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The Spoon

Daily news and analysis about the food tech revolution

grocery

Instacart Raises Another $200M as Online Grocery Shopping Trends Upwards

Online grocery shopping service Instacart announced today that it has raised another $200 million as part of a new financing round led by existing investors Valiant Peregrine Fund and D1 Capital Partners. This brings the total amount raised by Instacart to roughly $2.3 billion, and the company says its valuation now sits at $17.7 billion.

This new funding comes just months after Instacart raised $225 million back in June . But it also arrives at a time when COVID-19 has accelerated and normalized online grocery shopping. While grocery e-commerce has leveled off from its record highs earlier this summer, online grocery sales are expected to hit $250 billion by 2025.

Throughout the pandemic, Instacart has made numerous moves to keep up with demand for grocery e-commerce, including scaling its gig Shopper ranks (the people who do the actual picking and delivery) to 750,000 (not without some controversy, it should be noted).

But Instacart hasn’t just spent the past six months raising money and scaling its workforce. The company has partnered with Walmart to provide grocery delivery, expanded into the convenience category through a deal with 7-Eleven, and filed an intellectual property lawsuit against Uber’s Cornershop.

In a corporate blog post today announcing the funding, Instacart wrote:

We expect to deploy the new capital in a number of ways, including: product development focused on introducing new features and tools to enhance the customer experience, continued investment in Instacart Enterprise to support retailers’ end-to-end ecommerce needs, and further investment in Instacart Ads to help connect Consumer Packaged Goods (CPG) brands of all sizes to customers shopping online from their favorite local retailers.

As noted, online grocery is on track to do big business over the next five years. However, even with its massive warchest, Instacart’s success isn’t guaranteed as there are a number of players both entrenched in and entering the grocery delivery space. Amazon is expanding its real world grocery store presence, Kroger is busy building out big automated delivery centers across the country, and both Uber and DoorDash are getting into grocery delivery.

This is all good news for consumers. As these big well-funded names duke it out, they will all be improving their infrastructure and systems to make delivery easier, faster and better.

With App-Based Navigation and Contactless Payments, Walmart’s Store Re-design Is More Digital Forward

Walmart announced today that it’s giving its stores a facelift to provide a more digital experience that includes in-store navigation and contactless payments through the Walmart mobile app.

In a corporate blog post, Janey Whiteside, EVP and chief customer officer, Walmart U.S., explained some of the changes, including a new greeting at the store that encourages shoppers to download the Walmart app. The app, along with letter and number combinations on aisles, will provide digital navigation to help customers find products in-store.

Stores will also now include self-checkout kiosks and contactless payments via Walmart Pay and other (unspecified) payment services. Some locations will also have Walmart’s Scan & Go cashierless checkout option.

While these in-store changes have undoubtedly been in the works for quite some time, they are also reflective of the recently changing nature of grocery retail. People have their phones while they shop, you may as well put it to good use by providing navigation (and alerting shoppers to sales, promotions, etc.). This app-centric approach also seems easier than creating fleets of robot shopping carts that monitor your biometrics.

Additionally, the pandemic has made contactless payments pretty much table stakes at this point, so incorporating more of those options is a must-have for a giant retailer like Walmart.

Finally, and not for nothing, the Walmart refresh comes at a time when Amazon is beginning to launch it’s own chain of supermarkets. This shiny new kid on the block features digital-forward features like Alexa integration, smart shopping carts and, like Walmart, an emphasis on low prices.

Walmart’s changes will be in 200 Supercenters by the end of its fiscal year before expanding to roughly 1,000 stores by next the company’s next fiscal year.

Kroger to Build Out Ocado-Powered Automated Fulfillment Center in Romulus, MI

Grocery giant Kroger announced today that it will be building out its next Ocado-powered robotic fulfillment center in Romulus, MI.

Kroger is an investor in Ocado and uses the U.K.-based company’s technology to create automated fulfillment centers. These centers use a system of totes, rails and robots to assemble and expedite online grocery orders from a central location that are then sent out for delivery. Kroger is in the process of building out 20 of these facilities across the U.S.

In June, Kroger announced that the Great Lakes, Pacific Northwest and West would each get their own fulfillment center. The Romulus facility will service the Great Lakes region. Other locations announced include Frederick, MD, Monroe, OH, and Dallas, TX, among others.

Kroger’s ongoing automated march across the U.S. comes at a time when the pandemic and spurred record amounts of online grocery shopping. Though recent data suggest that the initial surge in online grocery shopping tapered off later in the summer, online grocery shopping sales are projected to hit $250 billion by 2025.

The first of Kroger’s automated warehouses aren’t scheduled to become operational until early 2021. That will give Kroger plenty of time to properly ramp up its own delivery operations amidst growing grocery e-commerce, but it also gives Kroger’s competition time to gain more marketshare. Amazon is expanding its grocery ambitions and offers Prime members free same-day delivery. Walmart just launched its own subscription service that offers free same-day grocery delivery as well. Even more regional players like H-E-B in Texas are getting into the automated grocery fulfillment game.

Kroger’s Romulus facility will be 135,000-square-foot, will create 250 new jobs and open up 18 months after the site breaks ground.

Zero Grocery Raises $3M Seed Round for Plastic-Free Grocery

Zero Grocery Founder and CEO Zuleyka Strasner announced today via Medium that Zero has raised $3 million in Seed funding for its plastic-free grocery delivery service. According to Strasner, “the largest check” came from 1984, with other investors such as Arlan Hamilton, AVG Basecamp Fun, Bluestein Ventures and more participating. This brings the total amount raised by Zero Grocery to $4.7 million.

Based in the San Francisco Bay Area, Zero Grocery doesn’t use any plastic in its grocery delivery service. According to the company FAQ, food is bought wholesale and packed into glass jars, tiffins, boxes and other containers.

Zero has a membership option for $25 a month, which gives offers free deliveries and also collects empty containers from previous deliveries (which then get sanitized and re-used). You don’t have to have a membership to shop at Zero, though non-members pay a $7.99 delivery fee.

The timing is certainly ripe for Zero’s fundraise. First, the pandemic has spurred record amounts of online grocery shopping over the past six months. And while the numbers have fallen, the online grocery sector is projected to keep growing and hit $250 billion by 2025.

In the Medium post, Strasner even mentioned that the pandemic drove 20x new business for Zero, but it was it was able to adjust on the fly and survive:

As other grocery stores faced out-of-stocks due to a mutual reliance on the same distributors and sources for their products, we were able to avoid out-of-stocks and maintain a consistent customer experience. We had put our model to the test and succeeded, and it allowed us to serve customers in the best way we possibly could.

But the plastic-free nature of Zero’s service is also compelling. People are more acutely aware than ever, especially in light of a recent NPR and Frontline’s recent headline “How Big Oil Misled The Public Into Believing Plastic Would Be Recycled.”

Thankfully, there is a new wave of waste-free grocery stores coming up to help tackle the problem. In addition to Zero Grocery, there’s Zero Market in Denver, CO, and Nada Grocery in Vancouver, Canada. Even big brands like Unilever and Pepsi are getting in on the reusable container train through the Loop store.

All of this combined, along with $3 million means that there are a lot more zeros in Zero’s warchest to help it scale its plastic-free mission.

UPDATE: An earlier version of this post misstated that there was a jar deposit for non-members.

Study: Online Grocery to Hit $250B, Account for 21.5 Percent of Total Grocery Sales

There are a lot of questions around the lasting impact the pandemic will have on the way we get our food. A new report out today from Mercatus and Incisiv attempts to answer some of those questions as they pertain to the way we’ll shop for groceries.

In the report, titled “eGrocery’s New Reality: The Pandemic’s Lasting Impact on U.S. Grocery Shopping Behavior,” Mercatus and Incisiv predict that by the year 2025, online grocery will hit $250 billion and account for 21.5 percent of all grocery sales.

Worth noting is how the pandemic has altered and shaped the online grocery landscape. Of the 60,000 American shoppers across the country surveyed for the report, 62 percent of respondent said they were shopping online because of COVID-19. And it seems like this new e-commerce behavior has become normal for many people. The 21.5 percent adoption in 2025 is a post-COVID data point, and is up 60 percent over pre-COVID projections.

Another finding from the report is that while 40 percent of online shoppers are likely or very likely to continue buying groceries online, the vast majority — 78 percent — still prefer going to the physical grocery store either to shop or do curbside pickup.

Who is shopping online may surprise you, as Mercatus/Incisiv found that older populations (45-plus years old) made the biggest shifts towards technology. In that group, 46 percent adopted new fulfillment options like curbside pickup and 35 percent ordered groceries online for the first time.

The report also found that 43 percent of respondents have shopped online for groceries in the past six months, up from 24 percent two years ago.

The one caveat with this report is that it was backed by Mercatus, which sells a grocery e-comerce platform. So it has a horse in this online grocery race. But Mercatus has also backed research by Brick Meets Click, which has helped provide a barometer of online grocery adoption both pre- and during this pandemic.

Speaking of, that Brick Meets Click survey was released last week and showed that online grocery shopping had fallen to $5.7 billion in August from its record peak in of $7.2 billion June. That $5.7 billion, though, is up from $5.3 billion in April, so there is still plenty of inertia behind the move to online grocery shopping.

Mercatus/Incisiv seem to have taken this slowdown into account, writing:

Growth of online grocery will slow in the immediate term, as shoppers return to stores due to reduced concern for COVID-19 risks. Retailers will be required to invest both in technology and re-alignment of operating models (store labor, forward deployment etc.) to improve customer experience and drive the next wave of growth, while ensuring profitability. Growth is expected to pick-up again in early 2022.

Of course, none of these projections are set in stone. We still have one full quarter in what has been a tumultuous year, and literally anything could happen to impact the meal journey. So all our questions won’t be answered for quite some time.

H-E-B to Use Swisslog for Automated Micro-Fulfillment

Even though everything is bigger in Texas, the San Antonio-based H-E-B grocery chain is going small. Today, the chain announced it has partnered with Swisslog to install automated micro-fulfillment centers at an undisclosed number of stores (tip of the hat to Grocery Dive).

According to the press announcement, H-E-B will make use of Swisslog’s AutoStore solution, which will use a combination of bins and robotics to shuttle grocery items around. Swisslog says that it has more than 170 AutoStore installations worldwide. H-E-B has 400 locations across Texas.

Swisslog’s micro-fulfillment centers will help H-E-B speed up the processing of online grocery orders for delivery and curbside pickup. Keeping up with the crush of new e-commerce customers was something retailers across the country struggled with throughout a good part of this year as pandemic fears pushed people into online grocery shopping.

While the first few months of the pandemic saw record amounts of online grocery shopping, recent survey data from Brick Meets Click shows that grocery e-commerce dropped in August to $5.7 billion, down from its peak of $7.2 billion in June. Having said that, August’s online grocery numbers were higher than the the $5.3 billion in April.

Swisslog is among a number of companies angling to bring more automation to grocery e-commerce fulfillment. Alert Innovation is being used by Walmart, Fabric is working with Fresh Direct, Takeoff Technologies has lined up Albertsons, ShopRite, and Loblaw’s, and Kroger is building out its own centers using Ocado.

While we’re still waiting to see exactly how many people stick with online grocery shopping (FWIW, even Whole Foods’ CEO thinks a lot of people won’t go back into grocery stores), H-E-B’s announcement shows that retailers continue to make big investments in micro-fulfillment. Will these micro-moves yield Texas-sized returns?

Waste-Free Grocery Stores & Bags Made From Skinny Jeans: Ideas From the Beyond the Bag Challenge

Ed note: This post originally had IDEO as the sole creator of the challenge. It has been updated to reflect that Closed Loop Partners launched the challenge with IDEO as their innovation partner.

It’s no secret that despite efforts by grocery stores and retailers to reduce the amount of plastic they pack into the waste stream, shoppers still use a massive amount of the stuff every single day.

Because of this, Closed Loop Partners in partnership with design agency IDEO recently put out a call for innovative ideas around generating less retail waste with its Beyond the Bag challenge. The ideas range from new plastic-free reusable bags to entire grocery store concepts that use bulk dispensing systems.

Here are some of the concepts I thought were pretty interesting:

Repurposing Bags for 3D Printed Crates

A company called re:3D has proposed a system that would take plastic waste produced at retail and repurpose it at retail for 3D-printed crates. The systems would use the company’s Gigabot X 3D printer, which can print from plastic waste that has been ground up into pellets. Their proposed system would put printers at the retail point of presence.

Gigabot X: Creating a pellet printer to 3D print using recycled plastic

A Wallet That Turns Into a Shopping Bag

Moved by Tomorrow has proposed a wallet that converts into a reusable shopping bag. According to the company, the bag would hold up to 150 pounds of total goods.

Reusing Back of House Boxes for Take Home

Already in use by some warehouse stores like Costco and some more sustainably minded grocery stores, Nathan Lee proposes a system that could be used by any grocery store: replace plastic bags with the cardboard boxes which were used to ship products to the store . While it seems simple, it’s always been surprising to me that more grocery stores don’t use this concept.

Denimcle: Turn Those Unfashionable Jeans Into a Shopping Bag

If you’re like me, you probably have lots of jeans that either don’t fit any more, are worn out, or aren’t in style anymore. Sure, you could give them to your local Goodwill (also a good thing), but another idea is to take those skinny jeans and turn them into a shopping bag.

The concept would involve a “Denimcle” kiosk at retail that would allow the user to turn in their old jeans and order a bag made of denim. While the processing of the demim to bag will be done off site, I still think there are number of people who would both donate their old jeans and those that would be open to using a bag made of denim.

The Filole Bulk-Food Waste Free Grocery Store

Smartbins, a maker of bulk bin dispensing systems, has created a proof of concept for an entire grocery store utilizes bulk dispensing and resuable take-home systems. Called Filole, the idea would utilize a system that automatically dispenses measured amounts of food then prints out a label with a price and product info the shopper can then use on reusable containers. Called the S1 system, which is modeled after the IKEA flatpack concept, Smartbins says its concept can be implemented as a whole-store system or one that can be used in an existing grocery store.

This is only a small sample of the ideas submitted to the Beyond the Bag challenge. I’d suggest you look at the submission page if you want to see more of the interesting concepts for reducing plastic waste in our local grocery store.

Survey: Online Grocery Falls in August, Though Majority Will Continue E-Shopping

What goes up must come down, especially, in this case, when people feel safe enough to go out. New survey data from Brick Meets Click/Mercatus shows that U.S. grocery delivery and pickup sales for August dropped to $5.7 billion, down from June’s record high of $7.2 billion.

This pullback in online grocery isn’t a huge surprise. Between March and June of this year, online grocery shopping had seen one record month after another, but that growth was artificially inflated, fueled by the pandemic.

According to Brick Meets Click, the fall in online grocery dollars correlates with increased ease about COVID-19, with 38 percent of U.S. households expressing high levels of concern about the virus in August versus the high of 47 percent in April.

“There is a common belief that the rapid and dramatic surge in sales caused by COVID-19, starting in mid-March, would recede at some point as stay-at-home orders and in-store shopping restrictions like occupancy limits, shortened hours and one-way aisles were relaxed,” David Bishop, a partner at Brick Meets Click, said in a press release announcing the August results. “While the August results reflect a retrenchment of sorts, the market appears positioned to begin a new growth cycle with a large base of committed shoppers.”

This larger base is actually good news for those investing in online grocery services. Brick Meets Click said that roughly 37.5 million, or 29 percent of all U.S. households, are monthly active users of grocery delivery and pickup. That’s an increase of 133 percent over August of 2019, when that number was just 16.1 million.

August wasn’t without its own record setting, however. Brick Meets Click found that spending per order hit a record $95 in August, up 32 over a year ago. Active shoppers placed 1.6 orders per month versus 1.0 orders during the same time last year.

Additionally, more people are developing new online grocery shopping habits. According to the survey, 75 percent of customers said they are “extremely or very likely” to online grocery shop through their retailer again within the next 30 days. This desire to continue shopping online, said Brick Meets Click, was likely because of improved online shopping experiences.

Considering that people have been living under pandemic conditions for half a year (!) now, new habits have definitely set in. One thing to look for is the change in the weather. Now that people have experienced online grocery shopping, will they return to it when the weather outside is frightful (and delivery and pickup can be so delightful)?

Albertsons Expanding Use of Micro-Fulfillment with Takeoff

Albertsons is adding more micro-fulfillment centers (MFC) from Takeoff Technologies in an effort to keep up with grocery e-commerce, according to a story in Supermarket News.

Takeoff Technologies’ MFCs use a series of conveyors, rails and totes to help automate the process of fulfilling online grocery orders. When an order comes in, the system retrieves and assembles the various items, which are then packed into bags by a human before being sent out for delivery or curbside pickup.

Albertsons launched the first two of its MFCs with Takeoff in San Jose and San Francisco towards the end of last year. The grocer is now looking to build out a number of new MFCs with Takeoff over the rest of this year and into next. Chris Rupp, chief customer and digital officer at Albertsons Cos., told Supermarket News, “We have a series of new locations we’ll launch over 2020 and 2021 that will help us deliver more groceries, faster, to customers in some of our highly concentrated areas of business.”

Those new MFCs will include both back-of-house facilities — that is, fulfillment centers built into the backs of existing stores — as well as standalone MFCs that are basically dark grocery stores. Last year ShopRite announced it was building out a standalone MFC with Takeoff.

That Albertsons is expanding its use of MFCs is not that surprising. The pandemic has pushed people into record amounts of online grocery shopping. Back in April, at the height of the lockdowns, I spoke with Curt Avallone, the Chief Business Officer of Takeoff Technologies who said that the company had seen demand for online grocery up 80 to 100 percent at its facilities, and that basket sizes had gone up from $150 to $200.

Those levels may have plateaued or even dipped since April, but Albertsons’ committing to building out more automated MFCs is an indication that grocery e-commerce is now a more permanent part of the country’s shopping habits.

Albertsons isn’t alone in adopting more automation to fulfill online orders. During my call with Avallone, he said that Takeoff had six operational units with other partners including Sedano’s and Loblaw’s, with another 20 MFCs being built. Kroger is also hard at work building out its own Ocado-powered smart warehouse fulfillment centers across the country.

Food Tech News: The Great Vending Machine Bug-Out, Food Tech Lawsuits Galore

We may be all-in on next-gen vending machines here at The Spoon, but does that mindset apply to those currently dispensing edible tarantula in a can? Read on to decide for yourself. Also, it’s another week another lawsuit for third-party food delivery services, this time in the booming online grocery sector.

Edible Insets Arrive in Japan’s Vending Machines

Japan, a country famous for its vending machine culture, has upped the ante recently by selling bugs out of these machines. Kotaku reports that, though still not terribly common, an increasing number of vending machines around the country now sell edible insects, from crickets to grasshoppers to (for the really adventurous soul) scorpion and tarantula. 

Now DoorDash Isn’t Getting Sued for Price-Gouging

DoorDash was dropped from a recent lawsuit that alleges third-party food delivery services used the pandemic as an excuse to price-gouge homebound New Yorkers. Grubhub, Uber Eats, and Postmates are all named in the suit, too. The voluntary dismissal noted that consumers leading the suit “reserved the right to refile against DoorDash.”

Instacart Facing Lawsuit Over Service Fees

Grocery service Instacart faces a lawsuit alleging the company charged millions in “deceptive service fees” to customers and also failed to pay hundreds of thousands in sales tax. D.C. Customers were “tricked” into “believing they were tipping grocery delivery workers when, in fact, the company was charging them extra fees and pocketing the money,” said DC Attorney General Karl A. Racine, who filed the suit. Previously, Racine sued DoorDash over its former tipping policy for drivers. 

Grocery Chain H-E-B Opens a Food Hall Offering Takeout and Delivery Meals

Grocery retailer H-E-B further dissolved the boundaries between groceries and restaurants this week when it opened a food hall at one of its Austin, TX stores. Dubbed Main Streat, the venue has five restaurants and a full-service bar.

Given the current state of the foodservice industry, now would seem an odd time to open a public space dedicated to restaurant fare. In most states, restaurant dining rooms must operate a reduced capacity. Many businesses are either mandated or choosing to stick to outdoor patio seating, though that will change once colder weather arrives.

H-E-B has clearly considered all of this, as Main Streat caters to the off-premises customer as much as it does the one who wants a patio table. The company said meals from the venue’s five restaurants are available for pickup and delivery (the latter through local third-party delivery service Favor) along with limited seating inside the food hall and on the patio.The to-go format even applies to alcoholic beverages from the aforementioned full-service bar.

Less than a year ago, starting a foodservice business with a built-in off-premises strategy would have been an anomaly. Catering to takeout and delivery formats was certainly becoming an important strategy for these businesses, but that transition was meant to unfold over a longer period of time, say, five years. The pandemic changed all of that, and H-E-B’s to-go-centric food court is one example of something that will become table stakes very soon for restaurants: opening a business with multiple formats from the start.

Main Streat also underscores how our definition of the word “restaurant” is quickly changing, and how the grocery store is a part of that transition. In the last several months, we’ve seen QSRs selling groceries at the drive-thru, third-party delivery services like DoorDash peddling grocery and convenience store items, and the rise of services like Good Egg selling restaurant meals and supplies via e-commerce. All of which is to say, both restaurants and grocery stores seem to be redefining the word “experience” these days, and often doing so together. The common denominator? Off, premises, obviously. 

Simbe Robotics CEO: Robots Help Prevent Empty Grocery Store Shelves

Can robots help prevent the empty grocery store shelves that we saw during the initial panic buying stage of this pandemic? Brad Bogolea, Co-Founder and CEO of Simbe Robotics, thinks so.

Simbe makes Tally, an autonomous shelf-scanning robot that roams grocery store aisles and uses computer vision and RFID to keep tabs on inventory. Simbe says Tally can spot inventory anomalies and provide analytics about purchasing and re-stocking insights.

Because Tally is a robot, it can spend its day going up and down aisles, giving store managers ongoing updates about product inventory. It is this near-real time snapshot of a store that Bogolea says can help retailers thwart outages during panic-buying sprees like the one we saw earlier in 2020, and also provide a better e-commerce buying experience for consumers.

Tally is currently being used in trials by grocers like Schnuck’s and Giant Eagle, as well as other partners across six countries. “We’ve had insights related to consumption patterns on shelves,” Bogolea told me by phone this week, “Especially in peak panic buying.”

Bogolea said the problem stores experienced during this panic buying was bad supply chain data. “Many of these stores operate on a replenishment system,” said Bogolea. He explained that “if there’s heavy distortion, retailers may assume a positive balance on-hand,” even though the products actually aren’t there.

The bad supply chain data, according to Bogolea, is a result of the manual inventory checks that stores currently carry out. If robots are used, shelf inventory count is more accurate and up to the minute (basically) because the robots can run multiple shelf audits throughout the day. More accurate data means that stores can respond faster when there is a sudden run on particular products to speed up replenishment.

But robots aren’t just helpful dealing with sudden pandemic buying. As the pandemic pushes people into record amounts of grocery e-commerce, there is a greater need for what the consumer sees online to match the availability in store. Anyone who’s ordered groceries online is familiar with ordering a basket of groceries only to get notifications prior to pickup or delivery that, whoops, that item was actually out of stock.

Bogolea said an additional benefit of using shelf-scanning robots is that they can free up human workers to do other tasks such as picking items for online orders and sanitizing the store and carts.

Simbe is not the only company making shelf-scanning robots. Walmart is expanding the use of Bossa Nova’s robots to 1,000 stores, and Woodman’s Markets is using Badger Technologies’ robots at its locations throughout the midwest.

Bogolea said that since the pandemic Simbe has seen an uptick in the amount of inbound interest in Tally. But despite all the promises of his company’s technology, Bogolea is the first to admit that adopting it is not like flipping a switch.

“Though there is stronger interest,” Bogolea said, “There’s a lot of work to deploy this type of technology.” As we learned from Albertsons at our Articulate food robotics summit last year, grocery stores, especially big chains, only adopt solutions that are already at scale.

Simbe has its own plans to scale up and build 1,000 robots over the coming year. Between it and all the other robotic players in the space, there’s a good chance you’ll be passing one in the grocery aisle in the not too distant future.