Jewel-Osco associates demonstrate new social distancing protocol, April, 2020 – Photo: Jewel-Osco
Albertsons’ pilot is latest part of the plan to supercharge omnichannel ops
Albertsons wants a bigger slice of the grocery market pie and the supermarket giant sees frictionless shopping experiences as a means to achieve that goal with the novel coronavirus pandemic continuing to spread across the U.S.
The latest proof of the grocer’s intent is a pilot program being conducted at a Chicago-area Jewel-Osco, a 188-store chain owned by Albertsons, that tests an automated pickup kiosk. The temperature-controlled kiosk, positioned in the parking lot at the store, is intended to provide an easy and contact-free way for Jewel-Osco’s customers to pick up their online orders.
The customers place their orders online and choose from two-hour windows. When they arrive at the kiosk, they scan a code from their phone and their orders are delivered to the front of the device. The kiosk unit features two temperature zones (regular and deep freeze) to hold orders that are delivered to the same console for customers to retrieve. Orders are placed in the kiosks by store associates.
Albertsons is also planning to test the same technology at one of its Safeway stores in the San Francisco Bay area. The grocer is not alone in trying out automated pickup stations — Walmart has done the same at stores in Oklahoma and Texas going back to 2017.
“We are supercharging our digital and omnichannel offerings to serve customers however they want, whenever they want,” said Chris Rupp, EVP and chief customer & digital officer at Albertsons. “This innovative and contactless PickUp kiosk makes it even easier for customers to shop with us in a way that is convenient for them.”
In October, Albertsons announced that it was testing temperature-controlled pickup lockers inside and outside of some stores in Chicago and San Francisco. At the time, Mr. Rupp said, “Our strategy to leverage technology and innovation to continue to grow our digital business is focused on creating products customers love that truly make their lives easier.”
Albertsons reported earlier this month that it achieved a 12.3 percent gain in same-store sales during its third quarter driven by a 225 percent jump in digital revenues. The grocer recently gained attention when it made the decision to outsource online order delivery to third-party services rather than using its in-house drivers.
- Albertsons Companies Debuts Automated Grocery PickUp Kiosk at Jewel-Osco Store in Chicago – Albertsons Companies/Business Wire
- Jewel-Osco pilots automated pickup kiosk as online grocery shopping soars – Chicago Tribune/Yahoo News
- Albertsons Companies, Inc. Reports Third Quarter Fiscal 2020 Results – Albertsons Companies, Inc.
- Albertsons offers a new refrigerated take on store pickup – RetailWire
- Albertsons ditching in-house drivers to deliver online orders – RetailWire
- Walmart expands test of giant automated grocery kiosk – RetailWire
Discussion Questions
DISCUSSION QUESTIONS: How well does Albertsons stack up when it comes to developing its omnichannel operations? Where do you see the greatest opportunities for the grocer to leverage its physical presence to drive sales and market share whether online or in stores?
Poll
BrainTrust
Suresh Chaganti
Consulting Partner, TCS
Raj B. Shroff
Founder & Principal, PINE
Albertsons has made great strides with digital and, as a result, has seen stellar growth during the pandemic. Lockers and kiosks makes a lot of sense as they reduce friction for the customer and can help with things like wait times. In essence, there isn’t a single solution to grocery fulfillment: there will be an ecosystem of options to suit different customer needs.
As much as Albertsons has done a sound job on digital, I remain underwhelmed by most of their stores which are in dire need of investment – especially some of the older Safeway locations. Ranges and pricing are also below par and I think a lot of work is needed to bring the whole proportion up to scratch.
That’s important because while it is easy to grow during a pandemic when people are buying more groceries and household products, the challenge is to maintain growth as we enter a more normalized period.
The pace of innovation is on at a breakneck speed. That is very impressive. 20 years prior to the pandemic, the in-store innovation and experience was almost stagnant. Having said that, I feel like the pendulum has swung wildly to the other side.
In an effort to catch consumers wherever they can, it is possible that the grocery chains could be stretching themselves thin. Some of these innovations may not make it to full roll out. Overall, a very welcome initiative. But it’s too early to tell if this gives any meaningful competitive advantage.
I think Albertsons is a little late to the game but they have also realized that they need to move on frictionless transactions to be able to compete with the major retailers who are already there. I just hope they can test and scale at a quick pace so they don’t lose customers to the others that are doing this.
This is a great initiative by Albertsons. They have to keep up with Walmart and stay ahead of others to gain market share and this sort of customer-focused initiative is exactly what they should be doing. Making shopping easier and, at the moment, safer for the consumer is top of mind and will gain loyalty. If it really gets hold they may have volume problems, but it is the right move. They still have to get the basics right as well – high availability and good pricing. Any amount of technology will not replace efficient supply chains delivering the right product to the consumer. This does add another layer of the seamless shopping that people are looking for right now. It will be interesting to see how long they pilot for and then how quickly they can roll it out.
Anything that makes it easier for customers to receive products and support digital commerce is a good thing. This strategy worked very well for Home Depot, and Walmart has been successful with it in some markets, so I expect it will do well for Albertsons as well. Long term? I see this as a bridge to the time home delivery scales and/or there are “stores” that are designed to support drive through pickup at scale.
For Albertsons to be pioneering this effort is exciting. The combination of mobile, data, logistics, robotics, and more are an exciting trend. More valuable is the contactless nature of the engagement, truly offering a step up for omnichannel curbside pickup. For regular Albertsons shoppers, or those shopping for someone else via Instacart solutions, this is a solid play. Albertsons has an opportunity to catch up with tested tech and process. Their existing physical presence will amplify their digital efforts.
Sorry – I’m underwhelmed by this unless it is way less expensive than someone bringing the order out to your car. Frictionless does not mean accurate or complete and I’ve argued before that in the absence of friction, the retailer gives up the opportunity to make a good impression and/or an additional sale.
Without being in their ecosystem it is hard to say. Knowing that they have a test and learn mindset and seeing them act on it signals that they are taking omnichannel seriously.
The kiosk idea, piloted by Walmart over two years ago seems like it could make sense for smaller orders. Giving shoppers choice is smart and if I just want to grab a few things but don’t want to go into the store, nor wait to call an associate, then there could be adoption. But as delivery grows, at some point, something will get squeezed out, probably kiosks.
The physical presence should be focused on the fresh, prepared meals, alcohol, and dine-in concepts sides. The more rote elements go back of house for in-store pickup or to direct-to-home fulfillment.
I will give them an “A” because this is what must be done.
But “supercharge” is a bit of a hyperbole. Retailers in China have been doing this and more for years.
I’m not a big fan of pickup kiosks for grocery but they can partially solve the “order staging” problem that supermarkets face when implementing store-picked fulfillment: Once the order is assembled and ready for pickup, where do you hold it until the shopper arrives? Existing supermarkets are not laid out with this activity in mind.
Use of kiosks adds a handling step – moving the orders out of the building and into the device. This seemed clumsy to me when Walmart tested it a couple of years ago and I expect it will be clumsy for Albertsons too. But adding a temperature-controlled staging area inside existing stores is clumsy too.
Remodeling has been done in many stores to create a staging area/holding area for these pick up orders. Including installing refrigeration/freezers. In some cases they cut out previous seating areas next to the deli. In other cases they moved into empty bank spaces. In other cases they remove part of or all of the customer service counter. In newer stores they just box off one of the front corners and put the space there, then build out the rest of the store as usual.
Every company who has focused on (and implemented) omnichannel deserves kudos. They are understanding, even if it’s late, that this is the future of commerce. However, there are some drawbacks to this model: 1) There isn’t a chance for the customer to check on replacement items/swaps. 2) It isn’t totally frictionless, because the customer has to load the groceries. Most of my pick up experiences, they even load them into my car, which I appreciate.
However, as grocery delivery gets more crowded (and sometimes delivery isn’t even available same day), I can see this model working well.
If customers will use this, this is a labor saving move and in some ways should improve customer service by decreasing wait time (but reduces service as the customer has to load their own vehicle). Albertsons runs in some very high cost of labor markets so this may get them more mileage than it got Walmart in low labor cost Texas/Oklahoma.
The pick-up order fulfilled by store staff, then put into this locker, then that is the last the staff sees of it (so they handle the item twice — once to pick it, once to put it into the locker). A pick-up order fulfilled by store staff, then put into a storage area in the store, then upon customer pickup, that staff has to again go and retrieve the order and take it outside to the customer’s vehicle, is quite a bit of handling (now they handle the item 4 times — first to pick it, then to put it into storage, then to remove it from storage, then to bring it out to the customer and unload to the customer’s car). Also it allows pick-up staff to remain more focused on picking orders — they may be picking orders, but under the current model, when a customer arrives, they have to stop picking, go to the storage area, and get the order out of storage to deliver it.
The Safeway locations in my area only have an employee or two scheduled to this Drive Up and Go service and they are not standing around waiting for customers to show up for pick ups — they are steadily out on the sales floor picking orders.
The bigger question as has been raised here is, is the Safeway pricing and mix the best mix in the marketplace such that it will draw customers? The answer to that question is definitely no.