Addie’s, the latest player in the pickup-only grocery sector, has opened its first concept store in Norwood, Mass.
The 22,000-square-foot outlet was designed for stocking, storing, and bagging groceries without the need for shoppers to enter the outlet.
Addie’s said its system is an improvement over the curbside pick-up of traditional supermarkets, which it claims is inefficient, unreliable, and unprofitable citing few available time slots, low-quality produce, service fees, and frequent out-of-stock items, resulting in frustrated shoppers.
The retailer stocks more than 4,000 curated items, including selections of national brands and local favorites, and will constantly improve its assortment based on customer searches and requests, Jim McQuade, Addie’s co-founder and chief executive officer, told Supermarket News.
“We will regularly solicit customer feedback on our offering,” he said.
Shoppers purchase groceries through the store’s custom app or website and can choose a pick-up window that fits their schedules.
By designing the store as an onsite warehouse with convenient drive-up, Addie’s claims it will realize major cost savings.
McQuade said the two biggest factors in reducing expenses are the elimination of non-value-added labor and the reimagination of the physical store.
“Traditional supermarkets carry excess inventory to maintain a sense of visual abundance,” he said. “Supermarket associates need to constantly restock shelves to capacity and physically rotate items to ensure that all labels face the same direction. With weekly price changes, they need to replace up to 30,000 physical stickers to reflect those new prices.”
There also are large savings from having less refrigeration, McQuade said. He noted that traditional supermarkets operate modular refrigeration units to display cold and frozen products to customers, such as open-air yogurt cases that he said cascade cold air onto the store floor that is simultaneously being heated for customer comfort.
“These small units are expensive to purchase, install, operate, monitor, and repair,” McQuade said. By contrast, Addie’s uses less expensive bulk refrigeration consisting of one large walk-in cooler and one large walk-in freezer, he said, adding that received pallets and cases are put directly inside temperature-appropriate storage to ensure continuity of the cold chain better than traditional supermarkets.
Addie’s claims it uses a quarter of the energy required for a regular supermarket.
“The result is both lower cost and higher quality for customers,” McQuade said. He noted that “We take out more cost than we add back in doing the work of collecting and delivering orders to our customers’ cars, work that customers must do themselves in a typical supermarket.”
Addie’s cost-saving measures are enabling the company to offer workers a $20 per hour starting salary, regardless of experience, with supervisors earning $27 an hour.
The retailer’s goal is to grow to 2,000 stores, McQuade said. “We have a lot of work ahead to get there, but this first location in Norwood has already demonstrated that we can delight customers reliably and profitably. We are in active discussions on multiple new locations.”
Addie’s received $10.1 million in seed funding led by the Disruptive Innovation Fund, the venture capital arm of Boston-based Rose Park Advisors.
“The 100-year-old grocery business is not immune to disruption,” Matt Christensen, chief executive officer and managing partner at Rose Park Advisors, said in a statement. “The traditional business model of in-store shopping makes serving convenience-focused shoppers highly challenging. We see disruptive potential in Addie's technology-powered drive-up grocery model.”
The opening of the Addie’s store is just the latest in pickup-only brick and mortar. Earlier this month, JackBe opened its first location in Edmond, Okla., with two additional Oklahoma City-area outlets scheduled to also operate this year.