'Dot' competitors challenge traditional supermarkets
Chain Store Age
New York
Apr 2000
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Authors: Anonymous
Volume: 76
Issue: 4
Pagination: 78-80
ISSN: 10870601
Subject Terms: Supermarkets
Conferences
Internet
Electronic commerce
Information management
Trends
Classification Codes: 9190: United States
8390: Retailing industry
7400: Distribution
5220: Information technology management
Geographic Names: United States
US
Abstract:
A trio of supermarket IT executives spoke at a lunch session during the
recent MarkeTechnics 2000. The panelists said supermarkets must rethink
how consumers want to be served if they are to fend off dot.com competition.
Consumers are in charge today, they said. And those consumers want shopping
options. The Internet and redefining customer service were not the only
topics discussed by the panel. How supermarket IT departments relate to
the organizations they support was discussed at length.
Copyright Lebhar-Friedman, Inc. Apr 2000
Full Text:
Have on-line grocers Peapod and Webvan "amazoned" risk-aversive supermarket
companies?
Pat Steele thinks so. In fact, the executive VP of systems and technology
at Boise, Idaho-based Albertson's, says that's just one example of a pattern
of dangerous timidity among grocers reluctant both to try new ways of doing
business and to experiment with unfamiliar technologies.
"Look at the headway companies like Webvan are making," he told fellow
grocers at the recent FMI MarkeTechnics show at San Francisco's Moscone
Convention Center. "We, America's supermarket companies, could have done
that. But we didn't. We just wanted to make incremental changes in our
businesses. And we're still operating in that comfort zone."
Steele was one of a trio of supermarket IT executives who spoke at a Lunch
session moderated by Mike Sansolo, senior VP of the Food Marketing Institute,
Washington, D.C. Natan Tabak, executive VP of Elizabeth, N.J.-based wholesaler
Wakefern Food Corp., and Kevin Holt, senior VP of information technology
and services at Grand Rapids, Mich.-based Meijer, rounded out the panel
The session, albeit the closing one on the MarkeTechnics 2000 agenda, was
well-attended. Grocers worried that one of San Francisco's signature winter
rainstorms might complicate their flights out of the city stayed through
the very end of this, the eighth annual MarkeTechnics show.
Albertson's is intent on not being amazoned by pure-play on-line grocers:
America's second-largest supermarket company opened a 30,000-sq.-ft. sure
that doubles as an on-line grocery fulfillment center in Amazon.com's backyard
last November. A 17,000-sq.-ft. '`backroom" dedicated to on-line order
fulfillment takes up more than half the store. A trimmed-dawn grocery mix,
Web kiosks and self-checkouts fill out the decidedly techie new concept
that Albertson's says may be a prototype for stores to come.
Following up Steele's comments, Meijer's Holt admitted that he was among
the supermarket executives who have resisted change.
"When I first saw the dot.coms, I thought they'd never work," Holt said.
"Grocers have to be more willing to test out new ways of doing business.
A lot of things I and many other people thought were a little nuts are
things we are looking at seriously today."
Pure-play on-line grocers have yet to turn a profit-they say ,they are
investing in infrastructure to support what they hope will be growing demand.
But traditional supermarkets are, nonetheless, worried about the competition.
Many landed grocers who question whether they can make money on line feel
they may risk losing customers to on-line grocers if they fail to provide
online grocery shopping as an option.
The MarkeTechnics panelists said supermarkets must rethink how consumers
want to be served if they are to fend off dot.com competition. Consumers
are in charge today, they said. And those consumers want shopping optionS.
"There has been a shift of power in the supply chain over the years," Wakefern's
Tabak said. "The manufacturers used to hold all the cards. Then the power
shifted to the retailers. But now the power has shifted to the consumers.
A shopper has a lot of options today. If supermarket companies don't offer
them what they want when and how they want it, grocers will lose customers."
"Figuring out how we are going
[IMAGE PHOTOGRAPH] Captioned as: Natan Tabak, executive VP; Wakefern Food
Corp.
to be convenient to shoppers is a challenge," Meijer's Holt added. "We
have to work out the demand equation if we are going to serve those customers
well."
"Natan is right," Steele said. "The customer is in charge now. Supermarkets
have to figure out how to attract that customer to a store and lock her
in as a loyal shopper, But in the grocery industry, we are trying to do
this using existing technology."
Steele argues that it's time for supermarkets to open up to new business
models and explore breaking technologies to support them. On-line shopping,
he said, is just one of the options supermarkets should explore.
"Look at everything that's happening in the wireless world," Steele said.
"Everybody has a cell phone these days. All grocers, especially the smaller
ones, are going to have to get smarter and use technology more effectively:
Companies that simplify the lives of consumers will be the winners."
Wakefern is trying to do just that, but Tabak said some of the grocers
it supplies are more adaptive than others.
"We have 40 different owners of ShopRite stores, and they are all looking
at change differently," he said. "Some want generation X to adapt to them.
We are seeking out those owners who understand the new labor force and
the new consumers-the grocers who are adapting to changes in society rather
than expecting society to adapt to the way they've done business all along."
Tabak said Wakefern is holding up those more progressive grocers as examples
to all the grocers it supplies.
But the Internet and redefining customer service were not the only items
hotly debated at this roundtable. How supermarket IT departments relate
to the organizations they support was discussed at length.
"IT executives and staffers should spend time in the business, and we should
encourage people from other departments within our companies to spend time
with us," Tabak said. "We should be encouraging our IT people to work in
a store for a month, or for three months. Visiting a store for a day isn't
good enough."
But should IT executives ask their CEOs to tag along when they attend technology
conferences such as MarkeTechnics?
Albertson's Steele said CEOs just don't have the time for that.
"Our role as technology executives is to go out and sort through the available
technologies and decide what to bring back to our organizations," he said:
"I don't think we should be trying to get the CEOs to walk the floor with
us."
Meijer's Holt said supermarket companies should take a more active interest
in the development of retail technology standards. If they don't, supermarkets
will have a difficult time working with supply-chain partners to respond
to consumer demand.
"As an industry, we should force ourselves to come together on standards
efforts," he said.
And what about the Y2K problem? Many people within supermarket companiesCEOs
among them-have recently questioned the money their IT organizations spent
on exterminating the millennium bug.
Such hindsight, the IT panelists said, is hardly 20/20.
"We had a lot of people internally who told us we spent too much money
on Y2K," Holt said.
Tabak heard the same thing at Wakefern, and it angered him.
"Retail IT departments did the work they had to do, and they did it well,"
he said. "Perhaps we should have left some Y2K glitches. That would have
satisfied executives who are now questionang whether we had to spend money
on Y2K remediation."
All three men said IT departments throughout the retail industry are being
asked to justify Y2K expenditures when they should be applauded for a job
well done.
Albertson's Steele said questions about remediation spending are just part
of the Y2K fallout IT departments are facing now: IT departments are sorting
through a backlog of requests for new applications that piled up while
they focused on Y2K code remediation. Business users, they said, have grown
a little impatient.
"The rest of our organizations were waiting far new applications while
we were doing the Y2K work,'' Steele said. "Some of the users thought this
was some great excuse to hold them at bay for a while."
[IMAGE PHOTOGRAPH] Captioned as: Pat Steele, executive VP, systems and
technology, Albertson's.
Reproduced with permission of the copyright owner.
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