Wakefern Chief Customer Officer
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RETAIL & CONSUMER JOURNAL INTERVIEW Wakefern Chief Customer Officer © Oliver Wyman 1
RETAIL & CONSUMER JOURNAL INTERVIEW
How has COVID-19 affected your businesses look and feel of mobile applications or desktop.
and how did customers’ needs evolve during That is something that must take place internally:
this time? moving that sensibility throughout the organization
A BRAND
in a meaningful way so that everyone understands
Honestly, I don’t think anybody could have imagined the importance of digital. We thought we had
VOICE THAT
the far-reaching implications of the virus — how more time to implement the digital move, but
people shop, how they feel about safety and crowds, reality has taught us differently. That’s the
RISES ABOVE
and their embrace of all things digital. We’ve certainly challenge for us as an organization: How do
seen an uptake in many product categories that you accelerate digital engagement across our
allow people to meet their family’s needs. And that’s entire enterprise?
had a huge impact on us.
To your point, whenever I think about digital
Frédéric Thomas-Dupuis, Our ability to deliver the same products has and e-commerce, there are three barriers that
Oliver Wyman’s Retail & Consumer changed: We’ve had to close our hot prepared food come to mind: First, there is the digital interface
Goods Leader, Americas, spoke bars, place produce inside bags, package our bread of the e-commerce site; second, there is the
recently with Wakefern Food rolls when we previously would not have done picking and packing part where automation
something like that. So there’s been a widespread may be appropriate; and finally, the third piece is
Corp.’s Chief Customer Officer
impact on the supply chain in the US as a result of fulfillment — pickup and delivery. Do you feel
Steve Henig. Henig, who oversees
mismatched demand. Consumer packaged goods that COVID-19 has accelerated any one of these
branding, e-commerce, marketing, have been under a lot of pressure to deliver what or all three of them?
and advertising at the member the customer wants.
cooperative, is tasked with creating Due to unprecedented consumer demand, retailers
a single, consistent brand voice for That’s the 30,000-feet, bird’s-eye view. all across the US and the globe are reporting
customers. Their talk ranged from increases of online orders on the magnitude of
What’s been happening and what has stunned 80 percent, 100 percent, and as high as 200 percent,
the far-reaching impact of COVID-19,
everyone is the consumer's embrace of all things depending on who you speak with. Just to be able
to Wakefern’s unique structure
digital, something that under the impact of the to meet that demand and to make yourself available
and how digital will transform the pandemic has accelerated by about three years. to your customers with delivery time slots or pickup
sector. An edited version of their All retailers have had to move faster in their slots in real-time has put an enormous amount of
freewheeling conversation follows. embrace of digital, whether it’s e-commerce, the pressure on all of us.
© Oliver Wyman 2RETAIL & CONSUMER JOURNAL INTERVIEW
And so for us, our goal is to expand our
e-commerce offerings in a more meaningful way:
Retailers all across the US and the globe are
more slots, more stores. We’ve opened up more reporting increases of online orders on the
e-commerce sites in the past quarter than we
have in the past two years and we continue to magnitude of 80 percent, 100 percent and as
open more.
high as 200 percent.
But e-commerce in its current format can’t
continue, and companies will need to embrace
automation in different ways. Also, automation
means different things to different people: to
some, it means full-blown centralized fulfillment
centers; others focus on micro-fulfillment centers; as an impediment to online sales, arguing that When it’s your own business, when it serves the
and to others, it means direct-to-customer. That e-commerce might pull sales out of their stores. community you live in and friends of yours are
said, all retailers are going to have to accelerate However, I think the way Wakefern is structured coming into the store — that is a deep level of
their comfort zone and embrace automation to actually enables members to be competitive. Do engagement. And so our members took their
meet strong customer demand. Because without you do share that view? role of protecting their associates and customers
automation, it won’t be possible to meet the very seriously.
customers’ expectations to have their products I have absolutely no concern about our structure.
in hand in just a few hours. And when you get What is powerful about our members is that all What was the division of labor between Wakefern
above double-digit e-commerce penetration in 50 of them are owner-operators and they’re very and the members during COVID-19? Was it more
your building, it starts to become very disruptive entrepreneurial. Many have seen the future around about headquarters providing support in areas
to your brick-and-mortar customers because item automation. Our structure is not an inhibitor — in that were cross-member challenges, such as
picking is taking place in the stores as customers fact I think it’s one of the key drivers of our success. sourcing PPE?
are going down those aisles and trying to shop. Our members embrace innovation — including
automation. Our structure is that we oversee distribution,
Wakefern is a cooperative group of supermarket logistics, marketing, and procurement. That’s
brands, consisting of more than 50 members who A core characteristic of your business is that your where the power of the cooperative structure
own and operate more than 350 stores throughout members own their stores. How did that structure comes into play. Wakefern is at its finest in a
the Northeast. In theory, the members could act help Wakefern respond to COVID-19? crisis and came together to procure as much PPE,
© Oliver Wyman 3RETAIL & CONSUMER JOURNAL INTERVIEW
chicken, toilet paper — whatever was needed so that case, obviously, there are implications for assortment. I would imagine that a CFC would
that our members could operate at the highest fulfillment time. skew towards a homogenized offering, with the
level in serving customers. range of grocery products being limited, and
That’s a complex question — the jury’s still out on would have a hard time working with ShopRite’s
Let’s go back to the issue of e-commerce. As it. To answer, I have to step back and ask myself as differentiated offering.
we shift to online and digital, what’s your view the retailer/grocer what’s the range of time that I’d
on whether customers prefer direct delivery like to start with, what can I realistically support, That’s right. Again, it goes back to what’s the role of
or click-and-collect? How do you think that and then to your point, what’s the lead time that perishables in your building and how important is
might evolve? I need. it to maintain that range. Plus, what do you do with
local, because local is not going away. And so if you
It’s a fascinating topic and potentially one that a lot Because when you move into a full CFC (centralized think range is going to be a key differentiator in
is riding on. I think delivery to home for groceries fulfillment center) model, you’re going to sacrifice your communities, then a CFC will be challenged in
makes a lot of sense where you have Zip Code lead time, and you’re also going to sacrifice the range supporting that differentiation.
density — urban areas in other words. In many of products in a traditional store. Companies are
of the rural areas, success may hinge on retailers’ going to have to determine whether they’re going to Will assortments, promotions, and pricing
support of click-and-collect. Remember, most go to market with a CFC or MFC. There are benefits strategies need to be different in an
of America remains a car-centered society, with to each approach. But, again, it goes back to what e-commerce world?
people driving to and from their destinations. So the customer wants, what’s your line of sight on
for rural areas, we’ll see click-and-collect, while in costs, and what experience you want to deliver to Some adjustments will be needed to the marketing
urban areas, it will be more direct delivery. For our the customer. At the moment, however, there isn’t a mix — digital allows for a level of personalization you
members, it will be a confluence of the two. tight logistics model in the US to support direct-to- could never achieve in a store. There will be a shift
customer from CFC with margins to support it. So in how people shop and get information. There will
Let’s assume that we achieve double-digit it’s a jump ball on that one — you have to start with be offers they receive online that they won’t get
e-commerce penetration levels. Do you think the customer. offline: Eliminate the waste to give the best offer
the delivery in urban centers will be fulfilled to the customers who are most likely to receive
from a warehouse, whereas click-and-collect will To your point on matter of range: A winning the message.
be done from a store? And will click-and-collect strategy has been for grocers to provide more
take a centralized approach too, with picking differentiation. Do you see a shift in your The biggest challenge for the industry, it seems to
for orders being fulfilled from an MFC (modified marketing mix? Take ShopRite, which has me, is where we are today — that is, we still have
fulfillment center) and dropped off to stores? In moved toward a very broad and differentiated the grocer’s flyer, and at the same time we have
© Oliver Wyman 4RETAIL & CONSUMER JOURNAL INTERVIEW
a number of customers using the app or website I find that marketing generally sees where Plus, there are so many offers and ideas that it’s
— and where we want to be tomorrow, which we are headed in the future. Merchandising, a little overwhelming. ROI and technology are
is much more engagement. This interim period however, sees the same future but lacks the evolving every day.
makes it difficult to allocate capital — whether linkages to marketing so as to be effective in
to fund the app, the website, or partnerships this brave new world. Do you see that as a Let’s talk about other players in your market.
that can help with personalization. Is that challenge as well? What do you think of discounters such as Aldi
something that is a challenge for the industry, and Lidl? Does their future depend on digital? Or
or do you feel that is something that needs to It’s a huge challenge. The digital ecosystem is do their pricing strategies protect them from the
be done incrementally over time? complicated: There’s a staggering amount of incursion of digital? Are they formidable rivals or
complexity, vast oceans of customer data and fringe competitors?
This is something we discuss internally all the time. preferences, and all of it overlaid with algorithms.
The world has become an “and world.” We didn’t It’s a level of complexity that makes it difficult for I think the competition in the market is upping
eliminate circulars, we didn’t eliminate billboards, most organizations to wrap their heads around. everyone’s game. What I would say is that
and we didn’t eliminate network television. We That’s part of the reason why digital retailers “digital” is a bad label for what we’re talking
just supplemented our approach with banner have been able to move so quickly: They lack the about. Digital for a long time meant e-commerce,
advertisements, email marketing, social media, burden of a legacy system — digital is all they know. but digital is really so much more broad-based
and YouTube. So we’ve augmented the traditional Ultimately, however, merchants will understand than that. Many retailers have very successfully
mix with a vastly expanded marketing ecosystem. and leverage digital, but it’s a big lift at the moment. leveraged social media to drive sales — they’re
Companies will have to be very smart about
how they go about engaging their customers.
I think it’s a continuum: Customers are going to
move away from some of the traditional means
of engagement. That’s going to free up some
capital for investing in the new digital as a means
I’m confident that when the pandemic is in the
to interact with the customer. That said, I think rearview mirror, people will gravitate back to
companies are going to have to make investments
in the short run, of maybe five to 10 years, to fund getting a prepared meal, rather than making it
that journey so that they can stay connected to
their customers. from scratch.
© Oliver Wyman 5RETAIL & CONSUMER JOURNAL INTERVIEW
finding the right digital tools that resonate with meal and a way to get in and out, while feeding Do you have a vision of the role of physical store
their customers. their family quickly — fast casual as well as quick in 10 years?
service. What happens with the likes of Uber
Big companies have the scale that allows them to Eats or Door Dash, is more people dialing up COVID-19 has complicated the trend that we see,
look at AI, machine learning, and other innovations. service on their smartphones and getting quick but in the US there was a steady march toward
I’m not claiming that the big companies have an delivery not only from a single food provider, but e-commerce, home-meal replacement, meals away
advantage, but they have more access to funds multiple ones. from home, and better and more refined unique
to find the technology that unlocks some of perishables. Those will be the north stars for
the challenges. Is e-commerce a competitive advantage for organizations for the next 10 years. But companies
the grocery space? will need to think of how to enable e-commerce to
What’s your take on quick-service restaurants? become central to their organization and design
Are they a big competitor that the industry needs It can be: I think there’s a fresh play here that can layout. How do I create the best presentation for
to take on? be very compelling to a customer. If you can have perishables? What are the best options for meal
a fresh heat-and-eat meal without having to drive replacement? I’m confident that when the pandemic
I think so. When I think about QSR, I’m throwing to it — that is delivered to your house and that can is in the rearview mirror, people will gravitate back to
in Applebees, Friday’s, and other restaurants be enjoyed by your entire family after 15 minutes getting a prepared meal, rather than making it from
like that into my definition — not just fast-food in the oven — then I think that is something that scratch. Those are things that organizations will need
operators. Customers are looking for a quick grocers can own. to think about as they consider building stores.
© Oliver Wyman 6Oliver Wyman is a global leader in management consulting that combines deep industry knowledge with specialized expertise in strategy, operations, risk management, and organization transformation. In the Retail & Consumer Goods Practice, we draw on unrivaled customer and strategic insight and state-of-the-art analytical techniques to deliver better results for our clients. We understand what it takes to win in retail: An obsession with serving the customer, constant dedication to better execution, and a relentless drive to improve capabilities. We believe our hands on approach to making change happen is truly unique — and over the past 20 years, we’ve built our business by helping retailers build theirs. For more information, please visit: www.oliverwyman.com CONTACTS Sirko Siemssen Maria Miralles Frederic Thomas-Dupuis Global Retail & Consumer Goods Practice Leader, Retail & Consumer Goods Practice Lead, Retail & Consumer Goods Practice Lead, Germany EMEA and LatAm North America sirko.siemssen@oliverwyman.com maria.miralles@oliverwyman.com frederic.thomas-dupuis@oliverwyman.com Pedro Yip Ronan Gilhawley Rainer Muench Retail & Consumer Goods Practice Lead, Retail & Consumer Goods Practice Lead, Retail & Consumer Goods Practice Lead, Asia Australia and New Zealand Germany pedro.yip@oliverwyman.com ronan.gilhawley@oliverwyman.com rainer.muench@oliverwyman.com Nordal Cavadini Coen De Vuijst Eric Bach Retail & Consumer Goods Practice Lead, Retail & Consumer Goods Practice Lead, Retail & Consumer Goods Practice Lead, Switzerland The Netherlands and United Kingdom France nordal.cavadini@oliverwyman.com coen.devuijst@oliverwyman.com Eric.BACH@oliverwyman.com
Copyright © 2021 Oliver Wyman All rights reserved. This report may not be reproduced or redistributed, in whole or in part, without the written permission of Oliver Wyman and Oliver Wyman accepts no liability whatsoever for the actions of third parties in this respect. The information and opinions in this report were prepared by Oliver Wyman. This report is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accountants, tax, legal or financial advisors. Oliver Wyman has made every effort to use reliable, up-to-date and comprehensive information and analysis, but all information is provided without warranty of any kind, express or implied. Oliver Wyman disclaims any responsibility to update the information or conclusions in this report. Oliver Wyman accepts no liability for any loss arising from any action taken or refrained from as a result of information contained in this report or any reports or sources of information referred to herein, or for any consequential, special or similar damages even if advised of the possibility of such damages. The report is not an offer to buy or sell securities or a solicitation of an offer to buy or sell securities. This report may not be sold without the written consent of Oliver Wyman. Oliver Wyman – A Marsh & McLennan Company www.oliverwyman.com
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