FEATURE STORY — PAGE 8 NEWS & TRENDS — PAGE 12 Sam’s Club On Bringing The Digital Whole Foods debuts Shift To Warehouse Stores online-order focused “dark stores” around the United States JUNE 2020 WHAT’S INSIDE 4 An overview of how the COVID-19 pandemic is leading grocers and consumers to embrace digital technology like never before FEATURE STORY 8 An interview with Eddie Garcia, senior vice president and chief product officer at Sam’s Club, on how the warehouse chain is employing product scanning apps and other digital services to make shopping more convenient and safe for its members NEWS & TRENDS 12 The latest news from around the food economy, including PepsiCo’s use of the direct-to- consumer model to deliver its products to customers ABOUT 17 Information on PYMNTS.com WHAT'S INSIDE WHAT'S INSIDE 4 WHAT'S INSIDE Restaurants have closed facilities designed solely for the preparation, packaging and distribution of mobile gro- en masse during the past cery orders. Such stores have been likened three months, and super- to ghost kitchens, which serve the grow- market trips have become ing number of mobile meal orders without physical storefronts. Whole Foods has stressful as customers opened six dark stores across the country, observe social distanc- and Stop & Shop and Kroger are looking to ing rules and pick through make similar moves. bare shelves. Amazon, Target and Walmart were already Many are therefore turning to digital tech- well-positioned to adapt to this new digi- nologies to stay safe while purchasing tal reality, as they all had robust mobile and groceries and related items, and these online ordering operations long before the new shopping habits could cause lasting pandemic hit. Smaller independent grocers changes that will have profound impacts have been forced to scramble to ramp up across the food economy. their digital services as the grocery market migrates online, however. Midwestern food Recent analyses reveal just how signifi- wholesaler Winkler Wholesale Grocers is cant these purchasing shifts are. PYMNTS supporting these smaller players by adding research found that the share of U.S. con- online ordering to the services it offers more sumers who went online to shop for than 400 independent grocers in Illinois, groceries increased nearly 400 percent Indiana, Michigan, Missouri and Ohio. The from early March to late May, when 13.2 company is also helping the stores set up percent reported doing so. A large share of online ordering, curbside pickup and deliv- these consumers cited exposure risks as ery programs. the main reason to shop online (40.2 per- cent), while 36.3 percent pointed to greater Stocking products and keeping them on convenience or speed. These latter con- store shelves are persistent challenges fac- siderations may prove to be even more ing all grocery stores. This could further compelling as consumers begin to tire of fuel the direct-to-consumer (D2C) model, large supermarket crowds, long lines and which enables merchants to sell directly social distancing rules. to their customers via eCommerce chan- nels and thus avoid potentially complicated and strained retail distribution chains. The AROUND THE FOOD ECONOMY D2C trend was gaining momentum before One of the most dramatic manifesta- the pandemic, but it has even become tions of food shopping’s digital shift is the appealing to larger merchants that have rise of mobile grocery ordering through traditionally relied on supply chains to pro- retail giants like Whole Foods as well as vide consumers with access to products. third-party services such as Instacart. This Food and beverage conglomerate PepsiCo trend is spurring the creation of dark stores, is getting into the D2C game with two new © 2020 PYMNTS.com All Rights Reserved 5 WHAT'S INSIDE websites, Snacks.com and PantryShop. shopping experiences. Change is also order com, for example. Consumers can use of the day for these retail giants, as more the sites to place direct orders for Pepsi and more consumers migrate online to do products such as Cheetos, Gatorade and their shopping amid the pandemic — and Sun Chips. demand safety when they do so in stores. Sam’s Club has been working on staying For more on these stories and other recent ahead of the curve by offering products headlines, read the Tracker’s News and and services over digital channels, such Trends section (p. 12). as app-based product scanners. For this month’s Feature Story (p. 8), PYMNTS inter- WHY SAM’S CLUB CUSTOMERS ARE JOINING viewed Eddie Garcia, the company’s senior THE DIGITAL SHOPPING CLUB vice president and chief product officer, Large membership-based warehouse about how mobile is helping provide cus- chains have long been known for offering tomers with seamless and safe shopping their customers good deals on bulk prod- experiences. ucts, as well as stripped-down, utilitarian YUVAL MARCO general manager of fraud and authentication at NICE Actimize 6 WHAT'S INSIDE $6.6B FIVE Value of U.S. online grocery sales in May FAST FACTS 54% 28,000% Share of consumers who Increase in grocery reported cooking at delivery platforms' home more often during social media the pandemic engagement from March to May 100 6 Approximate number Number of Whole of Frito-Lay products Foods dark stores, as available on PepsiCo’s of mid-May new D2C website, Snacks.com © 2020 PYMNTS.com All Rights Reserved 7 FEATURE STORY FEATURE STORY Sam’s Club On Bringing The Digital Shift To Warehouse Stores The supermarket has become a vital insti- is the company’s Scan & Go app, which was tution in recent months, as it is one of the introduced in 2016. The tool allows custom- few types of businesses deemed essential ers to scan UPC barcodes on products as and allowed to stay open through the thick they shop and show their digital receipts to of the pandemic. This has meant that store employees before exiting. operators have had to rapidly implement The app has surged in popularity since the new health and safety rules to minimize pandemic for a number of reasons. It allows transmission risks among workers and cus- customers to hasten shopping trips, main- tomers — especially the most vulnerable. tain proper distancing with other customers These realities are casting a new light on and employees and avoid the potentially some of grocery stores’ recent innovations, most crowded part of the shopping experi- such as Stop and Shop’s handheld product ence: the checkout line. Use of the Scan & scanners and Target’s mobile ordering and Go app has increased nearly fivefold since curbside pickup services, which have deliv- March, Eddie Garcia, senior vice president ered greater efficiency and convenience and chief product officer at Sam’s Club, told for employees and customers alike. The PYMNTS in a recent interview. COVID-19 era has given these technologies “We’ve seen a strong uptick in member the potential to not only reduce frictions in adoption during the pandemic because it the shopping experience but also make it gives them the ability to pay for items right much safer. from their phones and skip the checkout Sam’s Club has been a notable player line. It completely removes the friction and in the digital innovation arena. The uncertainty of waiting in a checkout line membership-based warehouse store chain right now,” he said. has long prioritized digital innovation, both The app is just one aspect of a multipronged in its customer-facing and internal opera- digital strategy that grocers such as Sam’s tions. One of the centerpieces of this effort Club are embracing to help customers © 2020 PYMNTS.com All Rights Reserved 9 FEATURE STORY safely and efficiently shop during the pan- Sam’s Club has adapted its existing tech- demic and its aftermath. nology platforms to accommodate seniors and other at-risk groups. Its concierge ser- TECHNOLOGIES TO AID AT-RISK SHOPPERS vice allows such customers to provide grocery lists to store employees, who then The pandemic has triggered a digital shift use a specially configured Scan & Go app to across the economy over the past few fulfill and bring their orders to their vehicles. months. Not everyone is prepared to go digital overnight and alter entrenched shop- “We were able to build the associate-facing ping and lifestyle habits, however. Senior app that powers our concierge experience citizens may face a formidable learning in just six days because we built it on top curve, for example, but they are also among of our already existing Scan & Go platform. the most vulnerable to the virus and should That’s the cool thing about technology take advantage of these new digital tools. — if you invest in building platforms the right way, you can accelerate innovation,” Garcia said. He noted that nearly 132,700 concierge transactions had been completed as of early June. The company is also enhancing the mobile device workers use on the floor. An emer- gency app allows them to quickly report confirmed COVID-19 cases and another app enables them to count how many custom- ers are in-store at any given time to comply with capacity restrictions. A PROVING GROUND FOR INNOVATION There is another important aspect of the new reality in which consumers are living: Millions have discovered online grocery shopping and many may gladly put brav- ing stores aisles and checkout lines behind them for good. Sam’s Club has seen orders through its web- site and apps increase significantly, with eCommerce revenues up 40 percent in Q1 10 FEATURE STORY 2020. These online orders may be poised to TOWARD THE FUTURE grow even more substantially, however. The The pandemic has exposed digital divides company began rolling out curbside pickup across the economy.