One might say that Roche Bros. Supermarkets is an old-timer in the online grocery business, having launched its first effort in 2005. It was the beginning of a 12-year journey that has brought an extraordinary amount of incremental business to the company.
Now the 20-store chain has entered a new and even more profitable phase in its development, with improved backroom operations and a full-service, hyper-efficient online system for customers that includes home delivery, click-and-collect and mobile platforms.
It has produced extraordinary sales results, says Geoff Farrington, director of e-commerce for the Wellesley, Mass.-based retailer.
“Our perishables penetration has been just the same as it is in store. But our average basket online is traditionally about $130, compared with $38 in-store. You have a lot of speedy checkout transactions in the store and that drives the dollar figure down,” he says.
“Additionally, our delivery basket is about $165, compared with the click-and-collect basket at about $171.”
The company recently started offering a call-in service three days a week for people without access to a computer or technical know-how; Farrington says those baskets average over $100.
The foundation of the development is a partnership with enterprise e-grocery software platform provider ShopperKit, designed specifically for retailers to process orders from online e-commerce storefronts for in-store fulfillment, and Brother Mobile Solutions, a mobile point-of-sale provider. Brother’s mobile printers are designed to integrate with ShopperKit’s platform and eliminate the learning curve for non-technical store associates who use the system.
The Amazon ethos
“I see nothing but growth for the online business,” Farrington says. “Online sales have traditionally been growing by double digits every year, despite Amazon. They may not hit you overnight. But if anyone thinks Amazon won’t affect their business, they’re being stubborn or naive.
“If anything, Amazon has helped this area of our business. They’ve been so successful in getting customers used to ordering online that they’re no longer timid about buying items like perishables,” he says.
Roche has taken full advantage of the Amazon ethos. The company started out with a delivery-only model, delivering from nine of the 18 stores it had at the time. That covered most of the trade area, Farrington says, and even a 10-mile radius beyond that. All fulfillment was done from the beginning at the stores.
“We were looking to make money on it or else we would never have gotten into the business,” he says. “Moving to a digital environment in subsequent years was the right thing to do, and the effects were almost immediate.”
In the first year alone, Roche had 12,000 registered users on its site, which accounted for a little over $7 million in incremental sales. Noting the lack of competition at that time aside from Peapod, “I do know that not being in the digital area would have been a mistake,” Farrington says.
“If a company is worried about cannibalization going into the digital environment, then they should certainly think again. If you’re not willing to cannibalize yourself, someone else will.”
— Geoff Farrington, Roche Bros.
The results were even more astounding considering Roche didn’t have a loyalty card tie-in.
“This made it difficult to accurately determine the effect online had on in-store sales. We didn’t know which customers we actually transitioned. It was safe to assume that a lot of orders were coming from outside our trade area,” he says.
“But if a company is worried about cannibalization going into the digital environment, then they should certainly think again. If you’re not willing to cannibalize yourself, someone else will.”
A raft of competitors has since burst onto the scene, including Amazon, Google Express and Instacart — a big motivator in Roche deciding to upgrade its digital footprint.
The company needed to implement a new online platform and backend solution, Farrington says, and the system offered by Brother Mobile was the most efficient and accurate, “as well as one that could provide real-time communication with our customers.
“We were looking for a pick-and-pack model capable of multi-picking and batch-picking orders to improve our picking efficiency. That model required the labeling of totes as the shoppers selected those order. That, in turn, required Brother’s mobile printing solution,” Farrington says.
Under the previous legacy platform, employees would pick orders from store shelves and bring them to the back room for packing. ShopperKit enables stores to pick and pack at the same time, so employees are packing right into totes for delivery or bags for click-and-collect orders.
“As a result of that,” Farrington says, “we have to label as we go, in order to keep each order separate and each item in its correct temperature zone.”
The chain’s ability to pick multiple orders efficiently increased immediately; the only difference between click-and-collect and delivery orders is that they go to different sides of the building: One goes to a truck for direct delivery to customers, while the other waits for customer pick-up at the store.
“Efficiency comes into play when we can pick orders faster,” he says. “Minimizing the time gives customers a shorter delivery or pickup window.”
Roche introduced click-and-collect in 2010 and today has five stores offering this service. Farrington says the company is looking at rolling it out to all its Roche Bros., Sudbury Farms and Brothers Marketplace stores.
“There’s nothing preventing us from doing that,” he says. “It will be a lot easier with the ShopperKit model since everything is tablet-based and you’re not tied down to work stations in the store. And it’s a mobile solution with minimum startup costs.”
He says home delivery represents about 25 percent of the delivery business, with click-and-collect making up the remaining 75 percent.
“We are seeing more growth in the pickup model due to the shorter window time — two hours. The home delivery model still has a lead time of about four hours.”
“The solution that Roche put together is highly efficient as it is,” says Mike Lowey, director of retail sales for Brother Mobile Solutions. “It would take a while for anyone to refine it further and deliver the kind of efficiency and cost savings Roche looks for.”
Brother does get a lot of questions from people asking what would happen if store designs changed or if a company moved to a new technology platform — such as from a traditional Windows to an Apple environment.
“That’s what we offer most of our customers,” Lowey says, “a simple migration path that keeps them on our platforms regardless of where the business drives them. We wouldn’t expect any dramatic changes with Roche Bros. They’ve got the process down pat.”
Implementation of both the Brother and ShopperKit solutions was smoother than anticipated, according to Farrington. “We expected some challenges,” he says. “But the full implementation only took about five months. We had a soft launch in early October and a full launch just weeks later.”
The number of people picking orders in store varies by location. Some can have a dozen, while others need 30 to keep up with the orders.
“These are people from within our operation that were trained for the picking process,” he says. “Each picker has a mobile printer and tablet for walking the aisles. As they scan products, labels are printed with the temperature zones that they need to be placed in. This keeps food groups like frozen, chilled, ambient and chemicals products separate.”
Len Lewis is a veteran journalist and author covering the retail industry in the U.S., Canada, Europe and South America.