod added an Organic filter in 2014 in response to key word searches. “It is now our most frequently used filter and all Peapod carts have at least one organic item.”

She told MNB that all evidence points toward increasing consumer interest and expectations in nutritional labeling, particularly regarding Non-GMO products. “People are much more aware not only about the food they eat but its provenance and sourcing.”

Those expectations certainly will play a role in the battle for grocery e-commerce, which includes such heavyweights as Amazon Fresh and Wal-Mart, online competitors Instacart and Fresh Direct, and major retailers such as Kroger, ShopRite and more.

A report from the Food Marketing Institute and Nielsen found that around a quarter of American households currently buy some groceries online, up from 19% in 2014, and more than 70% will engage with online food shopping within 10 years.

But will that grocery e-commerce be click-and-deliver? Or will it be click-and-collect at a brick-and-mortar store, a mini-warehouse or even a 24-hour, automated, refrigerated kiosk, as being tested by Wal-Mart in Oklahoma?

As reported on MNB yesterday, IRI is out with a new study saying that the click-and-collect e-commerce model is expected to be "a core driver of growth in consumer packaged goods” in because it combines the convenience of online shopping with fees or delays and delivery.

Peapod, which is owned by Ahold Delhaize and operates in 24 markets, actually now offers both options, including more than 200 pickup sites at Ahold’s Stop & Shop and Giant store locations. That ability certainly gives them a foothold in the future. Interestingly, its two markets showing the most growth in the past year couldn’t be more different demographically – New York City and central Pennsylvania.

While competitors are duking it out over the immediate gratification market – a basket of ingredients at your door in two hours – Peapod is committed to enhanced shopping tools, convenient meal solutions and the “big weekly shop.”

I think it will be fascinating to watch this sector as both Amazon and Wal-Mart become increasingly aggressive, which will pressure other competitors to match prices and delivery options. I do think that Peapod will have to do a better job marketing itself; both the Content Guy and I live in communities that are Peapod markets, and we were talking just the other day about how little promotion the service seems to get. (By comparison, Blue Apron seems to promote deals every other week.)

Two things are certain – the margins in grocery e-commerce are razor thin and the logistics leave no room for error.

As Bienkowski put it: “You have to deliver – literally and figuratively.”


Comments? As always, send them to me at kate@mnb.grocerywebsite.com .

Published on: June 7, 2017

by Kevin Coupe

Maybe it's just me, but I sense a rift growing between Apple and me.

Not a big rift. I'm writing this on an aging MacBook Pro, which soon will replaced by a newer MacBook pro. I love my iPhone, iPod and iPad, and even my Apple TV. I'm an Apple guy, and I don't see that changing.

But ... this week, when Apple announced its newest product - the Home Pod, which is designed to compete with the Amazon Echo/Alexa and Google Home systems - I found myself thinking that it didn't seem terribly relevant.

The New York Times notes that the Home Pod "ticks all the Apple-y boxes: It’s very pretty; it’s about twice the price of the Echo; and it has much better sound, including the ability to create a kind of surround sound customized to your room." But while the Home Pod seems like it does a lot of the same things that my Echo does in terms of providing information, controlling smart-home devices and accessing music, it also seems like the Apple ecosystem to which it is tethered is a lot more limited than Amazon's. (It doesn't help that Siri is the name to which the Home Pod responds; Siri has been around for a long time, but I've generally described the Echo/Alexa system as a "Siri that actually works.")

That - in addition to the $349 price tag - just makes the Home Pod seem mildly redundant. And maybe irrelevant.

And then there was something else - while Apple CEO Tim Cook announced the Home Pod at a developers' conference this week, it actually won't ship to consumers until December. That just seems like a long time to wait, if indeed I even wanted one.

I'm willing to be persuaded by Apple that I need the Home Pod. But it is going to take some persuasion, and they're just not there yet.

What they have to do is give me an Eye-Opener.

Then again, maybe it's just me.

Published on: June 7, 2017

Amazon yesterday announced that it will offer discounted Prime memberships - which gives access to two-day shipping as well as video and audio content and other benefits - to low income consumers in the US, effectively ramping up its e-commerce competition with a newly e-aggressive Walmart/Jet.

The Wall Street Journal reports this morning that the target makes up almost 20 percent of the US population, which is made up of people "who obtain government assistance with cards typically used for food stamps." The reduced rate Prime membership will cost these folks $5.99 a month, much less than the $10.99-a-month or $99-a-year rates charged to regular customers.

The Journal story notes that "Wal-Mart counts on shoppers who receive government assistance for a large percentage of sales. The retailer generated about $13 billion in sales last year from shoppers using the Supplemental Nutrition Assistance Program, or SNAP, accounting for around 18% of the money spent through the program nationwide ... Already, low-income consumers, typically those earning $50,000 or less per household, are the fastest-growing group of Amazon Prime customers, according to a survey by Robert W. Baird & Co. analysts."

Low-income shoppers "may face several impediments to shopping online: a lack of access to the internet, banking resources like credit cards, and safe places for package delivery," Journal writes. "In addition, food stamps aren’t yet eligible for payment online, a factor that has driven much of that traffic to Wal-Mart, dollar stores and other brick-and-mortar shops.

"These consumers’ habits are changing quickly. Most low-income consumers have mobile phones. Amazon now allows customers to load cash onto their accounts at physical locations. United Parcel Service Inc. has established package pickup locations, while Amazon has added delivery lockers around the country."

Published on: June 7, 2017

The Chicago Tribune reports that while Target has been suffering on a number of fronts, including sales and profits declines, the Windy City is critical to its reinvention plans.

According to the story, "Under attack from giants Amazon and Walmart, Target is fighting back by opening a raft of mini-stores in area neighborhoods. Each is no larger than 40,000 square feet, compared with Target's 175,000-square-foot superstores. By 2018 the chain is expected to have at least 10 mini-stores, about 7 percent of the company's expected 130 small-store network, operating throughout select Chicago-area neighborhoods and more densely populated suburbs.

"While this slimmer shopping concept won't single-handedly defeat the competition, the approach is an essential component of Target's multibillion-dollar about-face. That effort also includes sharpening its online strategy, refurbishing many of its huge stores and, Target management hopes, greatly improving earnings."

The story describes the stores as "tucked into densely populated communities with nearby apartments, condos, public transportation hubs, downtown centers or universities. They are trimmed-down versions of Target's flagship superstores, offering abridged versions of the mainstay lines of apparel, food and beverages, office supplies, housewares, hardware and electronics." And, they serve "as neighborhood pickup sites for Target's online customers."

Published on: June 7, 2017

CNBC is reporting this morning that Sears Holdings will close another 66 stores, on top of the 180 closings it already has announced for this year. The closures will consist of 49 Kmarts and 17 Sears stores.

The move is seen as yet another part of management's stated desire to return the company to profitability and viability, even though Sears already has conceded in a filing with the US Securities and Exchange Commission (SEC) that there is "substantial doubt" about its ability to continue to exist under the current fiscal conditions.

The closures should take place by July.

Published on: June 7, 2017

Fast Company has a story that questions whether meal kit companies - which are popular right now, with Blue Apron announcing its plans to go public - have the right stuff to be able to remain relevant and viable five years from now.

"While interest in meal kits is growing, there isn’t strong evidence that most people are ready to give up entirely on the grocery aisle," Fast Company writes. "Meanwhile, Blue Apron’s marketing department is spending an exorbitant $94 per customer to get people to sign up for its service–and in the last year, its customer growth rate has actually slowed. So is Blue Apron really cut out to be a public, stand-alone company?"

One possibility: "Blue Apron and many meal kits are rigid in format and as such largely supplemental to traditional grocery stores. That makes them potential targets for acquisition by grocers with a digital strategy."

Good piece, and you can read it in its entirety here.

Published on: June 7, 2017

• The Cincinnati Enquirer reports that "Kroger plans to open a Downtown supermarket in the summer of 2019, giving neighborhood residents, city officials and boosters what they've sought for decades." The two-level, 45,000-square-foot supermarket will be one block east of Kroger's headquarters, and will include a second-level wine and beer bar.


• USA Today reports that as German discounter Lidl opens stores in the US, it will feature an fashion line designed and promoted by supermodel Heidi Klum, who has a high media profile because of her "Project Runway" TV series.

"Klum, who is German, doesn't seem fazed by seeing her apparel show up in the place normally associated with stacks of peanut butter jars and or boxes of Kleenex," the story says, quoting her as saying, “Lidl is known for making quality products at affordable prices and I’m proud to partner with them on this fashion collaboration."

Published on: June 7, 2017

• Upstate New York-based Tops Friendly Markets announced that Edward Rick, its manager of consumer insights and analytics, has been promoted to the role of director, consumer marketing & digital, responsible for the development, implementation, and execution of consumer marketing and digital/interactive marketing programs.

Published on: June 7, 2017

...will return.