Now available on Spotify and iTunes, this episode explores everything you need to know about the Co-op’s transition online - from the logistics of its partnership with Deliveroo, through to coping with the Covid chaos….
With over 15 years of experience of working in senior roles at Asda and Morrisons - Chris Conway is certainly no stranger to ecommerce grocery retailing.
In his latest role as ecommerce director at the Co-op, Conway has channeled this expertise into transitioning the UK grocer online. As a result, the Co-op has seen impressive growth and a wealth of new customers (which you can read more about in our RX UK Top500 report!).
The online grocer now delivers from more than 1000 stores and has even rolled out a contactless delivery scheme via Starship’s autonomous robots in certain areas of the UK.
During the podcast, Conway looks in-depth at the hard work, strategy, and ideologies that have shaped the Co-op’s, still fairly recent, online presence.
Here’s a summary of the best bits:
How did Co-op respond to the challenges around Covid, despite being so late to the online game?
“I think actually we were at an advantage because we were building our business and we’d built it in a very future-focused way. For example, the fact that we’re able to add capacity and tag-on microservices when we need has meant we’ve been able to react really quickly.
“For 2020, we already had an aggressive plan to add 200 stores which would have taken us to over 500 stores by the end of 2020 and because of the pandemic; the extra pressures on capacity; the increase in customer demand, we were able to pivot that really quite quickly.
Essentially, we were able to roll out really fast so we’ve exited the year picking out of over 1,000 locations now. From an original plan of 300, we’ve gone to 1,000, which obviously means we’ve increased capacity tenfold during that period of time so therefore we were able to cope with demand.”
Conway explains that one of the biggest challenges was approaching operations in-store and adapting to the drop in footfall. He tells us that employees working in the physical stores were trained to help with Co-op’s online channels and tasks. This has been very successful, he adds - with some stores almost at the 50% online fulfilment centre stage.
Why have you chosen local picking models over large picking centres or dark stores as your approach?
“I quickly realised that if we were to be successful in the online space, the last thing we would’ve wanted to do was to replicate what was already there in terms of the big-box model. I thought, actually, if we allow the customers to choose how they shop rather than letting the retailer decide how they shop, what will happen?
“Co-op is a convenience retailer, we do really well at that top-up mission - the meal for tonight,” he elaborates. The partnership with Deliveroo is not only convenient in terms of same-day delivery, but it also offers customers the flexibility to order from the grocer with no minimum spend. This, Conway hopes, will incentivise customers to buy from the Co-op more frequently, compared to how often they might purchase from larger grocers during an average month, for example.
“We haven’t got vasts of people in our stores constantly doing a specific job, so where you go into a big-box retailer you’ll have a check-out operator and you’ll have someone filling a particular order, and you’ll have someone else picking online orders and that isn’t how it works in our stores.”
At the Co-op, all employees are able to do all the jobs across the store which are organised by the application ‘Taskmaster’. This technology works in real-time so that when an order comes through, that becomes prioritised.
“The fixed cost of this operation is minimal,” Conway adds. “So if two customers a day decide to order from that store and they want it delivered, the colleague can divert that task to pick the order quickly and we can pay a third-party carrier to deliver it at a fixed cost - we can manage our cost-base quite carefully. Had we invested in a dark store or a fulfilment centre, we’d always be starting at that base, meaning we’d always have to pay for that depreciation.
“I think the idea here was we start small and we do what we’re best at which is serving local customers.”
Is there a ceiling to operational cost?
“I don’t think there’s a ceiling because ultimately there’s a market out there and people are deciding how they want to shop. What I learned from the market data, pre-Covid is that customers operate very similar in the online world to how they were operating in the physical world.
“Is there a ceiling? No - because we’ve got 2,600 stores. We’ve opened stores now, so in central London, within the M25 we’ve got over 250 stores as a business and as people’s shopping habits change; the use of those physical stores is going to change as well.”
What is your customer and has that changed?
“I think it is changing from a demographic perspective, our customers tend to be older and it is an absolute strategy of ours to change that. I think if you go into some of our new stores we’ve opened over the last few years, I think you’ll see a massive step-change in technology and customer offer. That has been introducing our company to younger customers - that’s been a big bonus.”
The Co-op have also invested in appealing to students through working with NUS and Student Beans, as well as setting up physical stores on university campuses and at festivals (pre-Covid of course!).
Being “late to the party” the Co-op had to look at how we move volume online really, really quickly, Conway tells us.
“Deliveroo was an opportunity to partner with someone, so we started a five-stall trial in Manchester with 300 products of predominantly confectionery and alcohol to see if people would order.”
When the UK grocer realised how popular this method was, they quickly changed the partnership with Deliveroo to a more strategic one. It was agreed there would be an enhanced accelerated roll out and that Co-op could influence the platform’s product roadmap to ensure functionality on the application was equally favourable to grocery products as it is to take-away.
Conway lists the main benefits to this partnership as being:
-The immediate increased access to new customers
-The ability to showcase Co-op products and shift quickly
-Flexibility to go wherever Deliveroo was, wherever they had last-mile capability
-The opening of 600 new stores
“Our partners are a key part of our strategy, especially in the long term. A healthy mix of channels and partners means we can accelerate faster and have access to more customers.
“We are able to move quickly with new partners,” he continues. “When we see something exciting, we want to be part of it to... A) share the data and the learnings…and B) to help give others a leg-up in the market.”
Conway highlights the partnership with Starship Technologies as being one of the most interesting and shares that the company’s robotics has enabled Co-op to carry out completely autonomous deliveries.
When asked about the company’s somewhat liberal approach to multiple partnerships, Conway stressed that his role is to talk to start-ups, technology companies and so on to get an idea of what is going on in the market and to get involved.
“Because Co-op’s vision is co-operating for a fairer world,” he concludes.