SimonDelivers More

At Nash Finch, she met Christopher Brown, the company’s executive vice president of merchandising. When Brown became CEO of SimonDelivers in 2003, he asked her to join him.

Company research was showing that convenience wasn’t enough by itself to get people to shop SimonDelivers regularly. So when Brown left and Ojala became president, she and her executive team set themselves the task of uncovering what more they could do to instill loyalty.

Improving their Web site was one thing. It now alerts customers if items they click on are already in their cart. “We surveyed our customers: What was the number-one thing we did in 2007 that you loved about the Web changes we made over the last several months? And that was one of the top things they said,” Ojala says. There’s also a new page on the site—“The Best of Today’s Produce”—that describes the quality of the fresh perishables available that day.

Like other grocers, SimonDelivers has picked up on growing consumer demand for local, organic, healthy, and quick foods. It offers from 400 to 500 “Local Favorite” products, which include Peace Coffee and Izzy’s Ice Cream, along with “stories” of the companies that make them.

Last year, SimonDelivers began partnering with the Mayo Clinic and Real Simple magazine to develop health-conscious recipes. “These are healthy, quick meals that you can make with products that are either prepackaged or just simple perishables,” Ojala says. The online recipes incorporate a click-through feature—choose a recipe, and the site will automatically place the needed items into your cart.

But what about something else shoppers demand—namely, low prices? Ojala says SimonDelivers is at the same price points as higher-end supermarkets in the Twin Cities—Byerly’s, Lunds, and Kowalski’s. “We do an automated check to see how we’re doing, to make sure that we’re in alignment,” she says. This checking also is done through store visits.

And the checking goes both ways.

Fresh Competition

The same month that Ojala became president, SimonDelivers got some direct—and big-name—competition when Edina-based Lund Food Holdings, which operates the Lunds and Byerly’s supermarket chains, started its own online grocery service.

“We’d been looking at it for quite some time, thinking that it would represent our brand very well to be offering this service,” says Kevin Baartman, vice president of information services for Lunds and Byerly’s. “And then we started getting customers asking us as well . . . . We thought we’d start taking a look at it, knowing that as a market, it’s going to continue to grow.”

Operations VP Chris Servais says, "We need to be almost perfect in what we do. It's like just-in-time parts in vehicle assembly. We have that same kind of concept with our seafood and some of our bakery items. They arrive just in time to be placed in the order."

Lunds and Byerly’s offer about 15,000 items, compared to SimonDelivers’s 10,000. Baartman says his company services “hundreds of customers per day” via the Web. Lunds and Byerly’s add a service charge of $6.95 per order—a nickle less than the standard charge from SimonDelivers. Online customers also have the option of making a drive-through pickup of their “shop” at any of the five Byerly’s stores. The service charge in that case is $4.95.

Instead of setting up a dedicated warehouse, as SimonDelivers has done, Lunds and Byerly’s use a “store-pick” approach. “Personal shoppers” working at the store that’s closest to the customer handpick the requested items, which are then packed in the back of the store and sent out on one of 14 delivery vans. (SimonDelivers has a fleet of 70 trucks.)

Another difference from SimonDelivers: Customers need to be home to take delivery. “It’s our brand of service to have someone to be there and greet the customer,” Baartman says. “And any food safety concerns, you want to limit those.”

Beyond that, he adds, the personal shoppers are customers’ surrogates in the store: “If they want their steak cut a certain way, if they want their bananas a certain ripeness, they can personalize that shopping experience.”

Ojala doesn’t mention any competitors’ names, but says she’s skeptical about how well a store-pick model can work. “It’s very difficult to pick out of a store to compete with consumers in the store,” she says. “They have to figure out how to get [the personal] shoppers to shop while your typical shopping hours are also going on. Or stay open so some of that shopping gets done [earlier or later].”

With all the labor, maintenance, and IT needed for efficient picking, packing, and truck routing, “this is an expensive business model to maintain,” Ojala notes. “It doesn’t help that gas prices are higher, that food prices are expected to get higher in 2008.”

It also doesn’t help that, the experience of young Cameron notwithstanding, the vast majority of people still do their shopping at the supermarket.