This industry is more complex than telco and there is no reason why it should be
“When will you stop disassembling my meal... and scattering the ingredients across the supermarket?”
Chris Quin says this question from the audience at a recent industry conference got him thinking about the changing business model for the hyper-competitive era.
“We aggregate a whole lot of products for customers in a way that is effective for them to buy them.”
However as the Foodstuffs North Island chief executive points out, “If we don’t offer the best experience in aggregating those products, if we don’t offer the solutions they like, they will go somewhere else.
“We have to stop thinking about being a supermarket...and think about it as a place where we aggregate a whole lot of products and offer solutions.”
It is this kind of strategic thinking that he applies as the supermarket industry prepares for a slew of competitors.
“There is no barrier to entry in our market,” he says, noting the imminent possibility of other global retail chains entering the local market.
“Costco is coming,” he states, referring to the US retailer, that has already set up in Australia and is opening a store in West Auckland.
“We have to act as if any competitor we can imagine is here already."
"That is the way have driven all the proactive thinking," in the organisation, says Quin, who spoke on being ‘customer-driven for the future’ at a recent Trans-Tasman Business Circle forum in Auckland.
Customer focused, customer driven
Quin says the co-operative’s aspiration is to be “one of the most customer-driven retailers in the world”.
There is a difference between being customer-focused and customer-driven, he states.
“Customer service is the thing that people do when our customers are in front of them, and they do a nice job of that.”
“Customer driven,” he explains, “is about designing every single process and every offer off the back of every customer data and insight.”
“You can't be product driven, you have to be totally customer driven,” he stresses. “You have to know your customers better than anyone else to win.”
You have to know your customers better than anyone else to win
The basics of being customer driven, according to Quin, is around having clear vision and leadership; empowered frontline and engaged back office; customer insights and analytics; and focus on the end to end customer lifecycle.
He says it is important the the whole organisation understands that being customer driven “is for everyone”, and not only in customer facing roles.
Quin takes time to spread this message personally.
He meets with every single person in his team for coffee at least once a year. He invites 12 people at a time and have coffee for half an hour. “We talk about these things and ask them what is on their mind.”
Winning with technology
Quin shares an oft-quoted phrase from the master of ‘willful disruption’, Amazon CEO Jeff Bezos: “If you’re competitor-focused, you have to wait until there is a competitor doing something. Being customer-focused allows you to be more pioneering.”
Quin says for the past three years, they have been laying out the technology platform that will allow them to to this.
He says Foodstuffs North Island has implemented SAP throughout the entire business.
“We now have got that base and we need to leverage that base hard into an API infrastructure where we can plug any app or any opportunity into and be able to move quite fast.”
This, he says, means they will now have the components to be able to provide a different type of experience, for instance, for New World customers.
“We’re learning more all the time about what’s best for our customers and our business with the help of smart data from SAP and New World ClubCard.”
As an example, a customer will put together a shopping list at home or the menu for the weekend, and the system will know it will be for two adults and two teenagers.
Quin explains that, “It will work out your shopping list and will remind you about things you choose, and whether you deliver click and collect or shop in the store.”
We have to stop thinking about being a supermarket...and think about it as a place where we aggregate a whole lot of products and offer solutions
“If you choose to shop, it will let you sort by aisle so you won't do what I do,” he says, “which is lots of horizontal searching [down the aisles].”
The trolley, he adds, will have a barcode reader so the customer will just slide the products. The customer’s phone or tablet will be plugged into the trolley and will send reminders.
“If you choose alcohol, it might give you a very subtle light on the trolley to ask you to do the age check before leaving.”
The system can also send the receipt to the customer’s phone as they leave the store and email a healthy food analysis of their shopping.
Quin shares that, “All of this is possible off the components we have. We just have to stitch it all together.
“That is the experience that we are excited to get into as fast as we can.”
“If you look at Amazon distribution centres, they are placing these 5000 square metre centres close to populations. We call those PAKnSAVEs,” he says on preparing for another future trend.
“You have to think differently about how the building is used, and the building becomes even more and more a blended omnichannel centre. You don’t need a separate building.”
He cites another possibility: “The grocery is all in glass, you watch it and you can’t touch it. The drones are flying around picking your order. There is no storeroom."
IT to grocery
Quin joined Foodstuffs North Island in 2015, after more than two decades in the ICT sector, mainly in telecommunications.
Prior to Foodstuffs, he was CEO of Spark home, mobile and business and led the business through the company’s rebranding from Telecom to Spark. He has also held several executive roles at Spark and Gen-i Australasia (now Spark Digital).
Today, when he goes on a holiday, all he wants to do is go to the stores, he tells the audience at the Trans-Tasman Business Circle forum.
“My wife loves it because I have never given a toss about shopping,” he says, smiling. “Now, I do it deeply.”
At the forum, Quin brings out the history of Foodstuffs, which is inextricably linked to the evolution of innovation in retail in New Zealand.
Foodstuffs started in 1922 as a grocery buying group, and is now one of the largest retailers in the country.
It is 100 per cent NZ-owned and operated, and more importantly from a customer point of view, locally owned and operated, he notes.
He says the stores started with the grocer getting a customer’s orders from behind the counter and putting it in a paper bag. In 1948, FourSquare introduced New Zealand’s first self-service retail grocery.
“You were allowed to pick up a product by yourself and take it to the counter. These things have taken a long time to evolve.”
Today, Foodstuffs North Island has 335 stores employing 22,000 people, with $7.5 billion annual sales.
According to Quin, the company is present in almost every New Zealand community, and is more known by its brands that include PAK’nSAVE, New World, and Four Square, as well as the newly introduced small format stores PAK'nSAVE MINI and Fresh Collective by New World.
We serve around 1.3 million customers every week. In the age of social media and smartphones, it is 1.3 million opportunities to get it right... or not
Foodstuffs North Island serves around 1.3 million customers every week, says Quin.
“In the age of social media and smartphones, it is 1.3 million opportunities to get it right... or not.”
At the same time, he highlights the strengths of the Foodstuffs business model.
“We are nearly 100 years old. You feel the sense that someone has built something before you, you have been handed it and are expected to care for it for a period of time.”
Quin adds that, “It is quite a different feeling and responsibility from many other organisations I have been a part of.”
He notes that Foodstuffs also has another source of strength: the stores are operated by owners who are also shareholders of the whole organisation. “It is a very different model from a franchise.”
He shares how the organisation is preparing for changes in demographics and demands of customers.
He points to the results of a study they made on how New Zealanders will be 10 years from now.
“It will be more diverse and more pronounced in wanting everything the world has to offer,” he states.
They also look at economic inequality by that time, so there is a deep drive for providing value and making things work within a budget.
They also have to meet the needs of people who are in a positive position financially and want to enjoy the shopping experience.
“How are we going to bring that together?”
Have an empowered frontline and engaged back office
“People want a very personalised and very relevant experience, but want trust and great transparency on how their data is used and kept,” he explains.
As he notes, in many ways, they hold some of the most personal data - such as shopping habits of Kiwis - probably next to health.
At the same time, they have to cater to a range of lifestyle choices including vegetarian and pescatarian. “How do you make it easy physically and digitally for all of those preferences?”
He talks about some of the things they are working on to get that balance.
Quin says part of it is investing in their leaders and simplifying the business.
“This industry is more complex than telco and there is no reason why it should be. It is quite incredible the way it has developed, that we have to challenge every piece of that and just make it simpler.”
He says as an employer of 22,000, providing meaningful work is a massively important social issue - not only for today, but for the future.
“We can't stand back and watch it unfold we have got to lead the team through that,” he states.
He says one of the things he reminded the leadership team was that getting the New World ClubCard, as part of the loyalty scheme, “is harder than getting a passport.”
“That is not a customer driven process. Those are the things we have to attack and change,” he admits.
So they broke the New World customer experience down and asked the customers what key customers touchpoints are valuable to them.
He says they were amazed at how some of these things customers mentioned were outside the store, like helping them build a shopping list.
The customers asked, “How do I know what are the good value and promotions so I can plan and shop [for] simple solutions?”
If you look at Amazon distribution centres, they are placing these 5000 square metre centres close to populations. We call those PAKnSAVEs
“Help me save money, so show me how to be smart with my shopping.”
He says globally, one of the most penetrated online markets is the grocery. This is particularly in places where density is huge, and adoption of smartphones and wireless is enormous.
He believes it will be a long time, however, before groceries would be “100 per cent delivered”.
He traces this to the persona of customers. The least participation for online grocery shopping is from food lovers, he says.
“They want to go in, touch and smell the food and talk to people.”
The highest participation in online grocery shopping is the ‘value seeker’.
They are paying a delivery fee but the main reason they are participating is they are carefully organising their shopping list on a budget, he explains. “They do that in the privacy of their own homes.”
Taking care of ‘busyness’
Quin highlights one other issue today’s business leaders face.
“In a time of super fast change, how do you get focus and thinking time,” he observes, “and how do you drive that to your leadership team?”
“How do you take the time out to not be busy doing the doing, but standing back and asking, ‘what are the directions, what are the settings and what are the things we need to change?’”
He says that, “In the end, it does come to engaging in things that matter and letting your teams grow in their roles.”
“You have to be disciplined in your schedule. Pick the big rocks first, and make time to book 'thinking time'.
“Use that time well.”
In his case, he spends one day a month where he just visits their stores. “Nothing gets in the way of it.”
Every month, he shops with a customer.
The customer gets a $20 dollar voucher and “I just watch how they shop,” says Quin.
You have to be disciplined in your schedule. Pick the big rocks first, and make time to book 'thinking time'
“You learn really fascinating things about your business, and what is really going on in the minds of customers.”
“I am a big believer of you have got to use data and insight, but you have got to match it with personal observation and experience.”
He says in two years, their customer base will be millennials and younger.
“Our organisation does not look like that.”
Thus, he asks, “So how are we going to think and challenge and design the same way if we are not harnessing that diversity?”
Quin says, “You have to keep working at it and keep finding the talent.”
“You can't get everybody to the senior roles, you have got to create mechanisms to get diverse thinking on board to make it happen.”
In his case, this is creating a “shadow leadership team” made up of people under the age of 25.
“We are trying to get some of the big strategic questions around them.”
The programme, according to Quin, is in its early days, and he has just recruited his first batch of millennial shadow advisers.
He also recently participated in AUT’s ‘Shadow a Leader’ programme.
Three university and three Year 13 students joined him on his once a month tour of their groceries.
“It is scary and fascinating having those conversations… on what they listen to, and what will make them buy from our stores,” he says.
“We just have to keep finding ways to connect and get opinions from people we wouldn't normally ask so we can get a first-hand view on key things.”
What is far more critical is personalised marketing, says Quin.
Half of their customers won’t watch television, he says, referring to their younger customers, so they are unable to watch their advertisements in that medium.
They are also factoring in the people over 65 who are going to be living in some sort of property or care home.
“What does that mean for how they are going to buy and consume grocery and food?”
“You plan for that.”
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