Metro's Digital Strategy for Grocery Delivery Service
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The demand for home-delivered groceries has been booming over the last couple of years. While this kind of service has been popular across the pond in the UK for quite a long time, it has only relatively recently started to gain a foothold in the US and Canada.
Digital grocery sales in the US sat at $23.9 billion in 2018. Not a number to be sniffed at for sure, but when the current trajectory has those sales predicted to climb to a massive $59.5 billion by 2023, we start to get a sense of the scale of the demand. By 2022 it's predicted that 70% of US shoppers will be purchasing their groceries online, with 22% stating they already do at least once a week.
Breaking the numbers down by age, perhaps unsurprisingly, the biggest demographic to embrace digital grocery shopping are millennials at 47%. Thirty-one percent of GenXers take advantage of the service, dropping to 19% for baby boomers.
In Canada, almost 16% of consumers were already purchasing groceries online in 2019 and over 53% of consumers said they were willing to try it in the future.
With grocery home delivery becoming ever more popular, Canadian supermarket chain Metro thought it was time to expand its own offering in that regard.
Metro
At the top of 2019, Metro was only offering its online purchase and home delivery service to Quebec.
Metro's home delivery model charges customers $4 to have staff pick their order — staff are specially trained to pick the freshest produce so that customers feel like their order is of the quality they would have picked themselves — with an additional $6 charge if the customer wishes to have their groceries delivered as opposed to collecting the order themselves. Deliveries are facilitated with Metro's own fleet of trucks — including special "Tri-Zone" delivery trucks that include ambient, refrigerated and frozen sections to ensure all food is preserved and kept fresh — and orders placed before 1:00 PM can be delivered the very same day.
Despite an influx of alternative grocery delivery models in the space, Metro is confident in its own. Instead of reinventing the wheel, Metro is looking to expand its service to new locations and leverage the power of new technology. Ontario is first on the list, with spring 2019 seeing the expansion of Metro delivery services in the region.
"We are extremely happy to offer online grocery shopping to our customers in the GTA," said Senior Vice President of Merchandising for Metro, Joe Fusco. "Metro's online grocery shopping will give customers the opportunity to shop for their favorite products, without having to leave their home. Orders placed online at Metro.ca are picked and packed by Metro employees, which the grocer promises are trained to select the freshest in-store products, so that customers feel as though they've picked them themselves."
Another arm of Metro's strategy is to upgrade and modernize one of its major distribution centers. Digital technology is helping these facilities pick, sort, load, and organize orders more accurately and effectively than ever before. Upgrading facilities such as Metro's with the latest artificial intelligence and automation technology will help the supermarket brand better serve its customers in the digital space.
Grocery Delivery
Nonetheless, Metro faces stiff competition and is in a particularly vulnerable position. Third-party smartphone app Instacart, which uses independent operators to pick and deliver grocery orders in an hour plus, is continuing to expand into Canada thanks to its partnership with Loblaw.
Compounding this issue are behemoths such as Walmart, Costco, and Amazon (through its acquisition of Whole Foods), which are also investing heavily in their own digital grocery models.
Midsized and conventional brands such as Metro are the most vulnerable in a shifting landscape such as this. When it comes to digital, customers naturally gravitate towards big household names such as Walmart and Amazon and it can be challenging for smaller supermarket companies such as Metro to stand out. However, with a solid and confident model, Metro customers seem to be responding to the delivery service.
Metro has also invested in Miss Fresh, a meal kit delivery service. Meal kits provide customers with all the ingredients and instructions they need to cook a particular meal and have become incredibly popular in recent years. They cut down on waste and encourage home cooking and a move away from takeout food.
"The meal kit business is quite small," said Metro CEO, Eric La Fleche. "The sales are modest, for sure. It's something you have to invest in to get the customer to buy in."
Final Thoughts
Home delivery is the future of the grocery business, of that there is little doubt. To keep up with the big names, midsized brands such as Metro need to innovate and make sure their offering passes muster with customers.
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