Markets Go It Alone

Markets Go It Alone

The buzzword for today’s brick-and-mortar retailer is “frictionless.” It refers to a shopping experience where customers can come and go with ease. It means not waiting in lines and never having to take cash or a credit card out of your wallet. Sounds dreamy, right? It’s happening now, and here’s where to find it.

Zippin: San Francisco, CA

When Krishna Motukuri’s wife sent him to Trader Joe’s for a bottle of milk, he came back empty-handed. Why? The checkout lines were too long. When he dug into a study from MIT that found 37 billion hours were lost waiting in line every year, he was stunned. Wanting to help solve this problem, Motukuri took his computer science background and co-founded Zippin.

But while most of us think of the physical store as the end goal, Zippin only wants to be the powerful back end. This month, the startup launched a basic concept store in San Francisco to showcase its technology. To get through the slick entry gate, customers scan a QR code on their mobile phones. Once identified, customers can pick up a can of mango La Croix, a bag of sea salt Boomchickapop popcorn or perhaps a deli sandwich. Soon after they pass through the exit gate, an electronic receipt is sent to the Zippin app. And that’s it. Zippin’s AI-based software platform will allow retailers to deploy a “frictionless” shopping experience that wipes out time spent standing in line. According to Motukuri, operators of physical stores would need only minor upgrades — weight sensors on the shelves and overhead cameras — at a cost of about $25 per square foot. These enhancements, along with Zippin’s software (charged on a monthly subscription) will tell a retailer precisely what has been taken off the shelves.

Amazon Go: Seattle, WA

In January, Amazon opened its first cashier-free store on the ground floor of one of its many offices in downtown Seattle. Called Amazon Go, the store is a free-for-all of convenience foods, meal kits; even beer and wine. As reported by Recode, by being first on the scene, Amazon hopes to “carve out a loyal customer base outside of its website and inside a physical store where the vast majority of food and grocery shopping still occurs.”

Shoppers with the Amazon Go mobile app gain access to the store with a QR code, shop for snacks, take whatever they want and then they “Just Walk Out” — the name for Amazon’s technology. This includes overhead cameras, weight sensors and deep learning technology that detects what shoppers take off the shelves or if they change their mind and put something back. When customers leave the store, the “Just Walk Out” technology debits their Amazon account for the items and sends a receipt to the mobile app. In August 2018, Amazon opened a second location in Seattle. Expect subsequent stores to crop up in San Francisco, Los Angeles and Chicago, where Amazon has already signed leases for two locations including one in the famed Willis Tower.

The Moby Mart: Shanghai, China

While Amazon wants to help us eat more snacks, Wheelys, a Stockholm startup, is developing a market on wheels stocked with hip sneakers, fashionable magazines and yes, milk and cookies. In collaboration with Hefei University of Technology and tech firm Himalafy, the team created a roving, train-shaped convenience store on the university campus, 450 miles west of Shanghai, that can be located using an app. Self-driving, drone-equipped, powered by solar and always open, The Moby Mart is a tech nerd’s space-age fantasy come true.

Wheelys’ foray into automation began with modular-bike cafes. The easy-to-schlepp coffee carts could be moved around Stockholm for anyone not ready to commit to a lease. It was so popular that by 2016 Wheelys had sold 550 bikes. Looking beyond their Nordic country for their next innovation, the founders settled on China because of its large population and the country’s near-ubiquitous adoption of phone payments. While The Moby Mart is still running in beta, Wheelys is moving ahead with what co-founder Tomas Mazetti is calling “magic tech,” or hidden tech.

“At the moment, we believe that hidden technology is the next revolution, not just in retail but in many industries,” Mazetti says. “Imagine walking in through an open door, seeing a beautiful pair of sneakers, trying them on and then leaving the store with them, without ever having talked to anyone or seen any security.”

Farmhouse Market: New Prague, MN

Thankfully, not every automated market is so hands-off. In Minnesota, married couple Kendra and Paul Rasmusson opened Farmhouse Market in 2015. The Rasmusson’s wanted to open a store that offered delicious goods from local farmers, but they knew that staffing a store (and raising their three small children) would be a big challenge. Undaunted, the pair came up with some ingenious ways to run a mostly automated farm store that has some human touches.

First, there’s a membership base — $99 to join and then $20 annually. Members (now in the hundreds) can drop by 24-7 and receive a 5 percent discount on all purchases. Nonmembers can get in on the action at specific hours during the day when there is an actual person behind the counter. And it’s not all that high-tech: Members and farmers use a keycard entry system, and motion-activated lights and tablets enable self-checkout. (There’s a one-theft-and-you’re-banned-forever policy.) The store, only 650 square feet, is monitored with remote cameras, and inventory is tracked digitally. As with every one of these stores, humans are still quite important. Ms. Rasmusson prices items from home and texts orders to suppliers.

Side Dish Gallery: Mom & Pop Shops

Side Dish Gallery: Mom & Pop Shops

As we conceived of this grocery-themed issue, our minds naturally went to the tech-laden big-box stores. But then we remembered how grocery began: the small, independent mom-and-pop shop. Here’s a selection of our followers’ favorite small groceries — some stores are thriving, while others are shuttered, perhaps depending on economic realities of the communities they serve.

Photos 1, 4, 5 and 7 by Robyn Metcalfe; photo 2 by Joan Phaup; photo 3 by Charlotte Herzele; photo 6 by Cole Leslie; photo 8 by Julie Savasky.

Food Movers: Confessions of an Instacart Shopper

Food Movers: Confessions of an Instacart Shopper

He’s standing near the fresh herbs, staring at a forest of tiny green bundles, scratching his head, looking up and down from his phone. I offer some help, and he asks, “Where’s the basil?” After I help him choose a perky bunch, he thanks me and mumbles, “I hate shopping for vegetarians.” He’s wearing a shirt emblazoned with the Instacart logo.

Twenty minutes later I’m back in the produce section, and the man is still staring at herbs, looking defeated. “She wants fresh sage, not dried sage. What is it with these vegetarians?” he grumbles. In his defense, none of the herbs are labeled. I point out the fresh sage and wish him luck.

Those increasingly ubiquitous personal grocery shoppers roaming the aisles at a supermarket near you are paid a per-order bonus in addition to the minimum wage they earn per hour. The more orders they can complete in an hour, the more money they can make. But when they can’t find the right fresh herbs, like the shopper I encountered, their slowed quest results in fewer completed orders that day: in other words, money left on the table.

“If you do enough orders in a day and you’re really fast, you can make a lot of money,” explains a different Instacart shopper nearby.

Personal food shopping services have grown by leaps and bounds in the last few years. In Austin alone, six companies offer a range of personal shopping and delivery services at more than 10 stores. Nielsen’s Food Marketing Institute predicts that by 2025, 70 percent of consumers will be purchasing consumer packaged goods online. According to One Click Retail, Amazon already holds 18 percent of all online grocery sales.

That said, grocery shopping can be deeply personal. Customers have habits, preferences and quirks that retailers must accommodate with their third-party hand-picking-produce abilities.

“Ask anyone at HEB if they’ve had to find tahini and they’ll tell you, yes, it’s the hardest thing to find, and everyone wants it.”

As one shopper explains, “The people at Whole Foods are, well, ‘Whole Foodsie,’ ordering $50 jars of honey” and giving picky instructions about their produce. Because of this fastidiousness, online grocers started out offering only consumer packaged goods — pantry items like rice, beverages and breakfast cereals. But lately, most businesses have developed strategies for also offering fresh produce.

Still, online grocery shopping has room to grow. Less than 10 percent of customers in North America buy their fresh groceries online, according to Nielsen. Companies like Instacart have developed technologies that enable customers and shoppers to communicate as the shopper moves through the store. It’s a handy way to reassure customers that they’re getting exactly what they want. But shoppers may find their flow disrupted by picky comments such as, “Can you make sure to get the salmon that’s fourth from the back with the horizontal grill marks?” Or more frustrating: “I’m allergic to that brand.” Customer demands can get extreme, and shoppers feel the need to be polite even as they try to round up everything on their list.

Each company operates slightly differently for shoppers, who tend to stick to one company and one unique store. One exception is Burpy, which operates like the Uber of grocery delivery. Burpy shoppers may fulfill one order with products from a variety of stores. Shoppers are also paid differently depending on the company, ranging from minimum wage with bonuses per order, to flat hourly rates, to tips only. Shoppers generally work flexible schedules, which makes it an attractive second job or a good fit for students.

Regardless of payment criteria, speed matters. Shoppers create efficient strategies for moving through stores. Texas regional grocer HEB even has a digital platform that sorts a customer’s order according to the store’s unique layout, creating a “perfect workflow.” But despite deep store experience and superior technology, some items are still elusive to shoppers.

“Tahini,” one shopper says. “I’ve worked at five HEBs, and every time it’s a wild goose chase. I think it likes to hide itself. Ask anyone at HEB if they’ve had to find tahini and they’ll tell you, yes, it’s the hardest thing to find, and everyone wants it.”

Even when shoppers find everything on the list, customers must still get the groceries home. Because customers see only an itemized list, they often don’t realize how large their order is — an especially risky scenario when it’s for a pickup service or orders from Costco. Sizable orders of bottled beverages pose serious challenges.

“They pull up, and we’re dragging out three carts of groceries, two of which are full of bottled water, and they pull up in a VW Bug,” complains an HEB Curbside shopper. Amazon Fresh shoppers experience the same problem: “People will order 40 boxes of La Croix seltzer, and it’s crazy! You need eight shopping carts and that’s a lot of work.”

Despite the interconnected relationship between shopper and customer, an interesting disconnect remains. Shoppers frequently work in stores in which they do not personally shop, and often shoppers are asked to select items out of their comfort zone, like fresh herbs or fine wine. It begs the question: Can personal shoppers overcome these barriers to make this platform the future bread and butter of grocery shopping?

On Our Loading Dock

On Our Loading Dock

Our nightstands are loaded with books to read, and our laptops are packed with websites to explore and unpack wisdom about the global food supply chain.

Books

The Omega Principle (Paul Greenberg)

The author of several books about our seafood, Paul Greenberg takes us for a deep dive into the merits, demerits and challenges of Omega 3, a nutritionally beneficial fatty acid found in seafood. As you might imagine, the consequences ripple right through the seafood supply chain.

American Catch (Paul Greenberg)

In another book, Greenberg uses stories about three types of seafood — Eastern oysters, sockeye salmon and shrimp — to chart the rise and fall of American fisheries.

The Plant Paradox (Steven Gundry)

If you think eating bread makes you fat, you might find an argument in this book to support your theory. There’s lots of debate between these covers, and nutritionist Steven Gundry will give you reason to reconsider the science behind most diets.

 

The Great A&P and the Struggle for Small Business in America (Marc Levinson)

For some history about mom-and-pop stores, in the context of the grocery juggernaut that was A&P (aka The Great Atlantic & Pacific Tea Company), read Marc Levinson’s book about the grocery giant. A&P threatened Main Street stores long before anyone had ever heard of Walmart.

Podcasts

Eat This: Our Daily Bread series

We continue to be fans of Jeremy Cherfas’ “Eat This Podcast.” Recently, he explored every angle and story about wheat in at least 31 micro-episodes. You will learn about Red Fife, sourdough, bakeries, mills and more. We love enthusiasm, and Mr. Cherfas’ zeal takes us to a very complicated slice of bread. 

Planet Money

Born out of the financial crisis in 2008, National Public Radio’s podcast about the economics of everything covers food in unexpected ways. From the cost of popcorn in a baseball stadium to the concept of “free” food, Planet Money is full of insights about the role economics plays in how we eat.

Food52’s Burnt Toast

Since 2009, Food52 founders Amanda Hesser and Merrill Stubbs have curated this community-based trove of kitchen goods and recipes. Their podcast, “Food52’s Burnt Toast,” will elucidate just how your toast burns — and why. Such a simple food, with a complicated twist.

Article

We found another ingredient map in the article “Deconstructing the Environmental Footprint of a Sandwich” in Anthropocene. You may never again order a meat sandwich. Check out the first issue of Food+City for our map of the ingredients for a sandwich made in Austin.

Film/TV

Anthony Bourdain’s Parts Unknown

The passing of food legend Anthony Bourdain is a good reason to review (or re-view) his award-winning Parts Unknown. It’s worth 
reconsidering every episode in appreciation of his close-up view of food and the people around the world who make it.

Ugly Delicious

As our screens flood with documentaries that shame and disgust us, we are ready to see a new take on the food world. David Chang does this with his series about ordinary food made by ordinary people. The series also has helpings of Chang’s personal story about his beginnings as a chef and his conflicted relationship with Korean cuisine.

Water and Power: A California Heist

Food production relies on water. With fires raging in California during the summer of 2018, water resources for firefighters were even more scarce. Long the focus of battles between environmental conservation activists and economic development advocates, water resources are hotly contested. If you want some historical context for this topic, check out the PBS “Cadillac Desert” series, especially “Mulholland’s Dreams.”

Investing in Tomorrow’s Food Chain: Walter Robb Moves Forward

Investing in Tomorrow’s Food Chain: Walter Robb Moves Forward

Former Whole Foods Market co-CEO Walter Robb acknowledges that during his 26 years with the company the grocery giant helped usher in a new way of thinking about food — from farming to grocery shopping. Today, as an investor and advisor to food system startups, Robb is poised to influence the conversation again.

Walter Robb is the first to admit that it was not pre-ordained that he would become one of the modern era’s gurus of good food. After graduating from Stanford, he planned to become a lawyer, but he only lasted a week at law school. Next he tried being a teacher, a soccer coach and a farmer. None was the right fit.

In 1978, he borrowed $10,000 to open a natural-food store in an old garage in Northern California. He later sold his second store in 1991 to Whole Foods Market. By 2010, Robb was co-CEO with John Mackey, the visionary founder of Whole Foods. Sam Kass, the former White House chef and policy director for Michelle Obama’s “Let’s Move” program, says Robb has done as much to change the food system as anyone in America.

With Amazon’s 2017 acquisition of Whole Foods, Robb, 64, is starting a new chapter. Through his firm, Stonewall Robb, he’s an investor and an advisor to innovative food startups. It’s a natural next step for him — after all, he got a $10 million payout when he left Whole Foods. But his acolytes will not find Robb a typical investor. He is thoughtful, rather than brash and obsessed with disruption. And unlike many technology investors, he is not searching for silver bullets. After 40 years in food, he understands the complexity of the food chain and knows that culture and conversation will be as powerful as technology in creating a more just food system. Robb talked to Food+City contributor Jane Black about what he looks for in a startup, the importance of creating a company culture, his hopes for the Amazon-Whole Foods deal and the future of grocery stores. Excerpts, condensed and edited for clarity, follow:

Jane Black: If you Google Walter Robb, the one thing you’re definitely going to learn is that your favorite food is lentils. Lentils?! Have you always been a healthy eater?

Walter Robb: No, I wouldn’t say. I grew up in a typical upper middle-class family. We had piggies in a blanket and we had Bird’s Eye frozen vegetables — stuff like that. It wasn’t really until I got to college that I opened my eyes to some of the healthier foods and started making my own bread and that kind of thing.

Black: College isn’t usually where kids start to eat healthy.

Robb: Well, in my sophomore year I started really reading [about food]. I read Wendell Berry’s book, “Culture and Agriculture, the Unsettling of America.” And that was pretty exciting for me. And I read Frances May Lappe’s “Diet for a Small Planet.” Frances was speaking in San Francisco at Food First on Mission Street, so I went to hear a couple of her lectures.

Then I also met Alan Chadwick (a pioneer of organic gardening in California). And I spent time apprenticing with him. Between all those things, my interests in healthy eating, the soil and healthy living overall sharpened up. It kind of started me down the path.

Culture is the sum total of the humanity of the company. It’s where the culture and values come alive with a presence. It’s: How does it feel around here? How do the customers feel? How do the team members feel? That’s what culture really is. It’s an alive thing.

Black: Jumping ahead, you joined Whole Foods in 1991 and rose through the ranks. In 2004, you were named co-president. In 2010, you were promoted to co-CEO. What do you think was your biggest contribution?

Robb: It’s always tricky to say stuff about yourself. But look, I think I was part of the core team that really helped Whole Foods change the conversation about food in America. So, I’m very proud of that. I think I’m a good retailer — at the craft of retailing. I love it. My number-one quote over the years was this: “We’re not so much retailers with a mission, as missionaries with retail.”

I think I’ve definitely helped to shape the retail and culture of Whole Foods, which, as you know, is one of innovation and experience.

Black: Which leads perfectly to my next question. As the food world shifts to be much more technology focused — Amazon’s purchase of Whole Foods is just one indication of the trend — how does the culture you created survive?

Robb: Well, I think you start by realizing that culture is a living, breathing thing. Culture is the sum total of the humanity of the company. It’s where the culture and values come alive with a presence. It’s: How does it feel around here? How do the customers feel? How do the team members feel? That’s what culture really is. It’s an alive thing. It continues to evolve in a way that’s malleable, and, at the same time, that it’s anchored in the values.

So now the great question is: Will two wonderful companies [with their own strong cultures] have the courage, the wisdom and the humility to learn from one another, to learn from one another’s cultures?

At Whole Foods, we acquired 19 companies under my tenure as co-CEO. It takes about two years for two companies to really come together. So the answer to your question is, it’ll happen over time. But it will require efforts on both sides to really be thoughtful about how it’s happening.

Black: What are the big issues you see coming up in food?

Robb: There’s a new set of issues up on the table. Like food waste, like imperfect produce, like farm worker health, like full transparency on product. This new generation is going to look for a more, if you will, whole foods system. In other words, one that is more fully transparent, more responsible, [with] more options.

One startup in which former Whole Foods Market co-CEO Walter Robb has invested is HeatGenie. Its innovative self-heating container safely warms the package’s liquid contents — coffee or soup — within a couple of minutes, right in a consumer’s hand.

Black: What are you working on to address these new issues?

Robb: I’ve picked some companies to invest in and serve as a director. Food Maven [a Colorado startup that sells excess food acquired from producers and distributors to restaurants and institutions at a discount] came through Grant Lundberg, the CEO of Lundberg Family Farms. He reached out to me and asked me to talk to his cousin Patrick Bultema, who’s the CEO in Colorado Springs. And I guess it was just meant to be.

I’ve been troubled as a grocer for a long time about the food that gets thrown away. About 40 percent of food grown is wasted. It’s produced, there’s too much supply and about one third of what goes to landfills is food. It’s time for that to be met with some sort of thoughtful solution. I realized, “Wow, this is something we haven’t really worked on.” Here’s an area [in which] we can make a real change. I was drawn to that. I like working on things that matter. I like working on things that have a purpose, and [working with Food Maven has been] a great opportunity to work with people I enjoyed and to try to work on something that I know needs to be done. So that was an easy one.

Heat Genie came through Danielle Pruitt, my other half. She knew Mark Turner, the CEO. It is a technology that allows a can to self-heat in about a minute and a half. Think about it. Not only do you create new products for customers [such as self-heating coffee, soup etc.], but … think about disaster situations where hot food is needed.

I liked it for that reason. I thought the company had a missionary aspect. It’s a leading-edge technology for something that hasn’t been done before, but with applications where it could make a real difference in people’s lives. Black: So it’s the fact that all of these companies has a mission that drew you to them? Robb: The criteria are a great young entrepreneur or CEO, a sense of mission or purpose in the company’s work and a commitment to building a culture that’s good for the people at the company. They need to understand and appreciate those things.

I think I look for something that’s a forward movement into the future, right? So we’re creating something that doesn’t yet exist and that is going to help shape the world. Not just something that’s been around forever that’s just kind of trodding along, but something that’s going to open new opportunities and new growth.

Black: What parts of the supply chain do you feel really need the most attention in food?

Robb: I think number one is transparency. Number two, I’d say, is quality. I’d say quality and standards so that the transparency leads us somewhere, that it’s not just an obfuscation exercise.

[Adaptation] to the digital world is also important so that it’s easy for customers to access that information and to inform their choices, and this will also help companies to evolve faster. The last big thing is the food waste.

Black: OK. The questions everyone wants answered: What is going to happen with the Amazon purchase of Whole Foods? What can Amazon do, given their position, to take good food to the next level?

Robb: Well, I’d love to see them continue to reach the full potential of Whole Foods. Whole Foods was built to endure, to be around for hundreds of years. Built to make a permanent shift in the food landscape. I’d love to see Amazon continue to honor that and accelerate it into the future. That may be self-serving because I was there so many years and it’s so much a part of me, but I’d love to see that happen.

The second thing would be to propel a more nuanced conversation about food. This often is a conversation about “Is it cheap enough?” But the reason food is not “cheap enough” is there are so many tradeoffs in the production of the food that folks don’t always know what they’re getting.

So how do we more, I don’t know, more articulately, more intelligently, more holistically approach this question about cost and quality? In the end, there always is a set of choices for people. How do we make organic food, more natural food, less expensive, but not so cheap that it loses the reason for being? How do we make people more aware of the costs that in cheap food are really not being reflected, and the costs that are happening as a result of having it? So how do we raise the quality of the conversation about that?

Telegraphing the High Price of Cheap Food

Walter Robb argues that consumers need help to make more responsible choices about what they eat. But how?

One idea: True Cost Accounting, an emerging method that tries to pin precise dollar figures on the social, environmental and public-health consequences of food production. It’s a way to price a steak to include the costs of raising and slaughtering the animal as well as, say, the cleanup costs of associated water pollution.

How to account for these “externalities” is tricky. In 2016, some 600 economists, farmers, policy makers and advocates gathered in San Francisco to discuss new ways to categorize, quantify and monetize the food system’s externalities – and, equally important, how to message it to consumers. “We need to provide the context behind stories without overwhelming our audiences with complexity,” said the Consumers Union’s Urvashi Rangan. “You give the bad news, but you also have to give people a message that empowers them and puts them in the driver’s seat.”

Black: What about all the drones and robots we hear about? Will there even be grocery stores?

Robb: Absolutely, because the need and desire for human connection is ever-present. What’s exciting about robotics is that they are already being used extensively in distribution and in physical stores as a partner to team members, doing things like checking store conditions and out-of-stocks. In Wake Fern, a grocery chain out of the southeast, you’ll see robots going up and down the aisles doing their work, increasing the productivity of the human workers. It’s already part of the grocery store. But there’s a tendency to overstate the high-tech narrative right now — that everything will be replaced.

Black: What will grocery stores of the future look like?

Robb: The world is tilting toward fresh and artisan and the true craft of food production. Soon, we’ll see [stores] in different forms and sizes. I think the big stores are in trouble; people don’t want to shop at them anymore. The whole way people get food is changing. We have so many options for food, whether it’s a meal kit, pickup or eating out. You don’t have to go to the store all the time. The grocery store is just one option. There will always be a market, but even more, it has to serve as the town square.

More broadly, the grocery store of the future will have no boundaries to it. Even though it’s a physical store, it will reach all the way into your home and even walk around with you. Imagine a Whole Foods refrigerator. You set it up on an app, pull it up on your phone, order what you want and have it there when you get home. There are also virtual reality technologies, like one from a company called Spacee, that allow you to project images of the store onto, say, a wall and enable delivery from that image.

Black: So much of this is about convenience and more personalized food. What needs to be done to create a better food system?

Robb: We need a true north. I believe in the quality of food and the transparency and the access of good-quality food, and an inclusive food system for workers and eaters. I don’t know if everyone would agree with that.

Customers are pushing hard for transparency and more information, more choices. But there are different sets of customers who can afford different things, and they are supported by commodity suppliers. These two [food systems are] running in parallel. They have different value systems.

History suggests from our experience at Whole Foods that change is possible. There are setbacks, of course. The current White House shelved a rule around animal welfare for organic that was in the works for three years. It’s two steps forward, one step back.

But directionally we aren’t going to go back. It’s a combination of things, over time, that will lead to change. But if there’s one thing we need to keep working on, it is these gaps of access and availability. We produce enough food, but it’s not finding its way to the people who need it. I would hope that the north star is an ever-increasing availability and accessibility of food that nurtures and sustains our bodies and our communities and our country. That’s what I’m going to keep working on.

Watch Walter Robb discuss business culture, a leader’s vision and how to find your passion in a Duke University video.