About Amazon Go and the future of GDO: Luca Paolucci, a GDO Senior Buyer, expresses his point of view

Comments (0) Food, Tech

About Amazon Go and the future of GDO we have Interview with Luca Paolucci, Senior Buyer GDO at Arca Group S.p.A. (Famila, A&O, Cash&Carry).

F: What influence will the Amazon Go in the Gdo regarding future trends?

L: It’s definitely a very high objective that they are given, we need to see when they open the store what will happen, but I think that in a city like Milan might work.
Ten years ago you ate the Kale in the US, today we eat in Italy.

F: What?

L: The Kale, that we call Cavolo Riccio, as a little type of spinach, very small, which today is used a lot in salads. Or goji berries and other products, in quotes, brand new, and which today are a bit’ of fashion. Usually they come out first in the United States and then after a few years also come to countries like ours.
I think the time that will need for Amazon Go to get in Italy is similar, some years, because the use of the smartphone that there is now definitely makes everything possible, but I think it will remain finite at an event, in the sense that will not be copied by many because it is really very difficult …

F: is very difficult to implement …

L: especially if you put yourself in the customer’s shoes …

F: Why?

L: because actually you facilitate them, because you eliminate the queue at the checkout, I have not to put everything in the cart and then bring out all, passing it to the checkout and then put everything back again in the cart. It is a benefit.
But like all changes, even simple ones, scare people … and this fear is always a financial loss, at least initially, of which it is necessary to take into account.
But surely this experiment, done in Milan …

F: where there is a different mindset …

L: where there is a different mentality, it can definitely take hold, as well as in Turin or Bologna, but I see it as a thing for the big cities at the time.

F: maybe, only related to what is the small supermarket, as are, for example, the supermarkets express, in which are done mostly instant purchases, surely there could help much.
So for now it would remain linked to the quick purchase and not to the weekly groceries?
Because for that one, in principle, you’ve already taken the time to do it, you know that you have to dedicate to it a few hours, checkout line or not, but if I have to buy just a few things and I hurry, it gives me a real advantage.

L: Yes, because as far as the weekly groceries, that so many families still do it, still affect much more the flyer promotions, which in turn affect how families make the stocks in the pantry …
because it is true that grows ever more slice of singles or families composed of only two people, or because they’re young, or because instead
are elderly, because we do not make so many children as some years ago…

 

chef-kitchen-desktop-_v523327237_

F: or due to the economic crisis …

L: or due to the economic crisis …
But the classic flyer with offers still affects much, in fact even be told that, even if it is true, those who go to the grocery store, choose the store for a more convenient location, close to home, or passing through, or because the staff is very courteous, and the offerings, in the ranking of the virtues that impact on the rating, only reaches the fifth or sixth place, it is also true that on the weekly household expenses they have a heavy weight.
Suffice it to say that none of the major retail brands have stopped making flyers.
If send at home the flyer did not make sense, they would stop all, actually …

F: they still have sense…

L: they still …
it could be for the offer that make you, or just to remind you brand …

F: also has a branding valence …

L: also has a value for the brand, because every two weeks you remember of the brand.

F: The monitoring system of the shop Amazon Go, that is a very complex mix of sensors and cameras that are interfaced to each other, is also described as a great tool that in addition to speed up the purchase, is a better response about what concerns the offers to the customer because this system allows them to learn about each type of behavior that the customer has inside the store …

L: Yes, this in part already happens with the fidelity cards, which almost everyone has, because it does not cost you anything, you have discounted products even when they are not in promotions it and you should always do it …
and then it is a simple act, because you’ll just pass it on hand at the time of payment …
In fact in Italy about 80% of customers have the fidelity card …
and on the cards it is possible to monitor, for example, how many kilometers from home has made a customer to come to shop at a particular store and what he bought.
For example, in our chain at the end of the cash checkout, comes out a receipt, in addition to the fiscal receipt, where we give a discount to our customer for purchases that will make in the future on certain items … those specific items that come out on the receipt does not are the same as those who go out to the next customer or who was there before you, because the fidelity card has cataloged a range of information, which it has in memory, of all the times that you have previously been shopping. The system is designed to give you discounts on products that supposedly you could have pleasure to buy, because it has noticed that you have a certain frequency in buying them and will not give you discounts for products that instead, with high probability, you will never buy it, for a whole variety of reasons, from diet to lifestyle etc…

F: all these changes, starting from this of Amazon Go, but also bearing in mind all the new applications related to the food, which in the past five years have exploded, including those for the delivery, how they come taken by the classic big retail chains, used to having to do with the classic supermarket and that maybe had stopped precisely the fidelity card?

L: talking about our reality, a bit ‘more provincial, all these innovations really are not producing any revenue. Also the apps for deliveries don’t exist, no one brings your shopping at home, unless you are a hotelier or a company that buys wholsale, but at the retail level there is no group here in the area that does this type of service , at least at the time … but, let’s say that like all new things, we are careful, we look and monitor at them carefully.

F: so let’s say in the province, compared to the city, where for reasons of traffic and difficulties in moving, there is a greater demand, especially in the delivery, here instead the request is still not manifested.

L: No, it has not yet manifested, and in addition there is a type of very different customers …
In fact, if I examine a supermarket in the town center, it has probably the 60% of the products called “at imposed weight”, as they are for example bags of cookies that indicate 500gr, or that ones of pasta that indicate 1kg, which are “guaranteed weights” but also relatively to, for example, fruit and vegetables, we find a greater sold of “weight imposed guaranteed” products compared to “variable weights” products.
In a shop in the center of Bologna I find many pre-packaged products, instead in places as Forlì or Cesena and province, the vast majority of the product, even though there are promotions for the products with “weight imposed”, we sell more products with “variable weights”. Just to give an example of this season, we will never sell so many tangerines in nets compared to those who sell in bulk.
Here, people still want to touch with hand the product they buy, they have more time to do the shopping …

bottle-grab-desktop-_v523327232_
F: are two rhythms and two speeds …

L: totally different …

F: but the idea that you have, is that this gap will widen more and more?
So with the supermarket in the province that goes more and more toward the slow, toward slow food, that there already is, but also slow intended as interface for the slow-consumer, for a client who lives more calmly, that takes the time to check the product, a trend that also involves the product exposure, more extended rather than more vertical …
whereas in the city, I think it is clear by now, you’re going straight to the hyperspeed …

L: Yes, in the city you go to the depletion of what we call time lost, what I think is that there are two totally different types of customers, then I do not know if with the years, will turn in the same way even in provincial areas, but it remains a gap that is now difficult to fill.
Then, depending on where you have stores, you must to be able to bridge the differences, to be able to give satisfaction to those clients …

F: maybe it is also the same customer, but in different situations; when it is in the city it behaves in a certain way, much faster, rather then when for example is in the Riviera …

L: is more relaxed and he does not like anymore that kind of service, indeed wants calm, want the courtesy …

F: and maybe he want to go back to being served …

L: Yes, he wants the operator who recommends him, because it has more time, running all week, when they are on vacation or in free time, he wants a different service.

F: so, for what is the stimulus for change of which we were talking about, is taken into account depending on the area? If we talk about a store in the center of Bologna it is considered, instead not considered if it is on the Riviera or in the province?

L: right, I think not.

F: The first question that comes to mind about Amazon’s Go, is what concerns, as we said, the products at “variable weights”, than to products at “imposed weight” which are already closed and with their identification code, while for fruits, vegetables, meat, fish, meats and cheese that are sold in bulk, perhaps it is more difficult?
Because for us, in Italy, the product at the counter is a must, even in the city, while in the US, in the grocery, unless both the small market in the town, everything is packed and the counter does not exist, there is nobody that cuts the ham at the moment for you.
So the mental mold which leads to the automation of processes requires less steps.
In Italy, for example, they should do also machines that create the code at the time for bulk commodities that indicate how much weight, which product, that specific person wanted.

L: I do not think this is the complicated step, instead of the machine that creates the receipt, the machine should create a code linked to Amazon, who then headed the historic remains exactly the same way as a packaged product.
It must be said that in Italy the purchase process in bulk is tied to the territory.
Italy is long and narrow and has an infinite amount of microclimates can produce almost any kind of product, at least from the horticultural point of view.
In Italy are produced almost all the fruits that are found in supermarkets, all year we can give our customer an Italian product, just because Italy goes from Sicily to Trentino, there isn’t a day that we do not provide, for example, Italian strawberries.
Although we are not all technical, we know that the peach there is in July and August, the pear is from October to February-March, that oranges arrive in December-January, and this creates the desire to buy the product in bulk, because it is something that binds us to the circle of the seasons, each lived with its food.
If we go to other countries, especially in the north, such as Denmark, Sweden etc .. are more used to buy the boxed product, because they get all packed, probably they do not know whether a product is in season or not, they buy it because they feel like it, not because it is seasonal.

 

liezel-walking-desktop-_v523327233_

F: because the variety of species is less than …

L: Yes, it is also true that today with globalization, they too have almost everything in the supermarket, since the 80s, but everything is always boxed, a method that has thus created a very different mentality from ours.
For example, a few months ago I was in Ireland and I have to say that the supply of fruit and vegetables are not absolutely comparable to ours, in some stores have only bananas, oranges and apples in bulk, the rest is all packed.

F: so, in our country, if we want bringing greater computerization inside the store, we will be forced to deal with buying in bulk? Also because I believe that in recent years the sale of bulk products, vegetables and fruits above all, have had a boom linked to new trends in healthy eating and vegan diets?

L: Yes, absolutely, however, these trends have also affected the packaged product, where we began to sell many products 100% vegetable, which in the past two years have had a resounding success.

F: What percentage do we mean?

L: the packaged product 100% vegetable, so we talk about vegan burgers, vegan ravioli, lupine steaks etc .. today are worth between 2 and 3% of the entire fruit & vegetables section, which means really a lot, especially because are just few items, this means that each of them affects a lot.

F: and compared to the past, how much is increased in percentage?

L: we can not say, simply because they did not exist before in the big retail chains, today we have it and give us satisfaction, over time we will see if they will increase the percentage.

F: Returning to Amazon Go, when it comes to ready meals, especially in cities, where nobody goes home to eat at noon, avoid to the workers having to queue it means give them the 15/20% of the time of their break time …

L: surely, if I take into consideration as some of our stores located near the sea, than those in rural countries, the sales ratio is completely different, do not even seem two points of the same chain.
Would be enough to look at the difference between how many countless salad in bowl, those with ready dressing (salt, pepper and oil) fork and handkerchief, that we sell close to the coast, than those that are sold in the province in the interior, where almost could not put them. Because over there the customer wants to take the salad with your hands, choose it, remove the leaf that he think is not good … so I say that the experience from the customer inside the store must be built according to the needs that he has, and it happens that the speed is not one of these.

F: because who is to the sea, he prefers maybe eat a bit ‘faster and enjoy the rest of the time by swimming or sunbathing, while who is in open countryside prefer to enjoy his time eating.

L: Yes, because if you go to the beach you do not have the time to prepare everything, unless you do it the day before, but then you should bring along the whole preparation and not many prefer this option.

F: in moments when there is high population density, such as in coast at certain times, or in the city almost always, a supermarket like Amazon Go could almost go to replace the cafeterias, or the restaurants at noon have a competitive pricing, were it not for the tasting done on site?

L: Of course make you saving a lot ‘of your lunch break …

F: always within a concept of the small supermarket, the classic supermarket express…

L: we have to say that the restaurant also gives you a service table where you can eat, a service that for now the big retail does not take into account, because the yield per square meter inside the store is calculated specifically and investing on tasting areas, it means that the square meters given to this activity give an incentive to the sales so high to take greater profitability throughout the remaining square footage, in order to fill the part that was not used to make the sale, but the tasting. Let’s say that here, except for rare cases, it is a discourse that runs out in the bud.

F: Ok, do you want tell us something about the trends that we have seen in recent years?

L: first of all there is to say that all the big retail chains are giving more and more space to fruit and vegetables because there is more and more information from the health point of view, that goes in that direction and we find reflected in purchases that have moved more and more towards fruit and vegetables, or because the World Health Organization said some things not too kind on the massive use of meat-eating, or because there is now a more informed society, thanks to Internet, which now everybody know how to use it; because before it was said that the use of the internet would stop to people that are in their fifties, today it is used by people that are more than sixty, and therefore all acquire more information, more quickly, and consequently are more careful about what they eat and their health.

F: how do you take these changes and how you decide to bring changes? I mean, it is not you change something in your deployment because it is written on the newspaper?

L: no, of course. The changes are dictated by the numbers. We simply see that the meat sales are lowered, and those of fruits and vegetables are raised. You, as a company, to stay alive and competitive, you must bill, and if there is a department that performs better at a time it is right to support it.
I can not know if in the future there will be new discoveries or new vogues, and then everything will change again, what is certain is that from an economic point of view it is right to ride these trends and keep the customer satisfied.
We are doing for customer satisfaction, even the communication on site in stores, via digital monitor or panel, communication on the nutritional properties of what is exposed.
As an example, it is not revolutionary, but I think it’s very important exhibit above the cabbage or the broccoli some message that indicate the antioxidant properties of the that product, or indicate that the oranges with the bigger caliber are best for the direct nutrition while those with smaller caliber are more suitable for juices.
Here, I believe that customers, through the purchase numbers, show the way, it is then up to us to make it as workable as possible and in fact we know that they are very careful with this type of messages, because from this year that we started to do this communication even as sales have improved further since last year that we did not it.

F: so, the consumer usually stop to read these messages?

L: the consumer is careful to it, someone stops to read. Of course that communication that you do, it is very obvious and exposed so that it is almost inevitable to see … and in my opinion it is also appreciated by the customer.
This is because once all the shops were “consumer-served”, we went to the greengrocer to the butcher and so on … where there was the father with his son explaining you the product etc…

F: there was an exchange of information …

L: There was also a good morning and a goodbye … now you go to take the bread, you open the drawer, put the glove and take it away, you do not talk to anyone anymore … in very rare cases in the supermarket , unless there is a butcher, a fishmonger or served delicatessen, you talk with someone …
So not having anyone to talk with the customer, written communication has become crucial.
If it’s worse or better, it is always said by the numbers, because for many reasons over the years, all the big retail chains, but I would say the entire industry has gone in this direction, which allows a more efficient process, even because with the high mobility of the staff that there is nowadays, in any case you couldn’t establish a client-practitioner relationship as before.

F: About all this information, is there the possibility to be completely digitized in the future? Via app or video, so that they can exert a comunication more complete?

L: For what I know, in this moment no, but it would certainly be interesting. Now that they all use the smartphone for any information he needs, having even this possibility could be a plus, but it is to be verified.

F: The question is always whether, before making any plans, this will significantly increase sales compared to the cost that has its accomplishment.
Because an application that gives you information about the products when you’re in the supermarket, it means that it has geographic location system, which is one of the more expensive tools for the design and maintenance of the app.

L: Yes, but you should study before how increase sales compared to the cost.

F: it is difficult, but it is also true that the first chain to do so would certainly have a competitive advantage. It could lead users in store precisely because there is that specific service…

L: Yes, but those who come to shop in your store, do it for other priorities than that.
First are the proximity, the courtesy, the deals, the payment queue, the parking, the quality of the product that definitely affects a lot, especially on certain product categories, because the Barilla pasta is the same everywhere, but a customer doesn’t buy fish at the counter if it is not fresh.
Here, then we say that there are many priorities first for which a customer is in your store, and if he finds the communication in store panels I think is sufficient, at this time … but it is my personal opinion and I may be wrong.

F: Yes, in fact this talk of ultra-technologization is a discourse that is carried on by Amazon because it was born as a technology company, of distribution, but technological, and certainly those who will continue this discourse are the top player, however there remains the risk to arrive a little bit later?

L: Yes, these are my ideas, but it is clear that we are always with open eyes and we assess all new proposals that come from the market, in a perspective that goes certainly to continuous improvement.

Tweet about this on TwitterShare on Google+Share on FacebookShare on LinkedInShare on Tumblr

Leave a Reply

Your email address will not be published. Required fields are marked *

This blog is kept spam free by WP-SpamFree.

Will be used in accordance with our Privacy Policy