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Daily news and analysis about the food tech revolution

Albertsons

Microsoft Continues March into Grocery Stores with Albertsons Partnership

Microsoft and Albertsons are partnering to integrate Microsoft’s Cloud and AI technologies into Albertsons grocery stores, the two companies announced today. This deal marks another move by Microsoft into major grocery retail operations, following a partnership with Kroger last month.

Details of the new Microsoft/Albertsons partnership are light, with the pres release saying the arrangement “includes immediate and long-term initiatives to digitally transform the customer journey, optimize operations and deliver better products and services”

According to the two companies, part of transforming that customer journey includes “eliminating the friction” customers experience either trying to find products or while standing in checkout lines. Though they don’t say it specifically, this could indicate that the two companies will be working on cashierless checkout at Albertsons stores.

Microsoft has long been rumored to be working on such technology, and there has been a flurry of activity in the cashierless checkout space ever since Amazon launched its Go stores last year. A number of startups are working on cashierless checkout with some, like Grabango, already in pilots with grocery chains.

While this deal with Albertsons is more of a general relationship announcement for Microsoft, the Redmond giant made a more concrete pact with Kroger last month. Microsoft is actually working with Kroger to build out two tech-heavy pilot stores that made extensive use of smart displays and sensors for inventory management. Additionally, those Kroger + Microsoft solutions are meant to be packaged up as a turnkey package that can be sold to other grocery stores.

Both of these announcements seem to be, at least in part, targeted at Amazon. First both of these deals involve Azure, Microsoft Cloud answer to Amazon’s AWS, so Amazon is being shut out of that line of business. But more broadly, ever since Amazon bought Whole Foods, grocers everywhere have ratcheted up their technology efforts to stave off Amazon from dominating the industry.

In addition to launching this new high-tech initiative with Microsoft, Albertsons is also getting into the robot game. The grocer partnered with Takeoff to build out a test mini-automated fulfillment center in the back of one of its stores. We’re actually talking with Narayan Iyengar, SVP of Digital and eCommerce at our upcoming ArticulATE summit in San Francisco in April. While he’s on stage, we’ll see what else we can get out of him about Microsoft as well.

ArticulATE Q&A: Albertsons on What it’s Looking for From Robots

Robots are on the verge of transforming everyday grocery shopping into something more sci-fi. From shelf-scanning robots to self-driving delivery to your door, the food retail biz has been surprisingly aggressive in its moves to modernize.

Albertsons is not immune to this wave of automation. The grocery giant is piloting a robotic micro-fulfillment center built into the back of one of its stores through a partnership with the startup Takeoff. These robot centers will drastically shrink the amount of time it takes to process online orders, allowing for faster delivery or curbside pickup.

Narayan Iyengar is the SVP, eCommerce & Digital at Albertsons, and he is among the luminary speakers we’ve lined up for our upcoming ArticulATE food robot and automation summit in San Francisco on April 16. You should get a ticket and join us! To give you a sense of the great conversations that will take place, we did a brief (and lightly edited) Q&A with Iyengar to get a sense of how Albertsons is weaving robotics into their overall retail experience.

What is Albertsons looking to find out with this robotic fulfillment center pilot that you’re doing with Takeoff?

Iyengar: I think the space is actually quite exciting and evolving very fast and to me, there are a couple of different ways of thinking about this for grocery home delivery in general. There are multiple models of grocery, there is the big central fulfillment type model that works in some pockets and some cities in the US. Then there is a store-pick model, which we and several other third-party delivery services pick from our stores and deliver, let’s called that model two. But as volumes increase, we have to find a model that makes economic sense as well as uses the existing supply chain, “cool chain” and the merchandise to be able to serve customers same day or early next day.

So when we all look at the models that are available out there, does it cut across all three things: One does it use the existing flow for fresh [food]? Two, does it use the existing supply chain? Three, will it drive down the price for picking and packing?

So, as a part of this pilot they’re trying to test the three things: One, prove out that this model would work. That is to say, we collect the order, we have an automated system that picks and packs the groceries, and then we deliver it to the last mile. Second is to see if this particular technology vendor is the best at executing this model for us. And the third one is to test out the integration, because the robotics, it’s just one part of it. The rest of the model needs to work as well: the website for the app, the inventory management, all of that needs to get integrated.

How does Albertsons view automation overall? How are you learning to design a workforce that includes both humans and robots?

This particular Takeoff technology, yes it’s robotic, yes it’s automated, but when you look at practical solutions that work, they tend to be a lot less “sexy” than you think. They are very practical, it’s got a bunch of conveyor belts that bring totes of items that humans pick from. So, it dramatically reduces labor hours required to do a certain task. It’s robots and automation helping humans be faster.

Automation has been the standard thing in the retail and grocery industry for many, many years now. And so this essentially is technology that miniaturizes that and puts that within a store in a smaller footprint. Broadly speaking, I think everybody is in the process of testing and learning at the store level to see what does automation and robotics look like. Many of them will not be ambulatory robots that resemble the sci-fi movies, they’ll be much more mundane and down to earth, but extremely practical.

So our approach to testing all of this from a labor management perspective and so on is we have a design a new system for Takeoff, for this solution that they are piloting. We are going to design a new process, a new way of working which includes aspects of what the automated system does best, and how do you build the workflow around it? How do you manage the ordering process around it? How do you pick and pack? And how do you do the layout of micro-fulfilment centers in a way that maximizes the value of this automated system? So the layout, the labor process — all that needs to be thought through and redesigned, which is a part of what we hope to accomplish in this pilot.

What are the specific needs for grocery as Albertsons consider automation?

I mean it’s no surprise here really, but there are three or four broad things. The first one is the fact that you are dealing with fresh produce, it has its own set of logistical challenges that need to be addressed. The way you pack it is different, you cannot pack a hot rotisserie chicken along with ice cream, for example. You have different zones that you have to consider not just for transportation, but also when packing. The cool chain becomes important because the quality of items you’ll receive will be heavily determined by temperature staying within the relatively narrow zone throughout: from the time that fish is caught all the way to the time you’ll cook it. So the fact that you’re dealing with fresh and the cool chain needs to be considered and that makes grocery very different.

The second challenge that needs to be considered is that grocery is often a very large number of SKUs. Traditional e-commerce, you go to buy one item. You end up with a couple other things [in your] cart so you end up having three, four, five item tops when you buy anything. You buy a television, you probably buy a couple of cables next to it and maybe a speaker; a pair of shoes, you buy a couple of pairs of socks… For grocery, the average basket it 30 to 40 items, and many of those items cost $2 or $3. It’s a high number of items, so you’ve got to design a system that works towards a set of items that can be picked in a high degree of repetition.

And the third one is the repeat nature of purchasing. Grocery shopping is a habitual thing. People are used to doing it in a certain way because unlike other items that you often buy once in six months, once in three months — I mean, how often you buy a pair of shoes that or a television set, right? — food is something that you buy multiple times a week. You keep running out of milk or eggs or other things and end up going to grocery store and reordering very, very frequently. So the entire chain, both the interface as well as the delivery system, lends itself very well to habit formation.

How are Albert and customers treating online shopping and have you noticed them trending towards delivery or pick up?

Well, it’s a bit of both — I mean, we’re seeing good traction for our home delivery, both our own home delivery as well as Instacart partnership and so on. We are also seeing ‘drive up and go’ grow in all the centers that we offer it. I think the grocery market is so large and basically everybody has a stomach, and you have absolutely as many different preferences as there are people.

So, we are seeing there’s a certain section of the population that wants immediate delivery, and [is] willing to pay a premium for it. There’s a certain set of people who are more methodical and do the stock up trip, they plan a couple of days in advance and they order in bulk, we have solutions for that. And there is another set of people that want to order online but they don’t want to be tied to being at home at a certain point in time. So for them drive up and go works fine because you order and then you can pick it up any time after two hours from the time you order, so it fits well with that schedule.

What is your favorite fictional robot?
Giant Robot (from Johnny Sokko) is really cool!

Albertsons Partners with Takeoff for In-Store Robot-Powered Micro-FulFillment Center

Albertsons announced today it will pilot a new micro-fulfillment center in one of its grocery stores using Takeoff‘s robot-powered technology. The deal marks the first time a nationwide grocery chain will implement Takeoff’s technology, and further highlights how robots will play an increasingly important part of the grocery retail experience.

Details on the upcoming Albertsons implementation were light. The press release only said the micro-fulfillment technology would be built into an “existing store” and didn’t say where or when the build out would be complete.

Takeoff partners grocery chains to create automated systems inside grocery stores to fulfill ecommerce orders. The center typically requires 6,000 – 10,000 square feet (about an eighth of a store’s total space) and holds commonly ordered items in its inventory. When an ecommerce order comes into the store, Takeoff’s software coordinates a series of crate-bots that shuttles food around a railed system. Items are automatically brought to a human who bags the order for pickup or delivery.

Get ready for Takeoff

Albertsons may be the first nationwide chain to implement Takeoff’s solution, but the startup has been working with other partners including another test this month with Hispanic market, Sedano’s in Miami. I spoke with Takeoff’s CEO, Jose Vicente Aguerrevere and President, Max Pedro earlier this month, who said that their company has agreements with five retailers and will have five micro-fulfillment sites going live in Q1 of 2019.

It should be noted, however, that Albertsons is not the only national chain experimenting with robot-powered systems to speed up order fulfillment. This summer, Walmart announced it was building out a 20,000 square foot robotic fulfillment center to its Salem, New Hampshire store. And Kroger is leveraging its investment in Ocado to create 20 robot-driven smart warehouses across the country to speed up its last mile logistics.

All of this is to say that automation is hot. More than $1.2 billion has been invested in grocery tech this year, according to Pitchbook, and robots are playing a starring role. In addition to fulfillment, robots are scanning shelves to check on inventory, powering self-driving vehicles for food delivery and possibly being embedded into shopping carts.

Automation may be great, and it certainly seems poised to, err, take off in the coming year, I just hope robots can start doing a better job of picking out produce I order online.

Albertsons and Greycroft Form Venture Fund for Grocery Tech Startups

Albertsons and venture capital firm Greycroft announced today the formation of a $50 million fund to invest in emerging companies and technologies in the grocery sector.

By partnering with Greycroft, which has funded companies such as Venmo, The Huffington Post and Plated (which Albertsons acquired last year), Albertsons will gain access to cutting-edge startups with breakthrough technology before they become mainstream.

And technology is a major front in the battle Albertsons is waging against rivals Kroger, Walmart, and Amazon/Whole Foods. Technological innovations up and down the stack from supply-chain management, e-commerce, fulfillment and delivery logistics are changing the way supermarkets provide and consumers shop for food.

This partnership with Greycroft is a much needed move for Albertsons to keep up with its high-tech competition. Amazon is a tech behemoth, with an army of engineers that continually innovates cloud computing, distribution systems and even cashierless stores. Walmart has its Store No. 8 in Silicon Valley to create innovative tech solutions. And Kroger recently upped its investment in UK-based Ocado, which creates robot-driven smart warehouses for faster delivery, as well as formed a partnership with Nuro for self-driving delivery vehicles.

Albertsons inked a deal with Instacart for delivery last year, acquired meal kit company Plated and recently launched a virtual market for its O organics brand. But those are table stakes for any grocery retailer at this point. Starting up a venture fund will ideally give Albertsons a closer look at emerging technologies that are even more bold as well as the ability to execute deals with those startups before other retailers have a chance to.

HelloFresh Jumps on Bandwagon to Sell Meal Kits in Grocery Stores

HelloFresh will start selling its meal kits at 600 Giant Food and Stop & Shop locations starting this week, The Wall Street Journal reports, as the meal kit sector’s migration from mail order to brick and mortar continues at a furious pace.

The first half of this year has seen a flurry of activity from meal kit companies going into grocery stores. Chef’d and Blue Apron started selling in Costcos. Plated is rolling out nationwide at Albertsons. And just a couple of weeks ago, Kroger bought Home Chef for $200 million to put that company’s product on store shelves. And that doesn’t even count the meal kits WalMart and Amazon have available in their own stores.

It’s not hard to see why. According to Nielsen, last year in-store meal kits generated $154.6 million in sales, and grew more than 26% year-over-year. It’s a hot sector, and in-store meal kits are something customers want.

Last month, Pat Brown, Albertsons Vice President of strategic business initiatives told CNBC: “Our internal research told us that 80 percent of our customers would love to see a meal kit option in the store. And what was more surprising was that 85 percent of customers that were already subscribing to meal kits wanted to see meal kits in the store.”

Customer churn has been a big issue for meal kits in the past as the cost and inconvenience of waiting for your meals to arrive by mail have been stumbling blocks for maintained meal kit subscriptions. Having meal kits in stores offers customers more convenience and more choice closer to when they actually make meals.

HelloFresh CEO Dominik Richter told The Journal that online subscription will continue to drive sales, and that going into grocery aisles was a way for the company to find new customers. He also said that HelloFresh is in talks with other retail outlets.

HelloFresh recently surpassed Blue Apron as the top meal kit company by market share in the U.S.. The Berlin-based company went public in the fall of last year, and in April the company acquired organic meal kit provider Green Chef.

This is a big and fast retail move for HelloFresh, which will start selling meal kits on store shelves starting this Wednesday. For comparison, Chef’d has done deals with numerous regional chains as well as Costco, Blue Apron is in 17 Costcos, and Plated will be in “hundreds” of Albertsons by the end of the year. Kroger, which had already rolled out meal kits to some of its regional chains such as QFC in Seattle, is planning to put meal kits in most of its 2,800 stores nationwide.

Clearly HelloFresh needs to act fast as the window of opportunity for meal kit companies in grocery stores appears to be closing rapidly. While it may be rolling out judiciously, Albertsons still owns Plated, so that will be its preferred meal kit provider. Same with Kroger and Home Chef. Amazon, of course, has Whole Foods, and WalMart has… itself. To stay alive in retail, and by extension alive as a business, HelloFresh will need to get into a lot more grocery stores.

Plated and Albertsons go Nationwide as Meal Kits Move from Mailbox to Grocery Aisle

In 2007 a woman in Sweden launched the meal kit concept under the company name Middagsfrid, which roughly translates to “dinnertime bliss.” I don’t know how many working parents would classify any kind of cooking as “bliss” after a long day, but the basic sentiment worked in selling meal kits as a more convenient way to make dinner and even learn some new cooking techniques and recipes.

Trouble is, meal kits—particularly in the U.S.—haven’t exactly lived up to their original promise. As we’ve pointed out before, many have discovered along the way that “[Meal kits] are a huge departure from the way we have been taught to shop for and purchase our food – and while they might be more convenient in some ways, they are inconvenient in others.”

Around the time of Blue Apron’s grocery store announcement, the longtime U.S. leader in the meal kit sector had just seen its subscribers drop from 1 million in 2017 to 750,000 in February 2018, after laying off 6 percent of its staff just a few months earlier.

Blue Apron’s response was to head back to the place where we as consumers have been taught to shop: the grocery store. And now it seems going into grocers is all the rage in meal kit fashion. Chef’d and Walmart have done so, as has Weight Watchers and, now Plated has jumped aboard the in-store meal kit wagon.

Plated announced yesterday that it plans to have its meal kits in hundreds of Albertsons-owned grocery stores by the end of this year.

Albertsons acquired Plated last year, and according to the latter’s co-founder and CEO, Josh Hix, getting kits in stores was the point of the deal in the first place. “From day one, we wanted to use their stores and their assets to build this omnichannel experience.”

Right now the kits are available in 40 stores—20 in Northern California Safeway stores and 20 in Jewel-Osco stores in Chicago. In addition to the planned nationwide expansion, the kits will also be available for on-demand delivery through Instacart. The available range of kits in stores is less expansive than Plated’s online choices, though that’ll probably change if the idea is a hit.

Hix noted in a press release that, “This is the next big step in our journey to enable everyone to enjoy fresh, delicious meals.” It’s unclear if that step was always in the works or if it’s just a a nice way of saying, “We’ve had to pivot and try something new.” Not that it matters. With in-store sales of meal kits reaching $154.6 million in sales over the last year, according to recent numbers, it seems that those who want to stay in the meal kit game need to rethink the merits offering just subscription-based packages.

Whether going from the mailbox to the center of the grocery store is the answer remains to be seen. There are definitely some pluses: no commitment beyond the first purchase and freedom to choose on impulse, to name just a couple.

But if the original goal of the meal kit was to provide an enjoyable — dare I say blissful —experience in the kitchen, I’d say the eventual winners will be those brands who can tailor those original sentiments to the needs of today’s consumers. Whether that means through the mail or in the store may not even matter in the end.

Do you think the in-store meal kit will thrive, or is the whole concept one big dud? Feel free to share your thought sin the comments.

Albertsons’ Grocery Digital Marketplace is All About Data

Between Facebook and Cambridge Analytica, “data” has almost become a different kind of four letter word. But acting out of fear can make it easy to forget that data can be really useful for companies and consumers alike. In fact, data is a big reason why grocery company Albertsons is launching a digital marketplace this summer.

Late last month Albertsons, whose banner brands include Safeway and Vons, announced registration was open for vendors to apply to sell their food and wellness goods through a new digital marketplace. The still-unnamed marketplace will allow both smaller food startups and larger CPG brands who want to experiment with new products to sell those wares on a national platform, without taking up real estate.

“The number of innovative products that are coming out is truly amazing,” said Narayan Iyengar, SVP of Digital Marketing and e-commerce, Albertsons Companies. “We would like to stock all of them in the store, but shelf space is limited.”

While the move does expand Albertsons’ catalog without expanding any square footage, it’s also a data play for the grocer. Iyengar said that their new marketplace will provide interesting data about food trends, so the grocery company can capitalize on those trends more quickly. For example, if a boutique hot sauce becomes a huge hit in Los Angeles, the physical Albertsons stores in that area will be able to move fast and make room for the hot sauce on their shelves. This data will also provide insight for the participating vendors, indicating where they should build out distribution.

For Alberstons, stocking shelves to keep up with trends isn’t just geared towards the customers that come into their physical store. By the middle of this year, Instacart will be providing same day delivery for 1,800 Albertsons locations. Having a broad range of products available to impatient consumers will be critical as Albertsons looks to fend off huge competitors like Walmart and Amazon/Whole Foods.

Albertsons’ digital marketplace is supposed to launch early this summer, and according to Iyengar, “several” vendors have signed up already. Albertsons doesn’t list any prerequisites on its signup page, but vendors will need to be able to ship directly to customers and will be responsible for customer service. The digital marketplace itself is currently going through the final stages of testing, and will most likely be tightly integrated with the stores’ existing brands, as opposed to marketing itself as a completely separate entity.

Will this digital marketplace be a hit with consumers? We’ll have to look at the data to see.

August Home Expands In-Home Delivery Platform, Adds Deliv as Partner

Not long ago, my mom ordered a box of tea online, which a guy in a pizza delivery car tried to steal from her front porch while she was at work. Obviously, she’s not the first person to ever experience this. In her case, a neighbor happened to catch the guy in action and set the cops on his trail, recovering the package in process. Most folks, though, aren’t so lucky, and lots of them are ordering much more than a $20 box of tea.

All the same, risk of theft doesn’t deter most who order goods via same-day delivery. As we get busier and more mobile, we rely more and more on the convenience factor for anything from stereos to dental floss. And since this is as unlikely to change as mankind’s need to steal, it makes sense that that same-day, in-home delivery is rapidly becoming an option for both consumers and retailers.

News from August Home should help accelerate that option. The smart-lock maker just announced that it is opening up it’s in-home delivery platform to any retailer, and that it has formed a partnership with same-day delivery service Deliv for last mile delivery fulfillment.

It’s a pretty straightforward operation. August owners can order at a participating retailer and choose “same day” at checkout, along with their desired time window. Once the transaction is completed, they can opt to authorize “secure in-home delivery.” If no one answers the doorbell, the delivery driver can access a one-time-use passcode to unlock the door and leave the package. Users are notified via phone, so they know a delivery is occurring, even if they’re up the block folding the last of their laundry. If they have the equipment, customers can also choose to watch the delivery in real time through the August app (or view a recording of it later).

August’s move to expand its platform comes after Amazon launched Amazon Key in late 2017, which uses its own combination of smart lock and cloud camera, and helped make the concept of in-home delivery more prominent with mainstream consumers. Just last month, Amazon also purchased the maker of Blink security cameras, in a move that could bolster Key offerings.

August and Deliv partnered with Walmart this past September to test drive their new service. Not only did consumers have the option of in-home delivery, they could also get “in-fridge” delivery, where the driver enters your pad and puts any perishables in the fridge or freezer. Presumably, the same option will exist for this wider rollout of the August-Deliv service.

I’d love to say I’m weirded out by the idea of some dude walking into my house and opening my fridge, but I’m not. People open their homes to strangers all the time— cleaning services, maintenance work, and pet care, for example. And while a camera and a one-time passcode don’t guarantee complete security, they beat having your groceries swiped off the front porch by, of all things, the local food delivery guy.

The Albertsons Instacart Deal isn’t Just About Amazon

Albertsons announced a deal today that will have Instacart providing same day grocery delivery for more than 1,800 of its stores by the middle of next year.

Upon news of the deal breaking, many were quick to call this a defensive move to better compete with Amazon/Whole Foods. Tactically speaking, yes, that was certainly a motivating factor. But there is a far more fundamental change happening to our relationship with food — and delivery plays a big part in it.

Food is almost becoming a utility. And while it’s not quite like turning on a spigot, Amazon and Instacart already offer same day delivery of the food you want (in major metropolitan areas). It’s only a matter of time as they refine and optimize their logistics to winnow that delivery window down to the smallest time unit possible between ordering online and a knock at your door.

Suddenly, the meals we want to make at home are not constrained by the food we already have and/or the time we have to go to the grocery store. If we are struck by inspiration, we can order the ingredients we want and have them waiting on our doorstep (or in our home or refigerators).

Back at our Smart Kitchen Summit, celebrity chef Tyler Florence declared the “recipe is dead.” Instead of starting with a list of ingredients you need to get in order to make something, Florence believes in starting with what you already have and then algorithmically generating a recipe from that.

But that line of thinking presupposes that you only have access to the ingredients in your pantry. With same day grocery delivery, you are no longer shackled by that presupposition. Make the recipe you want! If you don’t have the ingredients right now, you can get them in plenty of time without having to leave the house or work.

We already see this happening with shoppable recipe lists, like the one recently announced by AllRecipes. See a recipe you like? Click the button and all the ingredients will be sent to you. As The Spoon founder Mike Wolf put it, the combination of same day delivery and shoppable recipes basically means customizable meal kits on demand.

The increased availability of ingredients will open up more recipe options, and smarter kitchen devices will help people cook better, while online communities encourage and inspire. This will open up new avenues of creativity and push people to make new meals they’ve never considered before.

Same day delivery has the power to spark an evolutionary change our entire relationship with food. Just as we want our music, movies and news on demand — so too will we want our meals.

Albertsons isn’t the only one thinking about this. Instacart has now signed up top five U.S. grocers including agreements with Kroger, Costco and even an exclusive arrangement with Whole Foods (until 2021).