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Our new research examines how data and technology are transforming retail business models.

Robot technology has made significant advances in terms of functionality and affordability, plus artificial intelligence is allowing machines to communicate more effectively with human beings.

In this report we’ve identified numerous examples from around the world of last mile solutions that help online shoppers embrace this convenience.

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Kroger’s data-science division, 84.51°, has launched a new analytics solution to help branded suppliers better position their products with consumers, in-store and online.

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As Ahold Delhaize USA announces the roll out of same-day delivery and the opening of a tech office, we look at how the retailer and its banners is embedding solutions to help it win with shoppers.

Stop & Shop extends reach of same-day pickup service

Stop & Shop has announced the launch of same-day online pickup for shoppers at 20 stores in Massachusetts, Rhode Island, Connecticut and New York. Shoppers make their purchases on Peapod.com before selecting which of the 20 stores they want to collect their orders from. Shoppers then arrive at their store of choice, where between four to six spots have been created to enable the service to better serve shoppers, at the arranged pick-up time. Customers are charged US$2.95 for the same-day service.

Shoppers will be able to select from a wider range than is available in-store. The addition of the service at Stop & Shop comes after it being available at Giant and Martin’s banners. Ahold Delhaize has said it is aiming to add 600 new click-and-collect sites in 2019, with Stop & Shop set to account 175 of them.

Commenting on the service’s launch, the president of Stop & Shop, Mark McGowan, said: “ As we continue to improve the omnichannel experience for our customers, we plan to roll out 175 of these ‘click-and-collect’ locations by the end of the year. We’re excited to offer our customers the convenience of shopping online for the all the products available at their local store, which they can now pick up in just a few hours.

Ahold Delhaize USA’s Retail Business Services opens tech office

Ahold Delhaize USA’s Retail Business Services (RBS) has opened a tech-focused office. The site will include an innovation lab and an incubator for tech start-ups. RBS said the site would be able to house 200 IT associates who will be able to provide technology services for all the retailer’s chains. RBS provides Ahold Delhaize USA brands with services and support in merchandising, marketing, private label, store operations, pharmacy, sourcing, financial, communications, supply chain and other areas.

Commenting on the launch, RBS’s executive vice president of IT and chief information officer, Paul Scorza, said: “We’re excited for this new space as we continue to expand our team. Whether it’s through our co-op program that brings college and graduate students into our innovation lab for six-month rotations, full-time hiring or partnerships with start-ups, universities and others, we’re always in the market for top talent to support our mission of creating the next generation of grocery retail.

Ahold Delhaize promotes use of AI

Speaking at the AI Summit in London, Ahold Delhaize’s global chief information officer, Ben Wishart, has said the retailer is using AI in several pieces of its business. Wishart said three different types of the technology were being used to improve its operations for its shoppers. First, he said machine learning was being used to help the retailer ‘get better at predicting’ and to help it optimise local assortments to meet shoppers’ needs. Machine learning was also being used to better personalise offers for individual shoppers.

Secondly, Wishart said it was being used to automatically scrape data from sources like social media to help it improve the way it engages with shoppers. Finally, he said AI was being used to better employ and use automation-driven solutions in-store, in its back office operations and in its supply chain.

New appointments at two banners

Ahold Delhaize USA has made two new appointments, changing its leadership team at Stop & Shop and Giant Food. At Stop & Shop, the retailer said Mark McGowan, president will be leaving the company, to be replaced by Gordon Reid, who is presently president of Giant Food. The second appointment will see Ira Kress become Giant Food’s interim president. Both Reid and Kress will assume their new roles in late July, while McGowan will remain with Stop & Shop until the end of 2019, at the company’s request, to ensure a seamless transition.

We review Kroger’s first quarter results and the factors driving growth at the world’s second largest food retail business.

Identical store sales behind expectations

Kroger’s first quarter sales fell by 1.2% to $37.3bn, reflecting the divestment of its convenience business last year. Total sales, excluding fuel and the impact of selling the convenience store business, increased 2.0%. Identical store sales over the period increased 1.5%, excluding fuel. This is below the run-rate required to meet its full-year guidance, with several initiatives underway to try and accelerate its performance. The work undertaken on space optimisation last year is expected to generate a tailwind for the business going forward.

Source: IGD Research

Investing to redefine the customer experience

Kroger remains a business in transformation, driven by its strategic plan Restock Kroger. Central to this is its goal to increase operating profit by $400m over a three-year period, driven mainly by alternative profit streams. This will enable the business to continue to invest in the customer experience, including its ecommerce and private label operations. The business remains confidence on achieving this, with alternative profit streams expected to contribute an estimated incremental $100m this year. The retailer has made several appointments across its media and data business units to enhance its capabilities in these areas.

Ecommerce sales up 42%

Ecommerce sales increased 42% in the quarter as it expanded grocery pickup to 1,685 locations and delivery to 2,126 locations. It also started to test a 30-minute delivery service, Kroger Rush, in the Cincinnati area. The retailer made further progress with its private label business, launching over 200 new products. These contributed to sales growth of 3.3%, helping unit share to increase to 28.9% in the quarter. Its Simple Truth and Private Selection ranges performed particularly well, delivering double-digit sales growth.

Partnerships underpinning transformation

Partnerships are an important part of Kroger’s transformation. During the quarter it formed PearlRock Partners with private investment firm Lindsay Goldberg. This is a new platform to identify, invest in and help grow the next generation of leading consumer product brands. It also formed a new direct relationship with Pinterest, further enhancing its Kroger Performance Media division. The retailer also broke ground on the first customer fulfillment centre that is being developed as part of its partnership with Ocado. Developing these types of partnerships has become a much stronger focus throughout the food retail industry as retailers look to move at pace and bring new capabilities and thinking into their businesses.

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Following Carrefour’s AGM, which saw its chief executive, Alexandre Bompard, discuss opportunities for the retailer to play a role in future retail consolidation, it has opened new formats as it looks to drive innovation in the market.

‘Carrefour to benefit from retail consolidation’

As part of the retailer’s AGM, Bompard said that he expects ‘there will be consolidation in the retail sector in coming years’ and that his mission is to ‘make sure that Carrefour is in the winners’ camp’. The statement follows questions about Carrefour’s long-term outlook in countries where it has underperformed recently, such as China and Italy, especially in the latter after its rival Auchan exited the country following the sale of most of its stores to Conad. Bompard was quoted as saying the retailer’s on-going transformation plan ‘could improve the operational situation in each of [its] countries’.

Opens automated store in headquarters…

As it looks to develop its own automated store and associated technological solutions, Carrefour has opened an automated store in its headquarters. The 48 sq. m store will enable it to trial technological solutions like facial recognition, which it has developed as part of a collaboration with China-based Tencent, and registerless shopping as it looks to drive in-store efficiencies. The store uses cameras and sensors to track shoppers’ movements, with their accounts charged automatically with each purchase. The store’s range focuses on a snack-oriented offer of about 1,300 SKUs.

…And its first restaurant in Paris…

Meanwhile, separately, Carrefour has opened its first restaurant, in Paris’ 1st arrondissement, under the Bon appétit banner. The 63 sq. m restaurant stocks salads, sandwiches and other food-to-go and dine-in options, for lunch or dinner, with the most expensive item costing €8.50. In line with its Act for Food initiative, products are created using organic and/or Fairtrade ingredients where possible. The restaurant has seating for 30 people. According to reports, Carrefour is looking to open a further two restaurants by the end of 2019 as part of the on-going trial to target shoppers with new solutions and formats.

…And its Bio format in Belgium

Following a successful roll out in other countries, Carrefour is said to be investigating opportunities to open its specialised Bio format in Belgium. The first store could open by the end of July, in the south of Brussels, with two to three more expected to be added by the end of 2019. The stores will continue Bio’s focus on fresh, organic and natural foods.

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