There were three interesting grocery developments in the last few days, all pandemic related and all reflective of the fact that digital transformation in grocery is still a work in progress and hardly a home run:
- Nestlé bought Freshly. This was probably the most predictable in that we’ve seen many big traditional companies buy startups for several years. That said, the whopping almost $1 billion purchase price seems inflated, especially since meal kits were on the outs until the pandemic gave them CPR. Plus, Freshly isn’t even that well-known. But consumer packaged goods companies have been confused by digital for years, and buying their way into e-commerce seems the best way to circumvent archaic systems and structures and get to a viable e-commerce business overnight.
- goPuff bought BevMo!. Usually retail acquisitions go the other way around, where traditional brands buy the hot new startups (PetSmart buying Chewy or Walmart buying Jet.com or item number one above). But here you have a startup buying an old-school business. That said, goPuff may very well have the last laugh, and it may be the best $350 million it spends. So many startups spend at least that much on marketing promotions or even warehouse technology. In this case, goPuff gets 150 stores that serve as micro-fulfillment centers (MFCs) in the US Southwest, a bunch of in-store media opportunities and tons of impressions if it puts up signage, and inventory to boot. I like the “strategic sale” of struggling retailers to a venture capital (VC) or VC-funded startup. Listen up, J.Crew and Staples.
- Walmart got rid of its shelf-scanning robots. This was a head-scratcher, as we know that inventory accuracy has been a bear for most retailers, especially as more of them pick their online orders from stores. The backstory asserts that people (i.e., store associates) can do the job as well as (or better than) machines. In a world where $15 hourly minimum wages are only going to be more common, I’d think automation would be crucial, especially given that the estimates for this technology is that it’s about the cost of two full-time employees per store (and most of these stores have hundreds of employees). We’ll have to keep an eye on this area. Perhaps this execution could have just had some issues.
So, what do you think? How evolved are you seeing digital transformation in the grocery world?