With the exception of wine, fine art and antiques, few things age well. This is especially true when it comes to retailers. The retail industry is littered with empty stores of companies that failed to invest wisely in technology, store operations, supply chain management and improving the customer experience. The result? They died.
I believe several well-known grocery retailers are in danger of being steamrolled by their competitors because their executive teams have failed to act aggressively in addressing a myriad of issues.
There are also several grocery retailers that I believe have a solid foundation in place but nonetheless, many changes need to be made. The northeastern supermarket chain, Stop & Shop, is an example of such a retailer. The company has been in business since 1914 and has grown its store count to 415, and employees over 60,000 associates. Stop & Shop was acquired by Ahold-Delhaize in 2016.
At 106-years-old, it’s time for Stop & Shop to get a makeover. If I ran Stop & Shop, this is where I would focus my efforts.
Digital and Analytics
Few things are important to a retailer than their digital experience for customers. I evaluated Stop & Shop’s e-commerce platform and on a scale of 1 to 10, I rated the experience a 5. There is nothing special about the website or experience. What’s disappointing is that Stop & Shop launched the platform I evaluated in August 2020. In other words, the platform I evaluated is the best that Stop & Shop has to offer.
My advice to Stop & Shop’s senior executives is to evaluate several commercial platforms and then compare the platforms to what Stop & Shop has provided to their customers. Stop & Shop, along with Ahold-Delhaize, should evaluate each of the companies listed below. I do not have a business relationship with any of these companies.
In preparing to write this article, I asked 100 people (including university students) to evaluate Stop & Shop’s website and rate the experience. I also asked everyone who participated to evaluate the software and platforms offered by the companies I listed. Locai Solutions and Shelfy averaged a rating of 8 and 9 respectively, and Stop & Shop received an average score of 6. My small sample size may be unscientific but the results are telling.
The following words were paraphrased by over 50% of the individuals who evaluated the website, “Stop & Shop’s website looks old. Why don’t they update it?” Yikes! I would not, under any circumstances, maintain the Stop & Shop website if I was responsible for strategy, e-commerce or customer engagement at the company. I would make massive changes.
The companies I listed generated positive feedback. I think highly of each company that I listed and I am very familiar with their solutions.
Halla, for example, offers one of the more interesting intelligence engines that can be used by retailers to predict consumer shopping behavior.
Shelfy has the best and most advanced e-commerce and mobile experience platform in the world. I’ve never seen customers react more positively to a platform than what I witnessed when I tested Shelfy. I recommend the platform without question.
Stop & Shop’s recipe section of their website is very basic. Locai Solution’s CookIt for meal planning would provide much better value to customers according to feedback I received. I agree. (I recommend that Stop & Shop explore utilizing capabilities within their stores and/or dark kitchens to cook and deliver meals to their customers).
AVA Retail generated a lot of excitement due to its SmoothShop, SmartShelf and Analytics products.
I was also fortunate to convince several current and former executives who work for Stop & Shop to speak with me off the record. In exchange for not using their names or revealing the topic of our discussions, I agreed to outline additional areas that the company should focus on.
The missing ingredient at Stop & Shop is that the company lacks a growth mindset across their retail ecosystem. Stop & Shop exists for one reason – create new customers and retain current customers. That’s it. Period. Full stop. Every executive and associate at Stop & Shop must operate with this principle embedded in everything that they do. At Amazon, we referred to this as being fanatical about customers. Stop & Shop isn’t Amazon.
In speaking with executives from Stop & Shop, I was struck by how much of what they’re doing will do nothing to drive growth. In fact, I was surprised by how many different projects appear to be in motion at the company but instead of reducing costs and complexity and driving growth, the perception is that costs and complexity are increasing. This is a massive red flag.
Based on my opinion, the Achilles Heel of Stop & Shop is that it isn’t a science-based company. This has to change immediately. Partnering with one or more of the companies I listed will prove beneficial.
I recommend that Stop & Shop evaluate every executive, manager, and director in the company and replace those individuals lacking experience in technology, analytics, digital and customer experience. Regardless of the amount of money invested by Stop & Shop in technology, they must have a team comfortable using and adopting the technology or the invested capital will achieve nothing.
Stop & Shop must also take a page from Amazon’s playbook and raise the bar in terms of the skills required to work for the company. Amazon is Amazon because they hire the best and they hire people who Think Big. Maintaining the status quo at any level in Stop & Shop cannot be tolerated.
Online Grocery Fulfillment
Out of all the topics I discussed with executives, the topic that raised the most concerns to me is Stop & Shop’s current model for fulfilling online grocery orders and it’s partnership with Instacart. Multiple sources I spoke with used a similar phrase, “We’re trying to increase our online sales because we’re an omni-channel retailer.”
I then asked these questions:
- The average grocery retailer loses up to $25 on every online order they fulfill. How much money is Stop & Shop losing on every online order they fulfill? How much money is Stop & Shop losing monthly and annually? Do you know?
- Has increasing the total number of online orders fulfilled on a daily basis increased or decreased the amount of money lost on every online order that is fulfilled? Does Stop & Shop have a plan for breaking even or earning a profit?
- Stop & Shop has hired nearly 1,000 associates to support omni-channel efforts. What is the ROI? Do you know?
- Is Stop & Shop increasing their market share? If so, why has market share increased? If not, what does Stop & Shop need to do to reverse the trend?
- What is Stop & Shop’s differentiating capabilities?
- Is Stop & Shop leading or competing?
As for Peapod, the online grocery retailer owned and operated by Ahold-Delhaize, I’m not convinced Peapod is the best option for online grocery ordering for Ahold-Delhaize or Stop & Shop customers. In fact, based on analysis I performed earlier in 2020, I believe Ahold-Delhaize should divest Peapod. The founders of Peapod, grocery analysts and consultants I’ve spoken with agree with me.
I believe there is a better option.
I strongly encourage Stop & Shop to conduct store cluster analysis and identify the optimal number of micro-fulfillment centers required to fulfill all online and curbside pickup orders. The analysis should also include identifying the total number of automated dark stores required to fulfill online orders. I also encourage Stop & Shop to explore the use of Micro-fulfillment as a Service (MaaS) for their grocery needs.
I have either designed and/or evaluated the strategy of nearly every major grocery retailer in the U.S. including competitors of Stop & Shop. Between 2021 and 2030, Stop & Shop will be faced with the most intense competition they’ve ever encountered. Good isn’t good enough. Stop & Shop must be flawless in order to survive and thrive over the next decade.
Stop & Shop must THINK BIG. This is a must-have but I believe it is an areas that needs work. I do not see the type of innovation coming out of Stop & Shop that I believe the company should be focused on.
I also believe Ahold-Delhaize must become much more aggressive when it comes to acquisitions. My advice is for Ahold-Delhaize and Albertsons to merge. Wall Street executives and retail analysts I’ve spoken with about this subject agree with me that a combined Ahold-Delhaize/Albertsons would be a game changer for the grocery industry.
Stop & Shop must transform and not just improve. The company lags in the area of strategy and its preventing the company from achieving its full potential. Macro-economic, financial, pricing, What If?, Monte Carlo Simulation, consumer behavior and in-depth logistics models are an absolute requirement. If the company doesn’t become science-based in all facets of its operations and decision-making. Stop & Shop will die a slow death.
If I didn’t care about Stop & Shop, I wouldn’t have written this article. The sand is quickly leaving the hour glass, Stop & Shop, get busy.