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.