PULSE at FMI Connect: Retailers Weigh in on Change

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PULSE at FMI Connect: Retailers Weigh in on Change

By Joan Driggs, EnsembleIQ - 06/27/2016

Is it uncanny that four grocery retailers with strikingly different approaches share similar challenges as each maneuvers for the future? The retailer panel Getting IT Right: The Ecommerce, Mobile, Analytics and Store Revolution, touched on these pain points and others during PULSE: Technology Enabling the Path to Modern Retailing, which took place as an event within FMI Connect in Chicago last week.

Moderated by Marc Millstein, principal, NextStep Retail Inc., the panel included Suzi Robinson, Marketing Lead, bfresh/Fresh Formats LLC, an Ahold Company; Diana Wolcott, Vice President of IT, Albertsons Companies; Donna Zambo, Director of Wakefern’s Digital Commerce and Innovation Division; and John Lauderbach, VP IT, Roche Bros. Supermarkets. PULSE was presented collaboratively by Progressive Grocer, Retail Leader and the Food Marketing Institute.

All retailers are evolving at a rapid pace and share the goal of meeting the shopper where they want to be met – both today and in the future – either through their phone,  device or face to face. All are testing new formats and various eCommerce solutions. And all are stymied by the popular notion of “fast failures.”

Suzi Robinson says that Ahold’s new bfresh brand is an innovation lab for new store formats, an enviable position in that testing and learning are built into the banner’s culture. bfresh is structured differently than traditional Ahold banners Stop & Shop New England, Stop & Shop Metro New York, Giant Carlisle, and Giant Landover. bfresh is an urban, fresh-focused retailer that resonates with Millennials. Part of the trick for Robinson is that Millennials like specialty and fresh-prepared products, but also make value purchases. It’s up to bfresh to understand the tradeoffs these shoppers are making based on their lower purchasing power and accommodating them in a smaller format store.

Still, Robinson recognizes the benefits of the “lab” mentality associated with bfresh. “An innovation company is a risk, and most companies don’t have this luxury,” she says. “We can be agile and [if we fail,] we are failing faster. It can be uncomfortable, but we can react constantly.”

“Failure” isn’t typically a budget line item for Roche Bros., says John Lauderbach. With 20 stores, the expectation is that “you get out there and get it done.”

Diana Wolcott of Albertsons says that traditional governance models are all about risk and ROI, and “fail fast and that traditional model don’t fit together.” The good news, she says, is that in two or three years, “we won’t be talking about this because we already will have figured it out,” or those who don’t will be out of the digital market.

Wakefern has 50 member owner groups, many of whom don’t believe the cooperative is moving fast enough. “[But] growth is coming from digital and it wouldn’t come if we weren’t investing and being aggressive,” says Donna Zambo. “We need to make our members aware, that’s part of the culture. It’s a day to day challenge.”

Even for bfresh, where failures are viewed as learning, there is always the challenge of defining innovation and balancing the value to be gained. “What feels like innovation to one company might not be innovative on the general market,” she said. “You don’t want to throw away the good and what works for the sake of innovation.” It’s important to define innovation and be clear on the expectations of defined innovation.

The Fundamentals of Innovation

“Innovation” is also driving other challenges, particularly in the IT world. “We hear constantly that there’s a new start up that will ‘transform your business,’” says Wolcott, “but you can’t forget the fundamentals of running a business. Certainly we have to be innovative and stay fresh in the market, but we have to keep our eye on the bottom line and efficiencies. Every day there’s a new great idea, so it’s a challenge. How do you make sure you’re paying attention to the right things? We need to evaluate early on for the best chances of success.”

Much of the IT work being done at Albertsons has been the integration of Safeway. But that momentous task aside, the digital tech challenge for all retailers “is that the features and functions that consumers wanted last year are not what they want today or what they’ll want tomorrow,” says Wolcott.  For a chain as large as Albertsons Safeway, “not only do we have to figure that out, but then we have to scale it across every market and every banner. From a tech perspective, it’s not one size fits all.”

For the most part, grocery retail mobile platforms greatly lag those of other industries. bfresh had the benefit of launching with a mobile first mentality – and it’s not just for consumers, it’s for all store associates. Most retailers are driven from a web platform, because even 10 years ago, no one would have accurately predicted the way shoppers are currently behaving. 

Albertson’s Wolcott agrees that supermarkets need to be mobile-first, but finds elements of it daunting, particularly the challenge of social media content. How can a retailer control a brand that is essentially out in the wild, she asks. The structures for maintaining control over a viral media don’t exist. “How do you keep the content fresh and control it; enable it and encourage it?”

Both Wakefern’s Zambo and Roche Bros.’ Lauderbach face increasing competition as new banners and formats enter their already competitive urban markets. Zambro says that eCommerce providers are constantly looking to test with them because of their diverse customer base. Lauderbach maintains that Roche Bros.’ has “staunchly loyal customers, but it’s hard to keep them. Shoppers have more choices than ever and their expectations continue to rise.”

All are experimenting with new hiring tactics, looking in new places for hospitable candidates. New formats are being tested along with new eCommerce solutions. Choices between in-house, second and third-party solutions are constantly being weighed. And then there’s the matter of when to pull the plug on an initiative that doesn’t look like it will float.

As an industry, says Wolcott, “we tend to leave [failing initiatives] there, and we support pilots for years and years. That’s not sustainable. We have to be willing to say it didn’t work and pull it out. That’s a mind shift.” With the significant investments being made to succeed in grocery retail, how success and failure are viewed must adapt as well. All agree, the pace of change isn’t going to slow down.  

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