produce the digital world - cornell...

Produce the Digital World Tony Stallone

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Overview The Day Retail Died Digital Retail – What is happening How Online Customers Shop Amazon (The Jester) The Peapod Winning Story! Grocers playing catch up Millennials – The Marching Band! Digital Produce Facts

Macy's is closing these 68 stores: Is yours on the list?

Economic Reality: 16 Major Chains Closing More Stores -Albertsons closed 26 stores

The Sweetbay Supermarket chain will close all 17 of the stores it operates in the Tampa Bay area, The Herald Tribune newspaper reported. Many of the stores might open as Winn-Dixie Stores. Sweetbay closed 33 stores in Florida last year.

Ralph’s, a subsidiary of Kroger, has announced plans to close 15 supermarkets in Southern California within 60 days.

It's the age of Amazon, and brick-and-mortar retailers are feeling the pinch

Proprietary & Confidential

http://supermarketnews.com/retail-amp-financial/albertsons-sets-26-store-closures

http://whatsinstore.blogs.heraldtribune.com/2014/03/17/sweetbay-supermarket-stores-closing-this-week/

http://www.prnewswire.com/news-releases/ralphs-announces-permanent-store-closures-72114122.html

http://fortune.com/fortune500/amazoncom-18/

In an attempt to consolidate, Walmart announced at the beginning of the year that it would shut down 269 locations around the world, including 154 in the U.S., including all 102 of its small-store "Express" locations

12 Major Retailers Closing Stores Like Crazy

1/3 of Malls will fail!

JC PennyMacy’sSearsAmerican EagleAeropostaleSports Authority Office DepotThe Children’s PlaceWalgreensWalmartBarnes and NobleFinish Line

More Store Closings!


http://fortune.com/fortune500/walmart-1/

http://time.com/money/4182681/walmarts-express-stores-close/

The Digital World

But first, A Trivia Question What start up company lost the most money in

the shortest period of time in the history of the world?

Hint: This company lost nearly 1 Billion Dollars in a little less than 18 months!


7Proprietary & Confidential

Shoppers continue to shop multiple channels – shifting primary loyalty to less traditional retailers or claiming no retailer as a primary store.

52 Million Grocery Shop Online Now and Millions Plan to Increase Their Virtual Shopping over Next Six months

Source: NPD Group

Online grocery sales will grow by 157% in 2016 to $42.1 billion.Source: Morgan Stanley


20% of grocery sales could be online by 2025



Key Insights and Implications

How Digital Customers Shop



Majority of online Shoppers are Satisfied

Americans Cook the Least,Eat the Fastest


The Jester Stole his Thorny Crown!

Amazon hints at one of its best-kept secrets:How many Prime members it has

Prime is one of the most important parts of Amazon's business because Prime members tend to spend more on Amazon's online shopping platform. A recent survey by Morgan Stanley estimated that about 40% of Amazon Prime members spend over $1,000 a year on Amazon, while only 8% of non-Prime shoppers do so.

Amazon generated roughly $6.4 billion in sales from "retail subscription”!


Amazon Go


We all knew Amazon.com's voice-controlled assistant Alexa'shad skills. But not this many. Alexa's app store has been growing by leaps and bounds since opening up to developers in January 2016. Amazon's voice-controlled assistant had about 1,000 skills in June, 5,000 by December and more than 10,000 as of today!


Alexa: What fruit is in Season?Alexa: How should I store my apples?


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“What's dangerous is not to evolve.”Jeff Bezos

We've had three big ideas at Amazon that we've stuck with for 18 years, and they're the reason we're successful: Put the customer first. Invent. And be patient.

“Innovation distinguishes between a leader and a follower.”

Steve Jobs

Technology and Innovations –”Drove my Chevy to the levy,

the levy was dry”



The Original Rocker! Now do you believe in rock and roll?Can music save your mortal soul?And can you teach me how to dance real slow?

The Peapod StoryFounded in 1989

Original “pure play” e-grocer

Purchased by Ahold in 2000

Key part of Ahold Delhaize Omni Channel strategy

Innovating for the future

What people are saying on

Facebook

Once upon a time we started

delivering at home

The brand just grew and grew

We mixed online with our

in-store strengths


Peapod Today Largest local delivery e-grocer in the US

Over 40 million orders

Over 1 billion products delivered

200+ pick-up points

Sophisticated logistics, proven e-commerce skills

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Retailers Playing Catch Up!

Grocers Partnering withDelivery Services


Kroger has long offered delivery in the Denver market, and recently began testing the use of Uber to make deliveries from Harris Teeter stores in the Washington, DC, market.

Instacart is raising $400M to deliver you groceries

The Cincinnati Business Courier reports on technology initiatives being pursued by Kroger, suggesting that the chain is no longer just a food store. "It's a tech firm," the Courier writes - a tech firm with offices in various parts of the country that are working on some fascinating ideas, including something called a “bananacam."

“Bananacam” is one example. Kroger has cameras in stores to prevent and detect shoplifting. It figured out how to split a video feed to alert the store manager when bananas are starting to turn brown and need to be replaced in the produce section. That’s a big deal here because Cincinnatians buy a lot of bananas, Groom said.

The New Grocer is a Tech Company


Yahoo Finance has a story about FreshDirect, which began in the e-grocery business back in 1999 and continues to expand - in part because, as CEO/co-founder Jason Ackerman says, the company self-identifies as a "food-tech company," not as an online grocer.

"Tech drives innovation at FreshDirect by predicting customers’ food preferences on certain days and at different times (for example, milk on Monday mornings or wine on Saturday nights)," the story says. "The company is also building a state-of-the-art automated warehouse in the Bronx, New York.

"Yet, with all of that said, Ackerman does not see robots taking over warehouse or delivery jobs anytime soon. And FreshDirect will still have people slicing deli meat and cutting carrots."

“I do not see robots taking over for our chefs," Ackerman says.

Fresh Direct


"We are pursuing a new direction for robotic grasping by developing robot hands that can safely pick easily damageable items such as fruits and vegetables,” says Graham Deacon, robotics research team leader at OcadoTechnology. “[The hand] offers a versatile, cost-effective and safe solution for robotic grasping and manipulation that integrates very well with Ocado's highly automated warehouse retail solutions."


Are Robots Taking Over?

Millennials


The report finds 23% of U.S. households were buying groceries online in 2016, up from 19% in 2014. Those sales represent about 4.3% of U.S. consumer retail food and beverage spending. Based on the research, FMI and Nielsen expect online grocery penetration to grow quickly. Among millennial consumers (those defined as ages 18-34 in the study), 28% were buying groceries online in 2016, up from 21% in 2014.


https://www.internetretailer.com/2017/01/06/usda-picks-7-retailers-test-food-stamp-use-online

Online shopping is only for the Rich! Not!


NEW YORK —Nearly two-thirds of millennials shop online weekly for groceries, and this demographic has the potential to transform the retail grocery business, according to new research released by Clavis Insight.Health-and-wellness products are what millennials purchase most, with 69% shopping in this category at least once a month. Millennials also frequent the pet category, with 25% of those surveyed making a weekly purchase in this category, according to the research.

69% of Millennials use smartphones to research products while in brick-and-mortar locations. 67% of shoppers are checking the price, 25% are checking ratings and reviews, and 9% are looking for more information about the product.


Millennials Looking for Health

Let food be thy medicine and medicine be thy food - with these words spoken way back in 5th century BC, Hippocrates the father of western medicine recognized the value of eating well and the potential of certain foods for good health.


Digital Tools to reach the Millenials


Ethnic Foods on the Rise!

10 Things Millennials Buy Far More Often Than Everyone Else

Gas Station Food Same Day Delivery Hot Sauce Snakes Athleisure Organic Food Tattoo’s & Piercings Energy Drinks Donations at Cash Register Craft Booze


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Produce in the Digital World

Whole Foods Market shoppers had a clear favorite when ordering groceries delivered by Instacart: fresh produce. In-fact, more than 40 percent of all Whole Foods Market shopping baskets delivered by Instacartfeatured fresh produce items. The top five most frequently purchased products over the past year were bananas, avocados, carrots, lemons and limes.

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Banana and Strawberries Basket ImpactBaskets that have bananas or strawberries on them are larger: Modeled basket size based on presence of bananas or

strawberries and customer’s order number and seasonality Orders with bananas on them average $17.50 more than

orders without ($2.30 of the difference is banana sales) Orders with strawberries on them average $24 more than

orders without ($4.70 of the difference is strawberry sales)

Bananas or Strawberries On Order 1st Order2nd - 5th

Order6th - 15th

Order16th or

Greater Order

No Bananas or Strawberries On Order $118.36 $124.44 $134.74 $152.49

Bananas On Order $130.73 $136.39 $148.78 $175.91

Strawberries On Order $131.31 $138.02 $148.55 $170.31

Both Bananas and Strawberries On Order $149.96 $156.33 $165.08 $197.40


Assortment matters online!

“People are no longer buying products they are buying solutions”-TS


Meal Kits and other PlayersWhy you should pay attention


Merging with Harris Teeter gave Kroger access to the grocery company's "Express Lane" technology that allows customers to order online and pick up their purchases at locations. Soon after the acquisition, Kroger began testing its own click-and-collect service, called Click List, based on the Express Lane model. Today, the service is available at 184 locations.

Vegetable-centric Hungryrootgoes national with Amazon Fresh, FreshDirect

He’s Right!


Thank You

Tony Stallone, VP [email protected]

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