Higher, Higher

Ocado - a supermarket chain with no physical supermarkets, in a sector historically dominated by in-store shopping - saw the highest positive shift in sales in the first quarter of the year.   

Their unique selling point is quality. Not product quality, but service quality. They provide a high-touch service to their customers, characterised by helping customers on a human level throughout the buying process and subsequent lifecycle.  

In 2019, much to the intrigue of investors, Ocado announced it was leaving its founding partner Waitrose to partner with Marks & Spencer. Fast-forward two years, the Goldman alumni that created Ocado now enjoy revenues surging by 40 per cent and registrations at double the pre-pandemic rate.  

More importantly, Ocado is not a true supermarket chain. Coinciding with the M&S announcement, the Competition and Markets Authority redesignated Ocado as a technology company at the end of 2019.  

Remember, developed sectors are still adapting and growing. Disruptors can appear at any time.  

Ocado was a pathfinder. It went where no company had dared. Now it is idolised as the preeminent grocery home delivery service. It created a whole new subsector within grocery shopping.  

But this is not the only way. 

Low touch 

The world is short on time and money, but rich in data. We can easily compare competitive offerings. We want convenience but don’t want to pay for it.  

Deliveroo offer supermarket deliveries within an hour. Amazon Fresh is building physical self-service stores in London without checkouts. Both are intentionally low-touch services. Back to basics. Ensure you know your target market and align your business to serve.  

This low-touch service is identified through limited customer interaction, usually with a lower price point. The company makes profit on quantity, not quality. An example of a low-touch service is a vending machine – not dissimilar to the stripped back convenience of Deliveroo and Amazon Fresh.  

On the other hand, Ocado deliveries are packaged in colour-coded bags according to grocery aisle – no other supermarket delivery service offers this; they don’t have the technology. They go above and beyond to please their customers in the comfort of home. 

Ocado’s online delivery service and Amazon Fresh’s self-serve in-store shopping experience are at similar price points, but polar opposites of the customer service scale. And both are seeing unprecedented demand. 

Stuck in the middle  

So, where does this leave traditional supermarkets? To paraphrase Gerry Rafferty, they are ‘stuck in the middle’. And you never want to be stuck anywhere.  

Do not let your business fall into the same trap. Adaptation is necessary for success.

Ask Mr. Bezos who used to run an online bookshop but now sells groceries in a physical store. Sometimes it pays to follow the herd and adapt to new customer demands and expectations. 

The future will be split between two business models. High-touch and low-touch. Your business could provide simplified customer experience in large quantities at a competitive price. You could choose to provide a bespoke service and customer experience at a premium price. It’s time to pick a side.