Voilà is the new benchmark in e-grocery ... for now

Voilà is the new benchmark in online food retailing in Canada, at least for now.

More than 100 delivery vans will roam the streets of the Greater Toronto Area (GTA) to deliver food to customers who have opted to buy their groceries online from Sobeys. What is at the centre of the entire fleet is a state-of-the-art distribution centre, the size of 40 Olympic-sized pools in volume. That is 250,000 square feet of space filled with robots. Another facility is currently being built in Montreal.

At the centre of this rollout is Sobeys’ partnership with major British e-commerce player Ocado. When it was announced that Sobeys would partner with Ocado, the Nova Scotia-based grocer was admitting it didn't have the internal capacity to deploy a high-level e-commerce strategy. The hundreds of robots in the facility can take 10 commands per second via antennae that link them to a system designed by Ocado engineers. The system itself can process a 50-item order in less than five minutes. No human can do that.

Ocado is one of the key players that got British customers to go online. Almost 10% of all food sales in the U.K. are conducted online. In Canada, it is at barely 2% right now. According to a report from the Agri-Food Analytics Lab at Dalhousie University, 22% of Canadians intend to order food online on a regular basis. By 2025, if the effects of COVID-19 are long-lasting, we could easily see online sales exceed 6% or 7%. That is almost $10 billion worth of food sold online, and Sobeys wants most of this.

For customers, there are always three sticking points when it comes to home food deliveries. First, there’s accuracy. Throughout COVID-19, many Canadians have experienced the frustration of finding items replaced without consent, or simply missing from their order. Voilà appears to be addressing these issues. Secondly, there’s the cost. Food offered online by Voilà is reasonably priced. Many items are offered on promotion as well, not typical in food e-tailing. Delivery fees are also reasonable compared to other delivery programs. Delivery costs as little as $8 in some cases. Only time will tell if the discounting and delivery fees will remain competitive.

The third point is delivery time, which is how Voilà sets itself apart from everyone else. You can get your food delivered within an hour, which is really what most expect these days. During COVID-19, some of us had to wait eight to 10 days for a delivery if we were lucky enough to be able to put in an order. One-hour delivery is what grocers should be aiming for now.

Grocery Gateway pioneered the warehouse-to-home model years ago. Owned by Longo’s, it has been delivering food across the GTA for more than a decade, applying a high, fixed fee for every delivery. The pick store in Vaughn looks like a grocery store without the cosmetics. But on execution, expectations have changed. For many years, customers were reluctant to empower a stranger in some obscure warehouse to pick out their apples and tomatoes. With COVID-19, this is hardly part of the conversation anymore.

Sobeys’ new centre is simply different. It really looks like what a modern distribution centre should look like, to support a highly efficient e-commerce strategy. But it is also the product of something else that has been going on in the industry. Amazon’s acquisition of Whole Foods in 2017 pushed Canadian grocers to think more about convenience and how to offset the threat of Amazon.

But that was before COVID-19. Now, it is about convenience and safety. Few saw that coming, and this is why Sobeys expedited its rollout. Sobeys is clearly making a statement with Voilà. Its strategy is fully committed, unlike the click-and-collects we have seen in recent years. Click-and-collect is convenient for retailers, but online delivery is the full package the market is ready for.

Sobeys is being aggressive, and for good reason. Other grocers will respond. In fact, most already have something in the works. Voilà’s national rollout must be quick or else other grocers will catch up and set even higher competitive standards.