Groceries on Demand: 5 Questions With Meijer President Rick Keyes

Posted March 16, 2017 by Dale Buss

After encouraging early results from Meijer’s home delivery test in Detroit, the superstore giant has decided to bring the convenience to major markets across its six-state footprint in the Midwestern U.S., hiring hundreds of new workers to keep up with demand.

Now expanding on its trial market, Meijer is stealing a march, to some extent, on giant retail rivals such as Walmart, which is still in the experimentation phase with broad home delivery.

Beginning with its Grand Rapids, Mich.; Indianapolis; and Fort Wayne, Ind., markets, Meijer is partnering with the Shipt delivery service to offer home delivery of any of 55,000 grocery and other items from its stores using a mobile app or a website.

Customers can schedule deliveries in as little as one hour, 24/7, which is when Meijer bricks-and-mortar stores are open. Other major cities will follow.

“The way our customers shop continues to evolve,” said company chairman Hank Meijer in a press release. “We believe the high-touch service that Shipt offers, coupled with what our customers love about shopping at Meijer, create a new type of shopping experience.”

The move comes after Shipt members in the Detroit area placed more than 65,000 orders in a test that began last September. The service is membership-based, with a monthly option and a $99 yearly subscription which covers unlimited free grocery deliveries on all orders of more than $35. Members can note any preferences, choose a preferred delivery window and pay for their order.

Shipt plans to build a network of hundreds of personal shoppers and identify opportunities to support community organizations in each market offering the Meijer service.

Meanwhile, Meijer continues to expand its Curbside click-and-pick-up delivery service at the store, tracking with rivals such as Walmart in giving customers the ability to drive up to a designated area at many of its locations and be greeted with bags of goods that fulfill their digitally-placed order.

We spoke with Meijer president Rick Keyes for more insights into its burgeoning home delivery business.

bc: What did Meijer learn from your Shipt pilot with 25 stores in the Detroit area?

Rick Keyes (right): We knew there would be a lot of lessons learned. The biggest one is assumptions around which customers this is going to work for, and what the size of the basket is going to be. You get surprised a bit.

Every demographic has used our service. Whether young millennials or boomers or time-starved moms, we saw our customer base span the entire spectrum. And the stores that we thought might be the highest usage were not necessarily those. Sometimes that has to do with geography and transportation.

Also, we were really pleased with the incrementality we saw. A lot of new shoppers loved the convenience and service and lived in an area without access to our products, or it was inconvenient. That was the stat we got most excited about.

bc: Does that imply more uptake from lower-income shoppers than you expected?

Keyes: It was balanced. You could make the argument that to pay a $99 fee for a subscription you have to skew higher end, but that wasn’t necessarily the case. Convenience matters.

The more we’ve come to understand it, people don’t even think about Netflix subscriptions; it’s part of the quality of life. This can be the same way. Certainly those people who are time-starved really appreciate the value of it.

bc: Are you ahead of Walmart and other rivals on getting serious about home delivery?

Keyes: We think we’re taking the lead in the Midwest. You can see tests across the U.S.—Walmart is doing some testing, Whole Foods has a relationship with Instacart. This is something everyone is trying to figure out.

We’ve been testing at curbside; Kroger is doing that in the Midwest and expanding rapidly. We try to figure out how to meet the needs of our customers. Putting customers first is a no-brainer and it’s something we didn’t want to wait on. We have a great partner and a great solution.

bc: What is the strategy behind launching home delivery at a time when you’re also expanding the number of stores, into new markets, and redesigning stores—while overall bricks-and-mortar retailing is in tumult?

Keyes: You have to be balanced. We’re investing in new stores, in store redesign and in digital. At the center of all of it is making sure we’re taking care of our customers. We’re not putting all of our eggs in one basket. We have to offer an everyday value in our stores. People have to see that value … Shipt to the home, or Shipt to curbside, this is one of the big pieces to that. It’s really been a big challenge from the point of view of a seamless, omnichannel experience.

bc: Are you also looking at some of the more ‘out there’ delivery options like drones and robots? 

Keyes: We’re not doing any experimentation with drones. Food is a personal experience. That is what I really like about Shipt, it’s almost like a personal shopper. You don’t put your order into a black hole and it shows up at your door.

Shipt stays in communication about when they’re at the store, and asks if the customer has forgotten anything. They look at the tomatoes and will text you and send pictures to make sure it’s exactly what you’re looking for. Food being that personal relationship, it’s important, which is why we really like the personal shopping component.