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Sobeys Voilà – Delivering The Goods

by Marjo Johne

Sobeys’ big bet on Voilà is scoring big wins

Great timing happens when strategic, meticulous planning intersects with optimal conditions. That was certainly the case for Sobeys last year when it launched its Voilà by Sobeys e-commerce platform in the early months of the COVID-19 pandemic.

“We couldn’t have anticipated the pandemic when we signed the deal in January 2018,” says Sarah Joyce, senior vice president of e-commerce at Sobeys, referring to the exclusive agreement forged with U.K.-based Ocado Group plc to bring the British company’s online grocery ordering, automated fulfillment and home delivery solution to Canada. “So when we went live to customers in June 2020, it was the perfect time to bring a new online service to Canadians when they needed it the most.”

Those who know the underlying platform and systems behind Voilà will agree that its value goes well beyond its fortuitous arrival at a time when getting timely access to food and other everyday necessities was a matter of grave concern for many Canadians.

For customers, Voilà has elevated grocery online ordering and delivery: orders are fulfilled with near-perfect accuracy, deliveries are scheduled within one-hour windows so customers aren’t spending half their day waiting, and items are organized so they can be unpacked and put away quickly. There’s even a feature in the Voilà warehouse that tracks product expiry dates and doesn’t allow Voilà to ship products to customers that are too cloe to expiry.

“A feature that customers love the most is the bag handles, which are in different colours to show which items should be put away in the fridge or which are okay in ambient temperature,” says Joyce. “It’s a fun little fact that our customers love when our team members tell them about this feature.”

New model for grocery e-commerce

For the Canadian food retail industry, Voilà has presented a cutting-edge model for grocery e-commerce. Instead of human workers walking through warehouses or grocery aisles to pick orders, Voilà has hundreds of robots moving over thousands of bins stacked high and organized corner-to-corner within a vast grid the size of 15 hockey rinks in its main customer fulfillment centre (CFC) in Vaughan, just northwest of Toronto.

Once the products are picked, they’re sent down to checkout stations where Voilà team members – with detailed guidance from the automated platform – pack them in bags and bins that are placed on metal pallets to be loaded into Voilà’s distinctive, turquoise blue delivery trucks.

“The robots move about four metres a second and take 10 commands every second,” explains Joyce. “They can pick a 50-item order in about five minutes. Compare that to picking your items in a grocery store – how long would it take you to do that?”

Metrics that add up to success

These efficiencies have, so far, driven e-commerce sales growth at Empire Company Limited – Sobeys’ parent company – of 315 per cent in its third fiscal quarter ending January 30, compared to the same period in the previous year. Joyce highlights other metrics: 99 per cent order accuracy, 98 percent on time delivery, and an 87 per cent promoter score, the latter a measure of customers’ willingness to promote and recommend Voilà to other consumers.

“We knew that customers wanted freshness, and precise temperature control in our warehouse and throughout the supply chain, along with our data-driven system that ensures nobody gets anything that’s expiring soon, allows us to deliver on freshness,” says Joyce. “The second important piece is accuracy – we knew that customers get frustrated because they didn’t get everything they had asked for. Ocado’s model provides perfect visibility into the warehouse, only showing things that are available.”

Full ownership of the delivery system and trucks, meanwhile, ensures reliability and consistency in that all-important last step in the e-commerce process: getting the products to the customer’s doorstep.

“We’re not using a third party or the gig economy for deliveries,” says Joyce. “We own the delivery system and the trucks, and we use the Ocado system to ensure our guys show up on time. We have the ability to track everything – where our trucks are on the road, how many minutes our teammates are spending on our customers’ doorstep, how long it takes for each delivery.”

Designed for flexibility and growth

Another key feature of the Voilà infrastructure is its flexibility and ability to scale, says Joyce. The Vaughan facility, for instance, can house as many as 39,000 SKUs.

“Much larger than your typical grocery store,” says Joyce. “We have all the grocery and fresh items you would find at Sobeys but can also do extended aisle.”

“Sobeys was the right partner in terms of scale, technology and being aligned with our commitment to deliver chef-quality meals”

Andrew Oliver, president and CEO at Oliver & Bonacini

Voilà’s extended aisle now includes products from Farm Boy and CHALO! FreshCo – both banners owned by Empire. Last March, Sobeys and Farm Boy announced a partnership with Oliver & Bonacini Hospitality to bring a curated selection of ready-to-eat gourmet meals to Voilà customers. As part of the agreement, O&B chefs work in Farm Boy’s test kitchens to prep and cook the meals, which are flash-frozen in blast chillers, ready to reheat and serve at home.

“Sobeys was the right partner in terms of scale, technology and being aligned with our commitment to deliver chef-quality meals,” says Andrew Oliver, president and CEO at Oliver & Bonacini. “It was hugely important to us to be able to use our own chefs to make the meals, and for customers to be able to have an at-home restaurant experience.”

O&B started with five SKUs on Voilà and plans to build up to about 30 SKUs, with items rotating based on a seasonal menu, says Oliver.

“Like a restaurant menu, our offerings on Voilà will evolve along with changing tastes,” he adds. “This is a business unit we want to continue, even once our restaurants reopen. We see it as a way for us to expand and continue to grow our business.”

Top priority: e-commerce acceleration

Growing in the e-commerce space has long been a top strategic priority at Empire, says Joyce. With the company stabilized through its Project Sunrise transformation initiative, Empire has been advancing its three-year Project Horizon strategy since last July, with e-commerce acceleration topping the agenda.

Empire announced last March that it was acquiring 51 per cent of Longo Brothers Fruit Markets Inc., and Longo’s Grocery Gateway e-commerce business is part of the parent company’s overarching plan for e-commerce expansion, says Joyce. For now, she says, Grocery Gateway will remain separate from Voilà and the acquisition will likely lead to even more efficiencies for both through strategic sourcing and optimization of real estate assets.

“We believe we can run two successful e-commerce businesses because the market is growing and there are enough customers in the GTA that we can grow both businesses,” she says.

Marion Chan, a principal with TrendSpotter Consulting, a Toronto-based branding and market research firm, says having Longo’s and Grocery Gateway under the Empire umbrella brand will help Sobeys gain a bigger foothold in Ontario and boost its e-commerce strategy.

“Ontario was always the missing piece for Sobeys, so the acquisition makes total sense,” says Chan. “When it comes to the online piece, Grocery Gateway has been around all these years and has a strong network within the Greater Toronto Area and beyond, so I think that one way or another, that will enhance Sobeys’ online presence.”

Delivering on a national growth strategy

Voilà is in growth mode; a second fulfillment centre is set to open in Montreal next year to serve the Quebec market, and a third facility is scheduled for the following year in Calgary. In each of these markets, the Voilà brand will be affixed to the local or regional Empire banner, says Joyce. In Alberta, for instance, e-commerce customers will be served by Voilà by Safeway, while in Quebec, the brand that customers will see on their home-delivered groceries will be Voilà par IGA.

Empire’s goal, says Joyce, is to have three or four Voilà CFCs serving 75 per cent of Canadian households and capturing 90 per cent of the country’s total online spend on groceries.

In the meantime, Voilà by Sobeys continues to expand in Ontario with plans to build strategically located “spokes” that will accelerate delivery by serving as temperature controlled docks for orders picked at the main facility. The first such facility, says Joyce, opened recently in the Toronto suburb of Etobicoke.

“So everything does originate from the main CFC,” she explains. “The orders are done overnight while our customers are sleeping, and in the morning at 6 a.m., we can be dispatching from the spoke facility.”

The start of an innovation journey

Along with this infrastructure expansion, Voilà has been pushing the geographical boundaries of its market. At launch, the service was restricted within Vaughan. Today, Voilà delivers throughout the Greater Toronto Area, all the way east to Oshawa, north to Barrie and west to Kitchener, Waterloo, St. Catharines and the Niagara region.

Empire has also launched curbside pickup in places where there are no current plans to build a Voilà CFC, or where a facility is yet to be built. Pilots are now underway in Nova Scotia and Alberta, says Joyce, adding that she expects “hundreds of stores” to offer Voilà curbside pickup in the near future.

“This is just the beginning of our innovation journey – we aspire to be the number one e-commerce grocery business in Canada and we’re well on that path,” says Joyce. “We have a better product. We have a proposition that’s hard to compete with because we have the structural advantage. There’s no question that we made a big bet with Voilà, and it’s paying off.”

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