A FOOD INSTITUTE WEBINAR 1:00PM. Bill Bishop, Brick Meets Click. Barnaby Montgomery, Yummy.com Moderated by Brian Todd

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1 The Future Shock Of Online Grocery Shopping: What You Need to Know A FOOD INSTITUTE WEBINAR Jan. 22, :00PM Featuring: Bill Bishop, Brick Meets Click Arnie Katz, Relay Foods Barnaby Montgomery, Yummy.com Moderated by Brian Todd

2 The Future Shock Of Online Grocery Shopping: What You Need to Know Presenters Bill Bishop Bik Brick Meets Clik Click Arnie Katz Relay Foods Barnaby Montgomery Yummy. com Webinar Begins Promptly at 1:00PM ET Moderator Brian Todd President The Food Institute

3 The Food Institute Mission Statement The Food Institute is a nonprofit organization with a single purpose: providing information. The Food Institute strives to be the best single source for current, timely and relevant information from farm to fork. Visit us online at for upcoming webinars, publications and industry information. Webinar Begins Promptly at 1:00PM ET

cfm What s Included The Food Institute Report Delivered weekly in print and electronically Today in Food

4 Sign up today for the FI Report, daily news and exclusive access to online industry research. What s Included The Food Institute Report Delivered weekly in print and electronically Today in Food Delivered electronically each day Foodinstitute.com Research library on your desktop available anytime! Continuing Education Programs Industry webinars & seminars Webinar Begins Promptly at 1:00PM ET

5 January 2014 How Consumers Are Using Online Shopping January 2014 By Brick Meets Click Brick Meets Click delivers the strategic insight and guidance that retailers, suppliers, & technology providers need to drive growth by meeting shopper needs in an omnichannel brick meets click

6 January 2014 The Weekly Ad is Still Number One brick meets click 2

7 January 2014 Demand for online grocery shopping is driven by the ability to satisfy a broader set of customer needs. Takeaway: This is more than just shopping for brick meets click 3

8 January 2014 More customers shop online for groceries using pure play online retailers than traditional grocers. Takeaway: A lot of new relationships are being built right brick meets click 4

9 January 2014 More than 10% of customers are already buying some groceries online. Takeaway: Local market experience brick meets click 5

10 January 2014 A little more than a third shop online once a month, but the majority shop more. Takeaway: Customers go online for a range of different shopping brick meets click 6

11 January 2014 More frequent online shoppers spend a much larger percentage of their grocery dollars online. Takeaway: It takes time to get trial and win a larger share of brick meets click 7

12 January 2014 About 3% of grocery spending is online, but there s a lot of variation across markets. Takeaway: Retailers who ve moved early have won market brick meets click 8

13 January 2014 What Shoppers Are THINKING About Online Grocery Shopping 1. Theexperience experience must be as good as other experiences onthe internet. Takeaway: That s the basis of brick meets click 9

14 January 2014 What Shoppers Are THINKING About Online Grocery Shopping 2. Price matters. Takeaway: The price component of the value equation can t contain insult pricing i and it must consider brick meets click 10

15 January 2014 What Shoppers Are THINKING About Online Grocery Shopping 3. Online shopping offers more confidence and control. Takeaway: Grocery retailers must find ways to match brick meets click 11

16 January 2014 What Shoppers Are THINKING About Online Grocery Shopping 4. Assortment is personal; i.e. covering 90% ofa shopper s needs is pretty awesome. Takeaway: There s more flexibility in defining assortment than is commonly brick meets click 12

17 January 2014 What Shoppers Are THINKING About Online Grocery Shopping 5. There are different online shopping occasions too; e.g. quick/emergency needs, fill ins, stock up, etc. Takeaway: Some services, have unique capabilities to serve some of brick meets click 13

37 Pie Eating Contest Grand Prize: More Pie!

38 My Background & Perspective Store-Based Online Fulfillment (closer is better) How do you use local inventory to fulfill online orders? : Co-Founder, CEO: Yummy.com Business Model: Pick from store & deliver on demand Result: 4 locations & almost 2,000,000 orders to-date : Stater Bros. Markets Vendor Background: Setup online operations from 15 stores Business Model: Pick from store & deliver by appointment Result: Failure Attorney, Latham & Watkins (Los Angeles)

39 Our Vision: To delight customers with online fulfillment that is faster and more convenient than a trip to the store. Local Omni Channel Limited assortment Open to the public Neighborhood grocery

40 Do consumers want to order groceries online?

41 Do consumers want to order groceries online? 1. What is the market opportunity / need? 2. What is the solution?

42 Threshold Question: What is the Customer Need? The Customer Need I need to order online. I need a delivery. I need groceries. I need savings. I need convenience. I need selection.

43 The Customer Need Defines the Market The Customer Need I need to order online. I need a delivery. I need groceries. I need savings. I need convenience. I need selection. The Market Prisoners Broken legs & old people Mass Market Mass Market Mass Market Mass Market

44 What are the possible solutions? 1. By Appointment We ll deliver Tuesday between 7:00 a.m. and 9:00 a.m. 2. Unattended We ll deliver e and leave e it on your doorstep. 3. Mail Order W ll We ll mail ilit to you. 4. Pick Up Customer picks up at your store. 5. Yummy.com We ll deliver in about 30 minutes.

45 Each Customer Need Requires a Specific Solution The Customer Need I need to order online. I need a delivery. I need groceries. I need savings. I need convenience. I need selection.

46 My Perspective on Fulfillment Solutions Solution By Appointment Unattended Mail Order Pick Up My Perspective Customer needs a delivery and is willing to anticipate grocery requirements and wait around for delivery. Customer values convenience and accepts the practical limitations inherent to unattended doorstep delivery. Customer is focused on price and/or selection. Lack of fresh foods limiting. Customers will buy in bulk to save. Customer needs to stay out of your store. No incremental customers.

47 The Need: convenience. I need groceries & The Market: Mass Market The Solution: 30 minutes. On-demand in about

48 Implications for Food Retailers Amazon and others will continue to innovate on behalf of customers. You knew how to compete with each other (e.g., supermarket v. supermarket), but how do you compete with innovation? Peeling your onion, or a crack Peeling your onion, or a crack in your foundation?

49 Perspective is Important Our energy at Amazon comes from the desire to impress customers rather than the zeal to best competitors When we re at our best, we don t wait for external pressures. We are internally driven to improve our services before we have to. -Jeff Bezos, CEO of Amazon.com

50 THANK YOU!

51 Anticipating the Growth for Online Grocery Shopping January 2014 By Brick Meets Click January 2014 Brick Meets Click delivers the strategic insight and guidance that retailers, suppliers, & technology providers need to drive growth by meeting shopper needs in an omnichannel brick meets click

52 January 2014 What Characteristics of the Online Grocery Shopping Offer are Defining the Market? Availability: Market Presence Accessibility: Ease of Use Flexibility: Fulfillment Options Affordability: Competitive brick meets click 2

53 January 2014 Modeling Market Readiness and Growth Potential Adoption curves reflect actual experience of similar US retail business models. Start point based on survey results from 22,000 customers from seven retail banners across multiple markets in the US. Growth/diffusion rate driven by positive word of mouth. Demographics define the necessary conditions and high potential segments. Growth scenarios built around the intensity of brick meets click 3

54 January 2014 Market-based Scenarios = theonlypracticalwaytogo to Created at the market level vs. national. Driven by the level of shopper readiness and the availability of online grocery shopping in that market. Online penetration driven by the speed/scale of an brick meets click 4

55 January 2014 Potential GROWTH brick meets click 5

56 January 2014 CONSERVATIVE Growth: 67% 6.7% penetration in 2024 Market conditions: Only online grocery option in the market is a new player who: Must invest in a physical capability; i.e. fulfillment center. Takes a measured approach to deploying across the brick meets click 6

57 January 2014 MODERATE Growth: 10.7% penetration in 2024 Market conditions: Some disruption as Amazon accelerates rollout to more markets triggering a response by the regional supermarket chains in those areas. Only the leaders respond. Response extends to reinventing the brick meets click 7

58 January 2014 AGGRESSIVE Growth: 16.9% penetration in 2024 Market conditions: Major disruption has occurred as Amazon Fresh dramatically increases its number of market, and national chains, as well as regionals respond. There are available physical assets ready for conversion for fulfillment. Deployments are brick meets click 8

59 January 2014 Three Forces Reshaping the Retail Landscape Digitally Connected Shoppers Retailers Need to Grow Lifecycle of Retail brick meets click 9

Are Traditional Retailers Turning the Corner? Moderator: Brian Todd, The Food Institute

Are Traditional Retailers Turning the Corner? Moderator: Brian Todd, The Food Institute Speakers: Jim Hertel, Willard Bishop Bill Bishop, Willard Bishop Webinar: June 27, 2007 2:00 3:00 PM EDT Food Institute