Gregor Ulitzka on the latest European online grocery trends

Gregor Ulitzka joined Ocado Group in 2023. For over twenty years, he has successfully led multicultural teams from international grocers like Metro to technology giant, Amazon. As President of Europe for Ocado Solutions, Gregor leads our work supporting grocery partners to grow and dominate the online channel in their markets, delivering big operational efficiencies, and introducing a step change in customer experience. He is also responsible for expanding the reach of the Ocado Smart Platform to new partners in new markets.

In this interview, Gregor shares his insights on how the online grocery market is developing in Europe, why the right kind of technology investment is essential, and the big milestones we have reached over the past year at Ocado. 

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‍After working in ecommerce and grocery for over twenty years, you’ll have witnessed your fair share of changes in both industries. What do you think are the biggest questions facing decision makers in online grocery today?

Ecommerce has now been part of the grocery mix for more than 20 years, yet most businesses still struggle to make it work economically. For most of the last two decades, many grocers were happy to absorb the extra costs (mostly manual labour costs) of fulfilling online grocery. They would either charge a premium to customers to cover those costs, or they would make a loss on the channel while keeping it a small part of their business. 

Neither of those options is acceptable anymore in mass market grocery. Online is the fastest-growing channel in grocery, approaching or exceeding a double-digit share of sales in many markets. At this level, you can’t accept a loss on every order anymore, and you can’t charge a premium to cover costs or customers will go somewhere else. At the same time, both the costs and the availability of labour have tightened. So grocers are under pressure both at a demand and a supply level to find the right response.

The question of, ‘How do I build a profitable business online with a competitive customer proposition?’ can’t be pushed down the boardroom agenda. It’s an urgent topic.

One of the big failings that we've seen historically has been that retailers have focused on parts of the grocery supply chain, like building a good online store experience, creating an efficient upstream supply network or delivering the most efficient last mile. Yet, excelling in just one area is not enough. Online grocery is a decathlon; you need to be strong at every activity, turning incremental wins across the value chain into large impacts on overall margin. That’s where Ocado comes in, connecting every aspect of online grocery by understanding the dependencies end-to-end.

It's been a tumultuous time for grocery with retailers impacted by covid changes, inflation, and a long period of uncertainty. What are the most significant opportunities for Ocado and our European partners?

Online grocery is everywhere, but in lots of markets the quality of the customer offering is not yet where it needs to be. There are huge opportunities for retailers to develop the market and enhance consumer perception.

More than most other industries, grocery on the whole remains a local game. What do I mean by that? Well, if you look at the major grocery markets around the world, the large majority of them are still dominated by local players; home-grown brands with deep roots in their communities.

Ocado has a significant opportunity, as we can tap into multiple inputs and innovations from the work we do with our global partners. We’re currently supporting 13 partners - most of them market leaders in some of the most diverse grocery markets in the world. 

These grocers would normally not interact with each other, but because they are all connected through one platform, we are able to transfer learnings and innovations from one market to another. That's a huge opportunity for our partners and for us because we're learning, and applying these learnings, every day to drive a stronger customer proposition within these markets.

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How do you think the online grocery market in Europe is developing? What are some of the key trends—both in terms of customer behaviour/demand and strategic priorities for online grocers?

I don’t believe that there are fundamental differences across markets regarding how they view online grocery. Everyone likes the output – cooking and consuming meals with friends and family – but most people would opt for a more convenient route to get their groceries if the service and value were good enough. There is no doubt that online grocery will continue to scale over the next decade across Europe, but the players who will take the greatest share will zero in on the customer experience. 

Look at our UK business, Ocado Retail. The company has been running for more than 20 years, and for the last 7 months it has been the fastest-growing grocer in the market, according to Kantar. In the online channel, it is growing at 4x the rest of the market. How do they do this? Focussing on what matters to the customers, and honing in on the differentiators that are essential in online - range, value, personalisation and perfect execution. 

Our international partners are talking about how the Ocado Smart Platform sets a new bar for customer experience in online grocery. Both Kroger and Sobeys are seeing a positive impact on NPS. Sobeys President and CEO, Michael Medline expressed how Voilà, their online brand had “the highest NPS scores by a mile” across Canada. Yael Cosset, Kroger CIO, reported the company’s NPS scores were among the highest in digital retail.

Grocery retailers have an amazing source of data in online. Online grocers can acquire every data point imaginable, including when customers shop, how often they shop, what they shop for and how they shop. I have seen a few grocers that combine their online and store insights to truly understand their customers.

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How do you think Ocado stands in the busier online grocery space, and what key developments have you seen this year? 

We have a head start of 24 years working in the online grocery space versus six or seven years for most other pure players and even less for some established grocers. These 24 years have provided a lot of learning, experience, and depth, which has accumulated in the cutting-edge technology we’ve developed. 

This year, I have been excited to see our technology extend across new markets and geographies. Two notable developments include; Alcampo launching their first CFC in Spain and Auchan Retail Poland completing the rollout of In-Store Fulfilment (ISF). In-Store Fulfilment has been fascinating to watch this year, giving our partners the opportunity to scale their online grocery operations within existing stores. In some cases, this has almost doubled their manual fulfilment productivity vs their previous methods. In-Store Fulfilment is a great step on the road to profitability, allowing retailers to scale economically from efficient store solutions to unbeatable automated technologies.

The adaptability of our portfolio of solutions is also incredibly impressive with our technology continuing to shapeshift to address new environments. Some examples of this flexibility include; aligning our technology to suit seismic conditions and space density challenges within crowded cities.

The end of 2024 is promising to be just as exciting, as we continue to work with our partners to unlock new growth opportunities within the online grocery space.   

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Today’s retailers are facing many economic challenges. How can they gain the best value for money in their investments when serving online grocery?

‍At its core, online grocery operations for retailers encompass various costs to consider—ranging from property to capital, labour, energy, and food waste. Different approaches emphasise varying aspects of these costs. In online grocery, maintaining margins is crucial.

We advocate for a systemic shift in how we perceive this issue. Our focus is not on short-term profits at single points in the process but on leveraging advanced technology, robotics, and automation to enhance efficiencies and provide value throughout the entire grocery supply chain. This strategy makes online grocery more profitable and enhances the customer experience simultaneously.

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Ocado has 13 partners, in a diverse range of markets. Are there common denominators for success across these, and what advice would you give to today’s grocery retailers on how to stay ahead? 

In the online world, there’s a vast difference between a ‘good enough’ proposition and an outstanding one—and only the latter will attract and retain customers in the long-term. Across our partners, there is a clear formula to success, with the outstanding propositions focusing on: ‍

• Reliability: this is a non-negotiable. Can your customers rely on you to deliver the same quality of service each time?

• ‍Range: a key factor in building customer loyalty and expanding baskets is a broad range. As competition becomes fiercer, customers expect to be able to get whatever they want - from groceries to general merchandise, especially when shopping online.

• ‍Price competitiveness: to deliver value, online grocers need to focus on end-to-end efficiency from ecommerce to the last mile, utilising technology to drive efficiencies and improve the customer experience at the same time.

I'm often asked what the secret is to online grocery. For me, it all boils down to end-to-end experience for shoppers - that's what really matters. So the real question for retailers is, "How can I invest in technology to fundamentally shift the proposition for customers and drive efficiencies at the same time?" This is how retailers will leapfrog the competition and establish long-term advantage.

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About Gregor Ulitzka

Gregor joined Ocado from Amazon, where he built and scaled the vendor-facing supply chain for over 10 years. Gregor spent the previous 13 years in Grocery at Metro in European Leadership roles where he started in Buying and Category Management to move on to become a Senior Director in Solutions and Systems.