Voilà is the new benchmark in online food retailing in Canada, at least for now.
More than 100 Voilà delivery vans will roam the streets of the Greater Toronto Area to deliver food to customers who have opted to buy their groceries online from Sobeys.
At the centre of the fleet is a state-of-the-art distribution centre, the size of 40 Olympic swimming pools in volume. That’s 250,000 square feet of space filled with robots preparing grocery orders. Another facility is being built in Montreal.
This rollout is key to Sobeys’ partnership with major British e-commerce player Ocado. When it was announced about two years ago that it would partner with Ocado, Sobeys admitted it didn’t have the internal capacity to deploy a high-level e-commerce strategy.
The hundreds of robots in the distribution facility can take 10 commands a second via antennae that link them to a system designed by Ocado engineers. The system can process a 50-item order in less than five minutes. No human can do that.
Ocado is one of the key players responsible for getting British customers to go online. Almost 10 percent of all food sales in the United Kingdom are conducted online. Barely two percent of Canadians now buy groceries online.
But according to a report from the Agri-Food Analytics Lab at Dalhousie University, 22 percent of Canadians intend to order food online on a regular basis. By 2025, if the effects of COVID-19 are long-lasting, we could easily see online sales exceed six or seven percent. That’s almost $10 billion worth of food sold online – and Sobeys wants most of it.
For customers, there are three sticking points when it comes to home food deliveries.
First, there’s accuracy. Throughout the COVID-19 pandemic, many Canadians have been frustrated to find items in their groceries they didn’t order, items replaced without consent or things simply missing from their order. Voilà, powered by Ocado’s know-how, appears to be addressing these issues.
Second, there’s the cost of home delivery. Food offered online by Voilà is reasonably priced. Many items are offered on promotion as well, not a typical practice in online food sales. Delivery fees are also reasonable compared to other programs. Delivery costs as little as $8 in some cases. Only time will tell if the discounting and delivery fees will remain competitive.
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The third issue is delivery time, which is how Voilà sets itself apart from everyone else. You can get your food delivered within an hour, which is really what most people expect these days. During COVID-19, some of us have waited eight to 10 days for a delivery if we were lucky enough to be able to put in an order. One-hour delivery is what grocers should be aiming for.
In the Toronto area, Grocery Gateway pioneered the warehouse-to-home model years ago. Owned by Longo’s, with a modest fleet of trucks, it has been delivering food across the Toronto region for more than a decade, applying a high fixed fee for every delivery.
But expectations have changed. For many years, customers were reluctant to empower a stranger in some obscure warehouse to pick their apples and tomatoes. With COVID-19, this is hardly part of the conversation.
Sobeys’ new centre is different. It looks like a modern distribution centre should to support a highly efficient e-commerce strategy.
But it’s also the product of something else going on in the industry. Amazon’s acquisition of Whole Foods in 2017 pushed Canadian grocers to think more about convenience and how to offset the looming threat of Amazon. Amazon is massive and its disruptive force can’t be denied.
But that was before COVID-19. Now, the keys to good service are convenience and safety. Few saw that coming and this is why Sobeys expedited its rollout.
Sobeys is clearly making a statement with Voilà. Its strategy is fully committed, unlike the click-and-collects we’ve seen in recent years. Click-and-collect is convenient for retailers, but online delivery is the full package the market is ready for.
Sobeys is being aggressive and for good reason. Other grocers will respond. In fact, most have something in the works. COVID-19 propelled the entire sector several years into the future.
Voilà’s national rollout must be quick or else other grocers will catch up and set even higher competitive standards.
Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.