Michael Medline, president & CEO of Empire Company and Sobeys Inc., says he does not think government legislation of grocery relationships with suppliers would be helpful because of the complexity of the relationships. But he is open to an industry code of conduct.
“I wasn’t used to the kind of relationships we see in grocery when I came into the business. I find some of the relationships repugnant and some of them are just plain bad for Canada. Suppliers seem bullied and it goes all the way down to farmers and independent retailers. It discourages innovation and hollows out our suppliers.”
Medline’s comments came during a presentation on October 27 to The Empire Club of Canada.
On the flip side, Medline says some current practices are also unfair for large retailers like Empire who try to play by the rules.
“We were being taken advantage of by some large CPG companies at one point. We’ve been talking a lot about whether or not we should follow suit (on supplier fee increases). But we don’t think this approach works. We’ll take care of ourselves, but do it in the right way.”
On the future of grocery retail, Medline strongly believes consumers will continue to visit stores.
“I love eCommerce. Canada is behind in eCommerce. During the heat of the pandemic it was about 4% of sales and now it’s falling back again. Some parts of the world are in double digits. eCommerce will be the highest growth area, but bricks and mortar will continue to be the bulk of business and finance innovation.”
Part of the innovation Empire has invested in is its exclusive partnership in Canada with robotic picking technology company Ocado and what this means for the launch of Empire’s Voilà online grocery service.
“It’s a great technology. It is so much better than anything else available. Even without a pandemic we would have been running out of capacity because of the positive response to it. When you have the best mouse-trap you tend to win.”
The robotic system has not made a mistake as far as Medline is aware. And when they get tired they go plug themselves in. It took three years to build a picking facility in Ontario. Empire is working on a facility in Quebec. And Medline says you can look west for two more, though he does not want to divulge details on this yet.
Medline expects a temporary drop in growth for eCommerce post-pandemic, but also that it will continue to be the fastest growth area of the company.
Another area of innovation is in pilot stage now with store queuing. The company is also looking at structural changes to vestibules.
“We learned a lot from the pandemic,” says Medline. “We were the first to put in Plexiglass in North America. We figured out on the fly the safest way to deal with the crisis. Our protocols are as strong as they ever were. Winter could be very bad and we’re looking at innovations in our stores.”