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Sobeys' online grocery service 'could put them at advantage': expert

Sobeys is launching a new grocery delivery service in the Greater Toronto Area that will bring groceries from a high-tech warehouse to customers within one hour.

The strategy – delivering products from a fulfilment centre dedicated solely to online orders – differs from the current delivery offerings at other Canadian grocery stores, and could set Sobeys up to capitalize on the future growth of e-commerce, one retail expert says.

Sobeys announced on Monday that it had launched Voilà, an online grocery delivery service that will complete orders at an automated fulfilment centre located in Vaughan, north of Toronto. The warehouse features robots that assemble orders, while employees pack bags and then deliver them to customers. The robotic technology has been supplied by Ocado Group PLC and has been previously used by grocery retailers in the United Kingdom.

“We think the combination of our robots and teammates working together safely with less handling is important,” Sarah Joyce, Sobeys’ senior vice president of e-commerce, said in an interview.

“We’ve always believed that Canadians deserve a better way to shop for online groceries... and now we’re able to provide a better service as a result of this technology.”

The new delivery service comes amid a spike in e-commerce demand for Canadian grocery retailers as a result of the coronavirus pandemic. Michael Medine, the chief executive officer of Sobeys’ parent company Empire Ltd. (EMP), said on a conference call last week that online grocery shopping “has been supercharged because of COVID.”

Voilà was initially going to launch with 40 employees working in the fulfillment centre. With demand skyrocketing, the company bumped that number up to 140.

Still, Canada is behind when it comes to online grocery delivery. According to a recent survey commissioned by PayPal and conducted by Angus Reid Forum, just 19 per cent of Canadians shopped for groceries online before the pandemic. That figure has since jumped up to 30 per cent, a 58-per-cent spike.

“Online grocery shopping has been slow to develop in Canada, but during quarantine the utility of buying groceries for delivery or via click-and-collect has proven essential,” said a June report from research firm eMarketer.

Bruce Winder, a partner at the Retail Advisors Network who has recently written a book about the impact of COVID-19, says that Sobeys’ new delivery business is a long-term play that could position the grocery chain ahead of its competitors in a few years’ time.

“I think it’s probably going to be a better approach over the long-term, but there’s always a risk. It’s a big gamble, because it’s a significant investment,” Winder said.

“Having said that, it could put them at an advantage over the other guys who don’t really have much infrastructure themselves right now.”

Many grocery retailers in Canada currently offer delivery services, but few feature products coming directly from a dedicated distribution centre. For example, Loblaw’s PC Express delivery features personal shoppers who shop at local store for a flat fee of $9.95.

Voilà will roll out in Vaughan to start, and charge a delivery fee of $7.99. Sobeys plans to roll out the service to the Greater Toronto Area over the coming weeks. Another distribution centre is under construction in Montreal. Joyce said the company hopes to eventually have three or four Voilà facilities serving people across the country.

“We believe Canada has been behind when it comes to online grocery shopping... and we think we have a role to play in growing the market by showing Canadians that there is a better way to do it,” Joyce said.

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