The Branded Pantry

The pace of change in the digital to consumer world is quickening, particularly with regard to the most coveted FMCG market place.

In the last few weeks frenetic  new world activity has included:

1.      Facebook and eBay ( I did not see that combination coming) joined up with an open network deeper integration with components of x.commerce and Open Graph.  That combination brings the power of Paypal, Milo, Magento, GSI, Zang, Where and Red Laser into a powerful platform on Facebook.  The ingredients provides a delicious base for both clever minds at either eBay and Facebook, or any third party application developers.  This one bears close watching.

2.      eBay announced an increased expectation for mobile sales this year for $5 billion, up from $4 billion forecasted just a few months back.

3.      Facebook and Walmart (a cross-over old world retailer, trying its best to become new world) announce a powerful local marketing powerhouse, again fueled by Facebook’s enormous client base.  Perhaps most important to Walmart is the depth of data they will be able to cull from the efforts.  Having customer or prospect data, and mastering how to  correctly understand using it…is one of the 5 key elements to retail dominance by 2015.

4.      Amazon announced the expansion of their catalogue of specialty stores.  They also got physical with at-store pickup in several test location 7-Elevens.  Finally, and perhaps most importantly they moved aggressively into the tablet market with Kindle Fire.  I suspect they see this device as a controllable consumer purchase and purchase-consumption device.  This additional manner of “connection with the consumer” supports another of the 5 key elements to retail dominance in 2015.

5.      Google engages with the announcement that they will secure $2.5 billion in mobile ad revenue up from $1 billion last year.  They announce a new “circular” style for search results.  They go head to head with …just about everyone with an online music store.  And finally they move aggressively to push NFC checkout pads into more retailers so they can gain the high ground with Google Wallet.  

In the old world the pace quickens as well as more traditional bricks and mortar players strap on mobile and online

applications, and even pursue online grocery shopping.

1.      Price Chopper and Marsh announced new online grocery initiatives.  

2.      Interestingly Price Chopper and ShopRite are going head to head in both store based and online grocery shopping in Albany.  Shoprite is using both traditional advertising and more stealthy search based tools to penetrate this new market.  And ShopRite is able to feature it’s online store.  Price Chopper is suing because ShopRite has purchased the online search rights to Price Chopper and Price Chopper Flyer.  This IS the new world colliding with the competitive rules of the old.

3.      Price Chopper is also adding integrated multi-channel capabilities in mobile and online.

4.      Shop N Save (SUPERVALU), has added a mobile application that will help customers find products in stores.  Wegmans has had this for a while.

5.      Safeway just touted their ability to deliver stealth pricing to individual consumers through their Just for U program.  They did this as part of their quarterly reporting to analysts.

6.      I have talked to five grocery type retailers in the last month.   All have big plans for the growth of their online commerce business.  Multi-billion dollar plans.  Within the next few years.  

It strikes me that the old world and the new are approaching this from opposite directions. 

In the case of the old it is “buy something from me.”

The new world seems to be saying “connect with me and let me help you buy something.”

Very different approaches.  In both cases however, they seem to be closing in on the same objective.  They want to be become relevant to the consumer.   Relevant retention is another of the 5 key elements to retail dominance by 2015.

A few will eventually succeed.

 

There has not been much hoopla made of Amazon getting physical by establishing consumer order pickup locations at several test 7-11 stores and at several shopping malls.  

 

This lack of news seems odd to me, although clearly any long term strategy is shrouded in some descriptions of the lock-box mechanisms used to protect the shipment to a consumer within the four walls of that 7-11 which may have led much of the tech news down a less interesting path.   

That mechanism  does  seem unhandy, but is probably necessary for the ease of mind of the shopper.   After all the purchases have to get into the lock-boxes somehow.  One would suppose the same store personnel responsible for sorting the UPS or USPS shipment and placing the parcels in the Amazon box in the first place are also the same clerks from whom Amazon is trying to provide buyers peace of mind.   

Nonetheless, let not Branded Pantry be led astray in the same way as the rest of the pundits.  The fact of the matter is that in a small, little noticed manner Amazon just established what it has always lacked, an easy to use pickup location near you.   E-marketers and commerce types have known for quite a number of years that it is not always convenient to have parcels delivered via post or UPS.   Most of us are not at home a good deal of the time, and given our propensity to be in our cars, a drive-by pickup location on my way to (name one; school, work, the gym…..even the store) is a very nice thing to have, particularly if it is done correctly.  

While this is not the first time Amazon has gotten physical (grocery and other merchandise home delivery in Seattle or 60+ distribution centers within an hour’s drive from  X% of the shopping population) it is the first time Amazon has bonded with another physical retailer to provide what should be a symbiotic service.   

Mark my words…this is just the beginning and there is a plan yet more grand to come.  Are you waiting for the other shoe to drop…or are you doing something to anticipate where that shoe might be found after it falls and how it will affect you?

 

Why not? 

Online Grocery Shopping is pegged at about 4% of the combined grocery market here in the U.S..  In the U.K. it is double that. 

Why shouldn’t we be expecting a very rapid increase to the 30-50% range over the next 3-6 years?

What would prevent it?  What are the real hurdles? 

I have heard for years the old saw(s) about touching produce and smelling the bakery and I have never bought into any of it.  Fewer and fewer customers even know HOW to test produce by touch. 

Today online sales account for 42% of Staples business.  You say “sure, but that is office supplies with corporate buyers.”  OK, how about William Sonoma.  39% of all W-S sales come over the net.  Those aren’t corporate buyers, and a more tactile group of shoppers have never been!!.  

Some of the other old myth’s….

·         Too expensive to ship.  Why ship?  Amazon has 60+ wholesale operations across the country.  How many consumers live within 25 miles of those centers?   What about ship to store and fill parts of the order from there?  Walmart is set up this way.  So is Home Depot.  And so is Walgreens.  What about Dollar General who announced their online store this week?

·         Too tiny margins to support.  OGS shoppers order the largest baskets and come back more regularly than any other customers in a well run operation.

·         It will never happen in my industry.

o   Books

o   Shoes

o   Paper books (again) vs. Kindle and ilk

o   Movie rentals

o   Gourmet kitchen

o   Office supplies

o   Why not groceries?  

I know there are companies out there beginning to plan their assault on this. Why not, it is already the fastest growing segment of the grocery business. Why not aim high?

Lists have always been an essential tool of the grocery shopper. Lists used to be simple oft-times taking the form of roughly penciled “categories” such as milk on any piece of paper or cardboard handy.  They served as a reminder to a shopper who kept the details about brand, item and size in their heads.   

I believe the grocery list will become the most powerful customer loyalty and customer centric marketing tool ever devised.  My plan for this blog is to:

·         Review the last two major “upheavals” in lists

·         Review the major innovations and talk about why they aren’t so new, how some have regressed and how there has really been very little innovation for almost a decade.

·         Talk just a bit about what needs to happen to make list the most powerful customer loyalty tool and customer centric marketing tool ever devised.

·         Talk a bit about the companies I see that might be able to play in the development, implementation and potential domination.   

Last Two Evolutionary Trends:

In the last 10 years the “list” has become both more and less useful..in fits and starts.   

Lists took a radical move toward more utility with the advent of serious online grocery shopping in 2001.  At that point they moved from category and subcategory…to items, with UPCs!   Full grocery store assortments became available and loyalty programs allowed retailers, usually supported by online service providers such as MyWebGrocer, to give consumers a choice among real products they had shopped for before.     

Most recently beginning about 2009, a number of other list services, not necessarily connected with any particular grocer are emerging.  Some of these are focused on savings (allyou.com has a localized circular tracker that compares all of the circulars in your immediate neighborhood).  Others are more traditional lists with bells and whistles that either give you optional drive-downs to brand based on pre-loaded products (which presumably either advertisers or other shoppers have specified) or allows you to scan items at the upc level or capture a picture for identification….if any data on that product exists in the supplier’s database.  

Major Innovations in Lists

Six innovations on the path between general category and item specific lists:

1.   The use of loyalty data to drive lists for online grocery shopping or use in the store.  Loyalty data from in-store shopping made for an effective “seeding” into the list.   In cases where loyalty data was not available, shoppers could build lists and save/name them for a variety of purposes (holiday list, vacation list).  The best applications organize lists by category and subcategory.  Current preferred store assortment, prices, specials and retailer coupons were all incorporated into the list.  If the customer wanted their list applied to a store that was not their preferred store (picking the one on the way home from work rather than their primary store) than the list modifies itself to reflect the assortment, prices, specials and promotions from that store.  All of this of course is within a particular chain or banner.

2.   The interoperability of other applications into the list.  A shopper could add specific items from recipe engines, from the electronic version of the circular from the coupon pages and so forth directly into their list.

3.   The use of loyalty data and product scoring mechanisms to focus the hundreds of circular items each week into a dozen or so key products that should be of prime interest to the shopper.  Not “you bought coke so here is a deal for pepsi” or even “you bought catsup so you need hot-dog buns” but products that the shopper had actually bought in the past. 

4.   Moved the list to the mobile consumer.  First through email.  The combination of lists (most often purchased items), shopper specific specials in a neat little package that they could either use as their total trip or use as a starter and delivery/pickup slot holder allowing them to finish the order off later from their laptop. 

5.   Adding aisle locations (as best could be done) This made the list, already heavily used in the store, more useable.

6.   The addition of non-retailer, errand based items (cleaners, wine store, drug store).  This was primitive, much like many of the early generic lists, but was an early form of trying to serve greater shopper needs with the host grocer as the “portal.” 

These innovations all occurred between 2001 and 2004, most of them with me at MyWebGrocer.  Since then there has been very little innovation.  The three notable, improvements since that time are:

a.    You can share the lists via mobile phone.  This is not much different than the old email days, but it is more portable.  Also some of the newer lists let you mark off what you already purchased which is handy for you….and if you need someone else to complete the shopping accurately, quite handy for them.   GroceryIQ is pretty cool here.

b.    You can scan barcodes to add products to your list.  In some ways this is less cool than it seems.  You would do this for three reasons:

a.    You wanted to see if there was a coupon available on the product.

b.    You were in a store that was not your normal store and you wished to remember the item.

c.    You want to add it to your list, but not for this trip

In these cases the chances of the application returning any useful information including the name or the correct image of the product are very, very remote according to studies done by ShelfSnap (shelfsnap.com) and by GS1-UK. 

c.    The application can be owned by a retailer or non retailer and may not be aligned with any particular retailer.  The shopper could have lists for each of his/her available retailers in one application.  They could have lists comparing prices on products they like or at least on categories in which they buy.  Some of these applications are not list builders at all except in the most rudimentary sense, but instead are price comparison applications.  Again, the application seems cool but …. The ability to combine relevance to any one consumer, and the availability of product images and information on that particular item or family of items is a very limited.  Usually the application is using circulars to satisfy the comparison, and product UPCs are usually not included in the ads.  An example, Grocery Circular Roundup by allyou.com is independent of any retailer.  A retailer owned version might look like Just For U from Safeway.  

   

What Needs to Happen to Harness Lists: Manufacturers, retailers and now, even applications and service providers have approached most application development from their own perspective.  “How do I keep the loyalty of my customer, or …how do I earn the loyalty of her customer?”   In reality loyalty can only be given, and only by the consumer.  

Back in January of this year I wrote:

Mobile adds yet another dimension to the multi-store, multi channel choice game that is developing for consumers.  Electronic coupons, online ordering for a variety of delivery options (online, via mail, store pickup), shopping comparison tools and the like.  All of these developments seem aimed directly at the heart of shopper’s loyalty to any specific retailers, particularly for oft-purchased items.  These applications fly in the face of what retailers had hoped to achieve.  They had hoped to convince shoppers to go to one place to buy everything.

In reality, at least for oft purchased, items consumers want the same thing. 

In our view: Customer needs drivers fall into a hierarchy that is definable with a finite number of common variables, but with infinite time and intensity variation.  Some of these are:

1.    Convenience -What I want, when I want/need it.  

2.    At a price I am willing to pay,

3.    Don’t make me work hard to get it. 

4.    Occasionally surprise and delight me with relevance. 

5.    Anticipate my wants and needs

6.    And . . .  don’t do anything that will make me go or look elsewhere.

 

We believe, structured appropriately these new technologies can be bundled into a shopper specific list.  This would help the shopper achieve a new level of satisfaction with the entity which is devoted to meeting these needs for each consumer.    We call the vision around this development Shopper 5.0.  Done well, this list will produce more loyalty than anything ever built .

 

The Companies who Might Drive Building and Operating THE LIST:

·         Amazon

·         eBay

·         Facebook

·         Google

·         Visa

·         Catalina

·         Walmart

·         Tesco

·         2- 3 regional players

I think more than one but fewer than a half dozen players.  It will take much more than the shoppers list.  The guys who don’t have stores will form a variety of relationships with a group of retailers-suppliers that will serve as a physical touch point.  But, the list will be the critical element.

 

And it won’t be your grandmother’s grocery list.

If one reads the research behind these two claims carefully and interprets the results across the studies, one can come up with what seems to be a reasonable, additional view of actual consumer behavior.  Both sets of statistics could be about right, and perhaps the studies should be read as complimentary.

Most consumers are not entirely loyal to a specific brand in a category.  Most have a set of acceptable substitute solutions that they chose from based on:

• availability
• price
• other promotions or incentives
• other factors likely to impact the current purchase (”Fred’s mom does not like my brand”)

Traditional grocery lists (perhaps all shopping lists) serve primarily as “reminders” to the consumer triggering an in-store scan and grab for the product of primary choice or select from a largely pre-determined set of substitutes.    So, the list while not explicitly calling out products, does evoke a specific customer centric set of product choices for each list entry.  The list determines a small set of products, the final choice is made at the shelf based on the conditions or circumstances laid out above.

 If I am correct about this, an I see no reason to doubt myself , this should critically influence how application and ecommerce platforms and loyalty service providers think about building list capabilities.

Back when I designed the MyWebGrocer online grocery shopping product selection display, I chose alpha by brand/size as the hierarchy to be used.  After we had launced and run for a bit I looked at the impact of this display hierarchy on consumer product selection behavior.

I worked with Lisa Selip at Lowes Foods and looked at market share comparisons between online customers and in-store customers on toilet tissue.  I picked that category because it tends to be purchased frequently, universally and there is not a huge switching penalty between brands.  The result was surprising and probably a bit dismaying for brand managers.  The market share for the first products displayed in the category was almost double the share generated on those same items in-store.

My conclusion about these seemingly disconnected studies,  is that while a product might be on a consumer’s mental or actual list , loyalty to that selection is generally quite tenuous.  Meanwhile influence is and can be exerted at the shelf to move a consumer from a primary selection to a pre-selected substitute.  It is much harder to move them to an item not on their evoked list at all.   The implications on the designers, developers and advertisers who wish to gain access to that consumer list are far ranging and complex.  The rewards for figuring it out are monumental.

One of the mobile application measurement services recently reported that the use of mobile applications generally fell off by over 90% after the initial post-download burst of enthusiasm.

In some ways this dramatic dropoff should not surprise as many low cost, reusable products and services (I-Pod songs, Happy Meal Toys) get scant attention after initial use.

Still, this 90+% decay curve is a staggering statistic and one that should give marketers pause.  Clearly in order to earn ongoing consumer usage an application must be:

• Useful, having some utility meaningful for that consumer
• Easily accessed
• Easy to run (simply input in CPG that means either  a list of options salient to the user or the ability to scan a picture or bar-code for self selection)
• Rewarding.  The application needs to have a high probability of returning data relevant to the person operating the application.

With regard to this last point,  a study run by GS1 UK examined consumer usage of mobile applications  involving consumers attempting to gain product information by scanning or taking pictures of products on the shelf.  The consumers were hoping for information  regarding:

• health and wellness guidance
• promotional offers
• other product information

Over 90% of the usage attempts resulted in either no data or in images/data inconsistent with the actual brand data according to the manufacturer.

I am of the opinion that the only appropriate gauge of product image and data accuracy is one that begins with how relevant the product image and data are to the consumer when they visit the shelf.   If the product displayed in the application is not the product found on shelf then the data fails.  We call such data Consumer Relevant Product Data.  The gap between the data available for mobile and online applications and the package the consumer sees on the shelf, is called the Consumer Relevant Product Data Gap.  

ShelfSnap with two partners, are engaged in a much more in depth and ongoing review of this Consumer Relevant Product Data Gap.  We will extend the research to compare what the consumer sees in their application to the actual product on shelf (vs. the manufacturer’s impression of which product is current).  We will also test how consumer purchase behavior is affected by the disparity.   The report will cover:

• The impact on shopper behavior
  • Sales
  • Dwell time
  • Brand - Banner perception
• The significance of the problem in terms both of:
  • The percentage of products affected by the gap
  • The severity of the differences.

 

So far our findings indicate that the  gap between the images that manufacturers think are current and the packaging the consumer actually sees on the shelf is well over 50%, regardless of the source of the images used in the consumer applications.   Mobile, online and even product specific paper coupon efforts are handicapped by this impediment.   Of that there can be no doubt.  This is an important set of findings and one of which marketing buyers need be aware.

ShelfSnap has documented a great deal of learning in CPG merchandising over the last two years.

A new area of study has begun to uncover and document a stubborn and significant gap between the product images featured on mobile - online applications and the actual product packaging at the shelf.   We are pleased to have the first publication of this occur in an important new online community of CG and Retail professionals called BrickMeetsClick.com. 

The focus of this new community is the intersection of where online and in-store shopping converge.  The founder and “architect” is Bill Bishop.   He engages what he terms black-belt thinkers from a variety of disciplines to help foster the discussion.  We were pleased to be his first black belt effort.    Read the piece here http://www.brickmeetsclick.com/stuff/contentmgr/files/0/5d7c27b7e82fad98115e93aaeaf5363a/files/do_the_images_match_6_14.pdf

and make BrickMeetsClick at least a weekly visit.

We will be examining more on this subject shortly in this blog as well.

Over the last few weeks we have seen some fascinating statistics continuing to chronicle the consumer shift away from traditional supermarkets.

The latest numbers document a half trip/per-household/per-week decline in year over year comparisons.  That is a half-trip per week decline down to only 1.7 trips to the Supermarket for the average household.  This is huge on a percentage basis and if memory serves, it represents the largest acceleration in trip declines on record…by far.

The per cent of households reducing their supermarket visits to once per week built from 29% to 34%.  The importance of households putting off visits to every other week mushroomed from 12% to 20%.

All of this leads to some pretty important questions.  I put down some musings for partial answers.  Any others you might like to advance?  Any questions I ignored?

While people are no doubt adjusting purchasing habits to account for the economy, they are not eating or cleaning less.  Where is the volume going?

1. Some shoppers are buying as much (or more) but doing it in fewer trips.

2. Some shoppers are hitting alternative outlets for both stockups and specific categories.  Many of these include lower cost outlets such as Dollar stores.  Others trips are based on the convenience  of local stores such as Drug and C-Stores.  Perhaps most interesting is a growing move toward online specialty (soap.com) which offers very competitive pricing and does not require fuel for the car, nor time in store or in the checkout line.

Why is the volume moving?

1. Part of the shift represents continued caution and downright increased frugality due to a lack of confidence in any sort of meaningful economic recovery.  All current indicators point toward a long slog in housing and jobs and that means uncertainty which never bodes well for the status quo.  Supermarket trips are status quo.  Finding new ways of saving money and time make a ton of sense to shoppers.  Consumers are shopping deals, private label and shifting toward lower cost outlet options.  Instead of the weekly trip to Costco for fun they are waiting until Costco member coupon week to stock up.

2. Part of this reduction can also be explained by the cost of gas, although given the timing of the data it appears the bulk of the impact from higher fuel prices will be felt in the next set of stats.

3. Rapid changes in buyer dynamics.

a. Single person HH now over 50% of population. Single HH purchases are not as large nor as frequent.

b. Many newer shoppers are NExTgen buyers.  These buyers are more comfortable/prefer to shop online.  They aren’t tied to the traditional values associated with the weekly shopping chores.  These too are primarily single person households.

c. Move toward Urban centers accelerating.  Not as many big supermarkets in urban areas so single stock-up trips become more important.

4. Supermarkets just don’t “fit” as well as they used to.

a. There always seem to be better pricing options.  Going to an Aldi or a Dollar Store has somehow become “make sense shopping.”

b. The cost of driving out of the way to the supercenter or the supermarket, by passing other outlets doesn’t make as much sense.  Planning and making that one trip count means less fuel.

c. If the store in which I normally shop is not the price leader, if the trip is going to cost me expensive fuel and I do not have the faith that I am going to have a predictable result (long lines, empty shelves, favorite brands MIA) than I should start looking for alternatives!

What does it mean to traditional outlets?

There are clearly many implications for the business health of traditional Supermarkets.  Two that I believe do not come up as often as they should, and that carry with them the danger of spiraling particular stores into continuous declines would be:

1. The impact of these fewer, but larger trips on already short staff and short shelf inventory should be more unpredictability for the consumer.  Will I find my product?  Will the person in line in front of me take 30 minutes to check-out?  Will the staff be available to answer my question about why the picture in the coupon does not match the product on the shelf?  The more uncertainty the buyer encounters the more likely they are to search out alternatives with higher predictive values, or at least with lower prices.

2. Supermarkets-supercenters are traditionally viewed as relatively fixed cost businesses.  If traffic diminishes and volume goes with it, then the store has a fairly limited band of actions it can take to reduce operating costs to match.   If on the other hand the trips are reduced but the cart increased to offset, then it becomes much more difficult to forecast labor and inventory to match the spottier shopping patterns.  Mismatches occur and the point above takes over.

How will this all end up?    Will volumes and trips return to the patterns of yesterday?

For answers to these and other questions give us a call at ShelfSnap and Panther Mountain Companies  224 512 4969.

There has been a decent amount of hype about Amazon and Walmart fighting over the bones of the traditional grocery industry, at least in the digital media.  In the face of this onslaught it is easy to lose track of the efforts that those traditional grocers are making to win the digital war for the weekly (or more often) grocery chore.  

 Perhaps more accurately it is hard to find meaningful gains made by traditional grocers.   Most of the efforts are concentrated on: mobile offers and coupons, generation two of web applications, monetization of web traffic through advertising and of course social media.    

In my opinion, and with no small amount of experience in this area there has been a good deal of incrementalism passing itself off as innovation when it comes to applying a cohesive technology, process and data approach to the grocery consumer.  

Still, there have been some meaningful improvements advanced by traditional grocers.   One of those was a business decision to allow online grocery shoppers to shop as many times as they wish for one monthly fee.  Harris Teeter was an early adopter of the online grocery channel option.   They allowed consumers to shop online and pick up their already shopped items at their local H-T store as early as 2000.    

H-T traditionally charges a shopping fee for each order, as do almost all retailers offering an online grocery shopping option.   That fee is to help offset the labor costs of picking the customer’s order for them in the low-margin, high-labor cost grocery environment.    In addition to offsetting a small chunk of the additional labor, the fee encourages the shopper to time their purchases and bundle their orders to offset the cost of the shopping fee.    Thus online grocery orders are typically huge, much larger than normal grocery orders.

Since shoppers focus their online efforts on their “big, stock up orders” they still go to the store for their secondary or top off orders.   In a typical month the average shopper may make 2-4  of the “big, stock up trips” but they make an additional 6-10 trips to stores to grab milk, meals, tissue and many other things of which they have run short.   The idea behind a single fee with no limits on shopping frequency has been an effort to capture more of the shopper’s share of stomach and therefore loyalty.   Frankly the purpose is also to keep the shopper for visiting other stores where they may become enamored with other features of those retailers and abandon the primary grocer.   One of H-T’s primary competitors, Lowes Food Stores had also entered online grocery shopping early and pioneered the fixed monthly fee approach long before Amazon ever thought about Prime.     

Both of these grocers have been at the sharp end of many of the advances in the online grocery shopping and marketing arena. 

Early efforts with this ”one fee” approach were pretty successful at converting a group of shoppers, and heavy analysis of the data (by yours truly back when I was President of MyWebGrocer) indicated that the technique indeed had captured  a share of stomach/daily needs much higher than even the most effective of loyalty programs.  

Even with all of this activity I am still not seeing the next great leap forward in harnessing the digital grocery arena as part of a cohesive multi-channel effort.   The fully integrated approach to satisfying the needs of what I call Shopper 5.0 in a manner that earns that shopper’s loyalty in ways unheard of in any shopper loyalty program today or in the past.   But that ….is for another day.

The big guy finally started to play his cards.  Walmart announced Project Titan, their online grocery shopping effort at the beginning of the month.It is rumored to involve grocery delivery in the San Jose area.

The press is covering the project with some enthusiasm mentioning WebVan, Home-grocer and other failures while at the same time offering some positives by looking at Walmart’s own ASDA online grocery delivery experience in Britain. 

Online grocery shopping, and other online grocery activities (promotions, other marketing efforts) have been successful in the U.S. as well as in Britain, Sweden and other areas.In the U.S. online ordering with “drive by pickup” is the preferred method in all but the most densely populated urban areas.   Walmart has no small amount of experience in this model, albeit with non-grocery items having been the focus over the last few years as they have continued to tinker with the service.   Chances seem very high that they will offer this pick-up option in addition to delivery on grocery.  With their current store based expansion plan including smaller formats (smaller super stores, more supermarkets and their new convenience effort) they will have more touch points convenient for consumers on their way home. 

The addition of the non-grocery assortment to the offering online for the shopper gives Titan a real advantage on the margin game, if they can convince the shopper to toss in a pack of socks or a can opener.   That and the CPG ad revenue will be substantial through this new channel. 

So far traditional grocers have not reacted much to current (Amazon, Amazon Fresh, Sears-Kmart, Netgrocer, Alice, Fresh Direct etc.) businesses trying to move into the grocery space.  A few physical grocers offer full online shopping services include Safeway in select markets and a number of regional and independent players as well as Peapod through a number of Ahold banners.The number of stores offering is limited, under 600 in total out of a universe of 30,000 supermarkets.    The size of the business is relatively small based on dollars but is growing much more rapidly than the store based business, as has been the case in every other industry where online is a viable channel. 

So, why aren’t more traditional moving more aggressively to protect their turf?   This is most assuredly NOT your father’s WebVan.