Category : analysis

Supermarket pick-up point obsoletes traditional supermarkets


I read an interesting article the other day. Albert Heijn, the largest supermarket franchise of the Netherlands is busy developing a new strategy for selling groceries online. To date, online grocery delivery services are generally more expensive and aren’t viewed as an alternative to traditional supermarkets. With this move, everything could change. After all they’re by far the largest supermarket in the Netherlands.

So, what’s this new strategy? Instead of delivering groceries right to your home, they decided to… wait for it… not deliver groceries to your home. Huh?! Makes no sense? Well, actually it does. First of all, we’re talking about a 600 million dollar business for Albert Heijn (which operates in both the United States and Netherlands). Currently the online business doesn’t account for a profit. Within years, sales should be up to 2 billion dollars and they hope to make a profit. According to the company, selling groceries online is a profitable business. However, this profit evaporates during the last kilometer of the delivering process.

“Delivering groceries to peoples homes is expensive. Also, the customer needs to be at home to receive the groceries”, a spokesperson said. “It is more easy to order groceries by using your smartphone and provide us with a time and desired pick up location.”

That’s why the company is developing a system of thousands of supermarket pick-up points scattered throughout the country. To make this system profitable, they need to dramatically increase their sales. Since this supermarket is market leader, these developments could mean a breakthrough and offer possibilities for other (online) supermarkets as well. I think Albert Heijn just made the traditional supermarket obsolete.

Last week I wrote about the need of a new urban model. I briefly mentioned Albert Heijn (AH XL). I wrote:

Companies continue to scale up. […] Supermarkets like AH XL (large Dutch supermarket) and distribution centers only need a few strategic locations in order to serve the entire country.”

So let’s take a look in the future. First of all, supermarkets only needs a few distribution centers. Furthermore, thousands of supermarket pick-op points are created in the entire country (a supermarket pick-up point could even add value to certain properties, just as a nearby Starbucks store does). It will be possible to order your groceries via a dedicated supermarket app on your smartphone or tablet computer, provide the supermarket with a time and location, pick up the groceries and bring ‘em home.

The Google refrigerator

A short while ago, I read about Google developing a refrigerator that is intelligent to know when it’s running low on certain groceries and ordering them from online grocery delivery services. Back then I thought it’s a waste of research dollars. But if you connect the dots (online supermarket, an app, thousands of pick-up points), think about the possibilities. Imagine the refrigerator being connected to your online supermarket app. The moment you’re running low on certain groceries it adds the item to your app (it might even search for the lowest available price. After all, it’s Google we’re talking about!). You only need to approve buying the item, after which it will be delivered to your desired supermarket pick-up point. That’s life made easy…

NB. Albert Heijn is owned by Ahold. This Dutch company also owns AH XL, AH to go, Gall&Gall, Etos, Stop&Shop, Giant, Martin’s and Peapod. It operates in several countries, including the Netherlands, United States, Germany and Belgium.

A new urban model (part two)

Wednesday I wrote about the need of a new urban model. Today I offer three of my solutions.

When people start to work from home more often and distance becomes less relevant, we should rethink the way our cities (and countries) are planned. Here’re three things we could do in the Netherlands.

1. Create Strategic Office Locations

These Strategic Office Locations replace the current offices in cities downtown. Since less office space is needed, only a few locations are needed. All of these office locations are located at major highway intersections outside of our current cities. Plenty of parking space and extensive public transport is available. Thus eliminating the problems we associate with cities (too much traffic, no parking space, new infrastructure cramped in old cities and always a lack of space).

2. Focus on unique housing

Home equals workspace. This results in people wanting to get out of their houses and avoid getting stressed. That is why people want to be somewhere they love to live. How many people really want to live in a generic apartment in just another suburb of a major city? I guess not that many. Since the Strategic Office Locations are centrally located and only need to be visited several times a month, people can live in the entire country.

Nature loving people might choose the Frisian lakes or Limburg hills. Other people could be more interested in locations like the historic district in Amsterdam where many shops, cinemas bars, restaurants and theaters are.

This development offers major possibilities for remote areas. Suddenly, they’re not that remote anymore…

3. ‘Super Giant XXL Megastores’

Companies continue to scale up. Companies like Media Markt, IKEA but also supermarkets like AH XL (large Dutch supermarket) and distribution centers only need a few strategic locations in order to serve the entire country. These companies will be situated at Strategic Office Locations.

Imagine how cities and entire countries will change. Is it just a dream? Or could this be our future?

Read part one here.

A new urban model

In the 1920s, experts estimated Amsterdam would grow to 960.000 people 80 years from then. They were wrong by a big margin (2000: 740.000 people). In October, experts again calculated Amsterdam (the Randstad) will continue to grow rapidly while the rest of the country faces a population decline (Volkskrant, October 2011). I believe experts are wrong again. Here’s why.

In the digital age we currently live in, everyone has a laptop and smartphone. Most people are connected via Twitter and Facebook and information gets stored in the Cloud. All these innovations make it possible to work anywhere and anytime we want.

These developments depart from the current urban model which is used by most experts. Put simply, employees wanted to live as close to work as possible while still retaining as much space and luxury as possible. For example, the Dutch city of Almere continues to grow because of its proximity to Amsterdam in combination with more affordable housing (more bang for their buck). But what if people could live even further away from Amsterdam without sacrificing their jobs?

In recent years people started to work from their houses more often. Distance becomes less relevant, since house equals workplace. Within years, current cities and the current urban model no longer suffices, thus suggesting a new urban model.  How do we get the Netherlands future proof?

Later this week I’ll post three of my solutions. Stay tuned.

Read about three of my solutions in part 2 of this blogpost.

A promising scenario

If twenty percent of the Dutch labor force spends one day a week working from home, it would generate some two billion euros a year. If people spend two days a week working from home, the benefits would go up to almost three billion euros. This is what made headlines today in the Netherlands. Newspapers cite research done by consultancy group PWC. As a result, we’ll see a reduction in the number of cars on Dutch roads. About 180.000 cars stay home. It’s an interesting piece of research. Below are some of my thoughts about it.

180.000 cars stay home

When I read this, at first I thought “wow”. That’s an incredible number of cars. According to the article, 1,7 million people working from home equals 180.000 cars less. Suddenly the number of cars sounds a lot less incredible. That’s why I want to know: How did they calculate this? I decided to give it a try.

– Dutch population: 16,5 million
– Dutch labor force: 8,5 million
– Total number of cars: 8 million
– For 40 percent of travels longer than 10 km, public transportation is used
– On a daily basis, 1 million people use public transport
– 30 percent of the total population uses a car
– 1,43 people use a car on average (less during rush hour)

Interesting you might say. But what’s you’re point? Well, based on this information, 360.000 to 637.500 cars would stay home. Which is a lot more compared to PWC’s calculations. I guess my question stays the same. How did they calculate this?

A promising scenario

Perhaps most promising is the scenario researchers used. A scenario in which twenty percent of the labor force spends one or two days a week working from home. And they’re not talking about the distant future. Nope, researchers used the year 2015. So imagine a scenario for 2020 or 2030. Will we see half of the labor force spending three to four days a week working from home? If so, imagine how a city or an entire country would look like.

Downside

Benefits would come from the reduction in cars on the roads – which in turn would cut traffic, improve air quality and cut accidents. Also companies can reduce their office costs and home workers are more efficient, PWC says. Sounds great?! Not so fast. Despite the positive aspects, home workers also tend to overwork, and it is proven to be difficult to keep work and private life separate. And this makes sense. If you have the ability to work wherever and whenever you want, you’ll also feel the pressure of doing so. Resulting in longer work hours, more stress and less private space (after all, house equals work). It’s the architects job to prevent this from happening, which will be a major challenge. Working from home should be a benefit. Not a downside.

Do people really want to live in cities?

Yesterday we welcomed the 7 billionth person into the world. This is why (Dutch) newspapers were flooded with charts, statistics and analysis about the United Nations report predicting the world’s population growth. It seems experts agree we shouldn’t agree with experts (in this case the United Nations’ researchers). Many questions were raised. But none of them questioned the United Nations’ prediction about the percentage of people living in cities. Which, according to the UN, continues to grow on every continent. No exceptions. And let’s be fair, all data (and most experts) suggests the same. So it makes sense to assume this actually will be the case. But…

Do people really want to live in cities?

You might say this is an irrelevant question. Don’t we all have to live in cities? Won’t we run out of space otherwise? Ehm. No. We’re not about to run out of space any time soon. We could however run out of resources, but this has not so much to do with cities. So let’s get back to the question raised before. Do people really want to live in cities? In order to answer this question we have to ask ourselves another question.

Why do people live in cities?

For matters of simplicity we’ll divide the people who live in cities in two categories. There are (1) people who love to live in a city, because of their social life, the buzz, entertainment and services. And there are (2) people who need to live in a city because of their jobs and/or education. They might not have had a job otherwise, or pay is higher, the job is more interesting, et cetera. I bet if you’d ask any urbanite (a person who lives in a city) he or she wants a bigger house with a garden and a safe neighborhood for their kids (if they have any). Instead, changes are big they live in a small apartment in a generic suburb of a city. Some of them love cities so much, they’re willing to make the tradeoff. Others just need to live there because of their job. They simply have no choice.

The situation described above (which I simplified quite a bit) is basis for the current urban model. This urban model is used by most architects, urban planners and also researchers like the ones who crafted the United Nations report. Since these researchers predict the percentage of people living in cities will continue to grow, they assume the current urban model will continue to exist for many decades to come.

But what if people don’t need to live in cities anymore? If this would be the case, the current urban model becomes irrelevant. Right?! And that’s exactly what’s happening today. Slowly we see a new way of working emerging. Because of technological innovations like smart phones, laptops, tablet computers, video conferencing and data storage ‘in-the-cloud’, employees can work wherever and whenever they want. As a result employers can cut costs because they need less office space for each employee (they’ll work from their houses more often).

These developments suggest a new urban model. Distance becomes less relevant since house equals workplace. Employees don’t need to live as close to their offices anymore allowing them to live wherever they want. For some people this will continue to be a city. They simply love to be there. But for others, their dream house could be located in a small town near a lake, in a forest or maybe in the mountains. More companies will adapt to this new way of working (which is already happening) thus speeding this development.

This new urban model creates major possibilities for (rural) areas which currently face a population decline. For them it is important to invest in education, health care and other services. But most importantly, they should invest in the best (Internet) connections possible. If these (rural) areas succeed in doing so, don’t be surprised the percentage of people living in (mostly western) cities will decrease in time. After all, do people really want to live in cities?