Sobeys' online grocery service 'could put them at advantage': expert
Sobeys is launching a new grocery delivery service in the Greater Toronto area that delivers groceries from a high-tech warehouse to customers within an hour.
The strategy - delivering products from a fulfillment center dedicated exclusively to online orders - differs from the current supply offerings in other Canadian grocery stores and could lead Sobeys to benefit from the future growth of e-commerce, according to a retail expert.
Sobeys announced on Monday that Voilà was launched, an online grocery delivery service that will process orders at an automated fulfillment center in Vaughan, north of Toronto. The warehouse has robots that assemble orders while employees pack bags and deliver them to customers. The robot technology was supplied by Ocado Group PLC and was previously used by grocers in the UK.
"We think it is important to combine our robots and teammates that work safely and with less handling," said Sarah Joyce, senior vice president of e-commerce at Sobeys, in an interview.
"We have always believed that Canadians deserve a better way to shop online groceries ... and now we can offer a better service thanks to this technology."
The new delivery service is driven by the growing demand for e-commerce for Canadian food retailers as a result of the coronavirus pandemic. Michael Medine, chief executive officer of Sobeys parent company, Empire Ltd. (EMP) said in a conference call last week that online grocery shopping was "charged due to COVID".
Voilà should start with 40 employees in the fulfillment center. With increasing demand, the company increased this number to 140.
Still, Canada is lagging behind in online food delivery. According to a recent survey commissioned by PayPal and conducted by the Angus Reid Forum, only 19 percent of Canadians searched for food online before the pandemic. That number has since risen to 30 percent, an increase of 58 percent.
"Online grocery shopping has been slow in Canada, but during quarantine the benefits of buying groceries for delivery or click-and-collect have proven essential," said a report by research firm eMarketer from June.
Bruce Winder, a partner of the Retail Advisors Network, who recently wrote a book on the effects of COVID-19, says Sobeys' new supply business is a long-term game that in some cases could position the grocery chain ahead of its competitors years ago.
"I think it's probably going to be a better approach in the long run, but there's always a risk. It's a big gamble because it's a major investment," said Winder.
"Still, it could give them an edge over the other guys who don't really have much infrastructure themselves at the moment."
Many grocery retailers in Canada currently offer delivery services, but only a few offer products that come directly from a special distribution center. For example, Loblaws PC Express delivery offers personal buyers who shop in the local store for a flat fee of $ 9.95.
Voilà will initially be launched in Vaughan and will incur a $ 7.99 delivery fee. Sobeys plans to launch the service in the Toronto area in the coming weeks. Another distribution center is under construction in Montreal. Joyce said the company hopes to eventually have three or four Voilà facilities for people across the country.
"We believe Canada is lagging behind when it comes to buying food online ... and we believe that we have to play a role in growing the market by showing Canadians that there is a better way to do it." said Joyce.
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