Amazon extends food tie-up with British supermarket Morrisons

Amazon and Morrisons have agreed to extend a partnership which already allows customers to order their shopping from the smallest of Britain’s big four supermarket groups and have it delivered by the U.S. online giant.

Periodically mooted as a possible bidder for Morrisons, Amazon has been slowly extending its food service in Britain, but market research firm Kantar Worldpanel estimates its market share is so far less than 1%.

The new Amazon agreement was for “a number of years rather than on a rolling basis, and will be exploring new opportunities to innovate and improve the shopping experience,” Bradford, northern England, based Morrisons said.

Morrisons, which has a 10.1% market share, trails market leader TescoSainsbury’s and Walmart’s Asda in annual sales.

It first tied up with Amazon in 2016 with a wholesale supply deal, whose scope has grown. In June the companies agreed to expand the “Morrisons store on Prime Now” service to more cities across Britain, including Glasgow and Newcastle.

Doug Gurr, Amazon’s UK country manager, said its relationship with Morrisons was an important part of its UK grocery growth plan.

Customers can already order a full Morrisons shop online, which is then picked at a local Morrisons store, and delivered by Amazon. There is also an option for one hour delivery.

Although Morrisons Chief Executive David Potts was vague on what the exploration would entail and declined to provide the agreement’s duration, he said as a wholesaler to Amazon the British company could be “part of their ambitions”.

“When you’re exploring, life can be a bit unclear … We achieve capital light growth by leveraging partners’ knowhow and assets,” he told reporters.

Analysts have also suggested Morrisons could be a candidate for a takeover by an overseas private equity firm, given the 24% fall in its share price over the last year and the weakness of the pound making deals cheaper.


Amazon may launch a hand recognition payment system for Whole Foods

According to New York PostAmazon is testing inside Whole Foods a payment system codenamed “Orville” that scans human hands to ring up purchases. The e-commerce giant is reportedly using its New York employees as guinea pigs by installing the system on a handful of vending machines selling chips, sodas and phone chargers in its offices.

Unlike most biometric systems that require you to touch the surface of a scanner, Amazon’s take on the technology apparently doesn’t need you to physically touch any device. The company’s technology uses computer vision and depth geometry to identify the size and shape of your hand before charging the credit card you have on file.

Further, you don’t even need to have your phone with you when you shop. That could make shopping at Whole Foods even more seamless than at Amazon Go stores, where you can pick up goods and then leave as long as you check in through a turnstile using a QR code in your app. You need to be a Prime member, however, for hand-based payments to work.

Stephanie Hare, a technology ethics researcher, told the Post that the company probably decided to give customers the option to pay with their hands instead of their face, because it would feel less like a mugshot. She warns, however, that it might not be wise to give a company your biometric data and risk being a data theft victim, especially now that there are “a couple of nation states that are really good at stealing data…”

The Post says Amazon is hoping to roll the technology out to a handful of Whole Foods stores by the beginning of next year. It has no specific locations in mind for the launch, but it’s planning to make the system available at all the supermarket’s US locations. For now, Amazon is apparently refining the technology so it can bump its accuracy up from within one ten-thousandth of 1 percent to a millionth of 1 percent before launch.


Target is launching grocery brand Good & Gather

After years of rolling out private-label brands in apparel and home goods, Target is starting a new grocery brand.

Products from the new line Good & Gather will hit Target stores beginning Sept. 15. The retailer said that by the end of 2020, the brand will have more than 2,000 items — everything from organic pizza crusts, milk and eggs, hazelnut and peanut butter spreads, frozen veggies, salad mixes and pastas. Target said it expects Good & Gather will be a multibillion-dollar brand — and the largest of its private labels.

“We’ve been hard at work [on this] for the last couple years,” said Stephanie Lundquist, head of food and beverage at Target. “Food and beverage play such an important role for Target’s business … for the Target experience.”

Today, nearly 75% of Target shoppers in stores are adding at least one food item to their baskets, she said, and when they do, their basket sizes are two times larger.

“One of our biggest strengths is the fact that we are a one-stop shop for our guests,” Lundquist said.

Still, analysts have often criticized Target’s fresh food offerings as lackluster and an afterthought. Shoppers can find national snack brands there, like Frito-Lay chips, Chobani yogurt and Cheerios cereal. But people don’t often seek out Target as a destination for all of their groceries, as they might at Walmart. Instead, a loaf of bread or a box of granola bars have been add-ons to Target baskets already filled with makeup and cleaning and office supplies.

“Grocery is the one spot in their stores they haven’t fixed yet,” said Brian Yarbrough, an analyst at Edward Jones. “But they are in a much better spot than they were four or five years ago.”

The potential is there. Walmart gets more than 50% of its business from grocery versus about 20% for Target, Yarbrough added. And consumers are increasingly willing to buy private-label products at grocery stores.

Target’s grocery business has had seven consecutive quarters of positive same-store sales growth, according to Lundquist, with six quarters of market share gains. A recent slew of store remodelings have been helping boost the category, while companywide same-store sales have been positive for eight-straight quarters.

The Good & Gather launch follows a period of heavy investing by Target in other parts of the store and in its own labels. The company will end the year with more than 25 new owned-and-exclusive brands, like A New Day for women’s clothes, Project 62 for furniture and Hearth & Hand with Magnolia for home goods. It started making the investments in 2017 as part of its bid to keep shoppers coming to Target for things they can’t find elsewhere except for Amazon. It also has helped pull Target out of a sales slump.

In 2018, Target’s sales grew to $75.36 billion from $71.88 billion in 2017. Sales had fallen more than 5% in 2016, to $69.45 billion from $73.79 billion in 2015. Analysts are calling for sales of $77.44 billion in fiscal 2019, according to FactSet.

Target shares have broadly outperformed the industry and are up more than 27% this year. The S&P 500 Retail ETF (XRT) is down nearly 6%.

“I think the reason they haven’t done as much in food to date … is food is much more competitive,” said Neil Saunders, managing director at GlobalData Retail. “Food is also much higher risk because the margins are lower. … I think the staples are what they are, and for the everyday things you need, Target does a reasonable job.”

As part of the Good & Gather launch, Target will also be phasing out two food brands, Archer Farms and Simply Balanced. It will also scale down the number of items it sells under Market Pantry, which makes basic goods like sandwich breads, cooking oils, sauces and canned vegetables. The addition of Good & Gather to Target stores also means it will slightly increase the amount of shelf space it devotes to private-label products versus national ones.

As a result, Target’s penetration of store-owned brands in the grocery category will climb. But Lundquist said national brands will still serve an “important role” in the space.

Target’s investment in a new private-label grocery brand could be coming at just the right time.

Private brands in grocery stores are showing more momentum than manufacturer brands, across all income levels of shoppers, according to a recent report from the Food Marketing Institute in partnership with IRI.

In 2018, sales of private-label brands at grocery stores, which would include places like Kroger and Publix, were $75 billion, up 1.5% from a year earlier. For online grocers, private brand sales surged an incredible 80.2% in 2018, the report said. At convenience stores, like 7-Eleven, they were up 12.5%.

At mass merchants, like Walmart and Target, private brand sales amounted to $5 billion and were up 7.4%, the report said. Private food brands overall in the U.S. brought in sales of $153 billion in 2018, up 5.5% from a year earlier.

“I think there is a much greater acceptance of private brands across the board than historically,” said Mark Baum, a senior vice president at FMI. One reason for this is “younger people don’t grow up with the same nostalgia as their parents did.” Secondly, “there hasn’t been the kind of innovation in national brands that has been getting consumers excited,” he said.

Walmart, the largest retailer in the world by sales, has used its private labels in the grocery aisles, like Great Value, to focus on low prices.

“What Target shouldn’t do is take on Walmart directly [in grocery],” Saunders said. “What Target should be about is great products … at reasonable prices. There is room for Target to nibble away at the market.”

Good & Gather will be Target’s new flagship brand but then will be broken down into different categories: kids, organic, seasonal and signature. The seasonal brand will include pumpkin-spice flavored snacks, for example, and the signature line will have more premium goods for more people with discerning tastes.

In working on this brand for the past few years, Target has also made sure it gets “taste” just right, Lundquist said. She said that when Target was polling consumers, taste was something they thought most about when navigating the grocery store. All Good & Gather products will be made without artificial flavors and sweeteners, synthetic colors and high-fructose corn syrup.

As it hits stores next month, the brand is also going to have prime spots in stores, with displays at the end of aisles. Its presence will be hard to miss.

For those who still doubt Target’s knack for grocery, the Good & Gather launch could be just what Target needs to call attention to its recent efforts.

Analyst Yarbrough said Target’s store remodelings include revamped grocery aisles, where fresh produce is displayed in sleek wooden bins. Grab-and-go food has a bigger presence. The lighting is brighter and the tiled flooring is a neutral hue, making the space more welcoming overall.

Target also offers same-day delivery of groceries via its Shipt subsidiary and has curbside pickup at more than 1,500 stores.

But Target knows there’s still more work to be done.

“We have to be [reliable], we have to be abundant and fresh, and we have to be relevant,” Lundquist said. “We’ve taken days out of [our] supply chain. We’re getting from field to shelf way faster. … Having an end-to-end team now we can really build on the momentum we’ve gained.”

Target is set to report quarterly earnings before the market opens on Wednesday.


Albertsons is testing a delivery subscription service

Albertsons is currently testing a delivery subscription service in about a dozen stores across various markets. The service, which does not yet have an official name, pricing plan or order minimum, began in March. “We are testing different price points,” a spokeswoman said. The orders are fulfilled by Albertsons’ systems and employees.

Speaking at the Digital Food & Beverage Conference this week in Austin, Texas, Kenji Gjovig, vice president of e-commerce marketing and merchandising at Albertsons, said the company plans to expand the service after seeing “off the charts” results in the Phoenix and Southern California markets.

Gjovig said Albertsons’ goal in offering subscription delivery is to secure customer loyalty and get them to order more of their online groceries through the company. “The objective of the program was to increase frequency without having a negative effect on profitability in the transaction,” he said during his presentation.

The program offers a monthly payment plan as well as an annual plan, and Gjovig said both options have exceeded expectations.”We’re seeing a dramatic increase in frequency — above where our forecast was, and an increase in profitability as well across the two cohorts in the annual and the monthly subscribers,” he noted.

Getting the buy-in from customers through subscription services can help ensure that they won’t go elsewhere for their online grocery shopping. But with so many different subscription services vying for consumer dollars — from Netflix to Amazon Prime, which claims more than 100 million members — the trick is convincing customers to pay up.

According to a survey of 2,500 Americans released last year by Waterstone Management Group, respondents spent more than $237 a month on subscription services — much higher than the roughly $80 they estimated they spent.

Will shoppers view online grocery subscriptions as a necessity or a nice-to-have? During a separate presentation at the Digital Food & Beverage Conference, SpartanNash’s director of e-commerce, Matt Van Gilder, said customers approach them differently from other services. “You’re already going to be getting an order every week,” Van Gilder said. “This subscription model isn’t necessarily adding new products into a customer’s life but a new way to get those products.”

SpartanNash currently offers a $49 unlimited grocery pickup subscription through its Fast Lane service, which is available at more than half its retail stores. Van Gilder noted that subscription shoppers are spending 30% more with the company than they did before they used the service.

Competing grocers and delivery services are sold on subscriptions. Walmart is testing a $98-a-year “unlimited” delivery plan in four cities. That’s the same price as a Shipt membership, while Instacart’s Express service dropped from $149 to $99 late last year. And then there’s Whole Foods, which offers free two-hour delivery and pickup to Amazon Prime members in a growing number of markets.

With more and more consumers adopting online grocery, retailers are jockeying to claim their loyalty. Look for more companies to turn to subscription services, and to potentially add perks to sweeten the deal.



Carrefour goes for fast home delivery with Glovo deal

Carrefour has teamed up with Spanish start-up Glovo to provide a fast home delivery service as the French supermarket group looks to deal with growing competition from the likes of Amazon as well as domestic rivals.

Other supermarkets around the world are forming deals with online partners such as Amazon and others to meet growing demand from customers for home delivery services. Carrefour’s French rival Casino already has a partnership with Amazon, while Marks & Spencer has a joint venture with online food retail pioneer Ocado.

Carrefour’s Glovo partnership will cover four countries – France, Spain, Italy and Argentina – and will start operating by early October at the latest. The service will aim to deliver 2,500 products to customers’ homes within 30 minutes.

“With this new partnership, Glovo and Carrefour will offer a 30-minute home delivery service that complements their existing e-commerce offers and allows them to address the needs of new customers,” said Carrefour director Amélie Oudéa-Castéra.

Glovo, which competes with platforms such as Uber Eats and Deliveroo, said in April that it had raised 150 million euros ($168 million) of new funding.

Glovo, founded in 2015, booked a 90 million euro-loss in 2018, according to data provided by Delivery Hero, one of its shareholders. Carrefour, Europe’s largest retailer, is in the midst of a five-year plan to boost sales and profits.

The plan includes 2.8 billion euros of investment in digital commerce and aims to increase online food sales to 5 billion euros by 2022. In 2018 alone, Carrefour’s online food sales grew by over 30% to 1.2 billion euros.



Tesco wants to open 750 stores in Thailand

Tesco is to open 750 convenience stores in Thailand over the next three years in its first major overseas expansion under chief executive Dave Lewis. Thailand is the grocery group’s biggest market outside the UK and its most profitable.

Lewis, 54, who was parachuted into the supermarket chain in 2014 after it ran adrift under previous management, believes that Thailand offers a huge opportunity because of its young, increasingly urban and affluent population. ‘The economics of the country are very attractive. There is a big emerging middle class” he said.

Tesco has been in Thailand since 1998. It employs 46,000 full-time staff there and operates under the Tesco Lotus brand. The group has more than 1,500 Express convenience stores and around 400 larger shops, including some hypermarkets. It also owns shopping malls and until recently was involved in the wholesale market.

Lewis’s move will create up to 10,000 new jobs in the country. He said he sees large scope for growth, as around half of the Thai food shopping market consists of traditional markets, street stalls and small family-owned shops. Profits in Asia, which also includes its Malaysian operation, were down 4.3 per cent last year, though Lewis attributes this to a restructuring in Thailand, including a withdrawal from the wholesale operations. He shut down a bulk selling business in 2017 that serviced independent merchants after concluding it was unlikely to become profitable. ‘We have been making changes over the past two years but now we have a model we are very pleased with,’ he said.

Tesco is likely to face stiff competition from Japanese-US business 7-Eleven, which has thousands of its convenience stores in Thailand, where the brand is run by locally listed company CP All.

In the past, Tesco has run into rough waters with some of its overseas forays. It pulled out of an ill-fated venture into the US through its Fresh & Easy chain on the West Coast in 2013. The failure to win over US shoppers cost it around £1.2billion.

Lord MacLaurin, a former chairman, recently attacked ex-chief executive Sir Terry Leahy, whose decision it was to go into the US market on the eve of the financial crisis, accusing him of having an ‘arrogant’ and ‘extravagant’ management style.

Lewis sees the Thai move as part of his strategy to move the company on after its recovery from the scandal that engulfed it under his predecessors. A £250million black hole in the accounts came to light shortly after his arrival and Tesco posted a record pre-tax loss of £6.4billion in 2015. Under his stewardship, the group has returned to profit, with a 28.8pc jump last year to £1.7billion.



Britain’s Tesco tests checkout-free shopping

Britain’s biggest retailer Tesco is trialing a checkout-free method of payment for its convenience stores, allowing customers to scan products on their mobile devices and then walk out with them.

The supermarket group is testing the smartphone app at the Tesco Express convenience store located in the campus of its headquarters at Welwyn Garden City, north of London.

“Using your mobile device you select some products, put them into your basket on your device and then just walk out of the store,” Steven Blair, Tesco’s convenience transformation director told reporters.

“The feedback is very good on it but it’s super early,” said Blair.

U.S. giant Amazon opened a checkout-free grocery store in Seattle to the public in January, moving forward on an experiment that could dramatically alter bricks-and-mortar retail.

The Seattle store, known as Amazon Go, relies on cameras and sensors to track what shoppers remove from the shelves, and what they put back. Cash registers and checkout lines become superfluous – customers are billed after leaving the store using credit cards on file.

Tesco Chief Executive Dave Lewis said although the Welwyn trial was scalable, security implications had to be considered as there was a danger of increased product theft.

“If the margin in the business is 2 or 3 percent, you don’t have to lose much to make it unprofitable,” he said.

The Welwyn store is also cashless, cutting the time spent on customer transactions.

Blair said the store was serving customers at its checkouts in about 45 seconds, versus 90 seconds for a similar sized store in the estate.

He noted that some Tesco convenience stores in Britain were already down to just 20 percent of payments by cash, making a cashless roll-out likely in the future.



Walmart in Mexico launches grocery orders via WhatsApp

Walmart’s Mexico unit has begun offering grocery delivery from its Superama stores via messaging service WhatsApp, in a new stab at attracting shoppers outside bricks-and-mortar supermarkets.

WhatsApp, the free text-messaging service owned by social media platform Facebook, is ubiquitous throughout Mexico. Superama shoppers can text an order to a WhatsApp number run by Walmart, known in Mexico as Walmart de Mexico.

A Reuters reporter tried the service on Monday, sending a photo of a handwritten grocery list. A company representative responded immediately, punctuating responses with smiley-face and winky-face emojis.

The representative said Superama charges 49 pesos ($2.55) for delivery within 90 minutes, or 39 pesos ($2.03) for a later delivery time, and would accept payment in cash or by card upon delivery.

Superama represents about 92 of Walmart’s 2,459 stores in Mexico, which is the U.S. retailer’s largest overseas market by store count. Superama already takes orders via its website and a Superama app, as well as through Cornershop, a third-party delivery app that sells goods for a variety of other stores.

Walmart’s plan to buy Cornershop, which operates in Mexico and Chile, for $225 million, was blocked earlier this month by Mexico’s competition regulator, which said that Walmart could not guarantee an even playing field for rivals also using the app.


Source: Reuters

Kroger is testing 30-minute delivery

With Kroger Rush, the experiment-happy retailer seeks to win over customers looking for a quick meal or a few last-minute ingredients to round out a dish they’re preparing at home. The service is part of Kroger’s effort to cover a wide range of online shopping demands, and joins its pickup and delivery options along with Kroger Ship, the direct-to-consumer marketplace that launched last year. Altogether, these services will make Kroger products available to every American household by the end of this year.

As the threat from restaurant delivery services like Grubhub and Uber Eats grows, grocers are trying to respond. Some, like Wegmans and Publix, offer dedicated meal delivery, but the speed, brand appeal and quality popular restaurants are delivering at lunch and dinner is tough to match.

If Kroger Rush scales, it will likely need to do so in population-dense areas close to young, tech-savvy consumers. The company will also have to sort out labor. Is it more cost-effective to rely on a third-party company like Instacart or does Kroger need to use its own employees?

The service calls to mind FoodKick, the on-demand offering from New York-based e-grocer FreshDirect that caters to a young, affluent audience. FoodKick launched in 2016 and centers on alcohol, fresh foods and meals for Big Apple consumers.

Kroger Rush also draws a comparison to Ocado Zoom, the on-demand delivery option Kroger’s British e-commerce partner launched earlier this year in London. Zoom — a nimble alternative to the next-day service Ocado provides from its large automated warehouses — offers around 10,000 products and is focused on small- and medium-sized orders.

Depending on how demand evolves, Kroger and Ocado could very well combine their knowledge and resources for super-fast delivery in the U.S. A Kroger spokeswoman acknowledged as much to the Business Courier, noting “maybe Ocado robots will do the picking for a (Kroger) Rush solution.”

That solution is still a ways off, however, as the two companies just broke ground on their first fulfillment center — a $55 million, 335,000-square-foot facility in Monroe, Ohio, set to open in spring 2021.

Ever since it launched its Restock program, Kroger has shown an eagerness to experiment and explore alternative revenue streams. But the company’s core grocery business remains under pressure, and executives have placed significant emphasis on becoming an e-commerce leader in the future.

A progress report will come this Thursday when Kroger reports its first-quarter earnings for fiscal 2019.


Publix ready to launch mobile payment feature

Publix Super Markets customers will soon be able to pay by credit, debit or flexible spending account with the grocer’s mobile app. The current mobile payment option, on Apple devices, is being rolled out gradually in its stores, with plans to expand to Android.

“By integrating a mobile pay solution within the Publix app, we can offer a way for our customers to plan, shop, save and pay with ease,” Publix spokesman Brian West said in an email to the newspaper  The Ledger.

The mobile pay system will integrate coupons and other offers already connected to the app.

Other major retailers have launched their own mobile payment platforms including Walmart, which was at the forefront of the trend when it developed Walmart Pay in 2015. Target debuted its mobile payment app in 2017, and Kroger introduced Kroger Pay just a few months ago. Many other grocers who don’t have their own mobile pay feature accept Apple Pay or some form of mobile payment.