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Natural Foods Merchandiser

New virtual grocery store Peapod lets consumers shop while they commute

New virtual grocery store Peapod lets consumers shop while they commute
Peapod's new virtual rail program allows commuters to shop, scan and schedule grocery deliveries—all from their smartphones. Is the model a threat to natural products retailers who also cater to convenience-hungry shoppers?    

Quick, convenient, easy—there's a lot for consumers to love about Peapod's new virtual rail program that allows shoppers to buy groceries while commuting. There are also plenty of reasons for natural products retailers to stay informed about the new store model.   

This month, Peapod, a leading Internet grocer, placed a virtual grocery store at a train stop along Chicago's highly traveled CTA line. Just like shoppers would see in a brick-and-mortar store, billboards feature aisles stocked with household and grocery staples from brands such as Coca-Cola, Barilla, Procter & Gamble and Kimberly Clark.  

After downloading a free Peapod mobile app, shoppers can use their smartphones to scan the bar codes of products featured on the billboard.

"People always want to save time, and we're showing consumers that shopping can be done anywhere and at anytime," said Elana Margolis, manager of corporate communications at Peapod. "This model really pushes the idea of convenience which is what we're all about."

Thus far, the virtual retailer has only been approached by one natural products manufacturer interested in being included on a billboard, but it may not be long before the model catches the interest of other natural brands suspects Bill Crawford, director of retail programs at New Hope Natural Media.

Peapod's potential

At the Chicago stop, 7-foot tall virtual shelves line both sides of the 60-foot tunnel which in addition to helping Peapod sell products, could be a great marketing and advertising tool for companies, he said.  

If more natural brands get involved, the convenience factor of shopping on the go could lure busy moms and boomers—two major segments targeted by brick-and mortar natural products retailers.  

Already, other online retailers are buzzing about the potential of the Peapod model.

"Just knowing all that goes in to fulfillment and shipping, to be able to do this is quite exciting," said Sariah Smith, executive purchasing manager at Green PolkaDot Box, a direct-to-consumer natural products retailer. "It seems like a very grand undertaking that may impact the entire online retail model."

New to the U.S.

Peapod's virtual store isn't the first of its kind. Last July, Tesco, a British grocery chain, unveiled a similar model at subway stations in Seoul, South Korea.

Peapod brought the idea to the U.S. last month at Philadelphia train stations and received positive feedback from commuters, Margolis said. The newest Chicago location along the city's bustling red line was selected for being a high-traffic area. The train stop averages 17,640 commuters each weekday, the Chicago Tribune reports.

After a 12-week test period, Peapod will determine if other Chicago locations will be added.

How can natural products retailers compete?

Without a sizeable investment in technology, marketing and staffing, it would be hard for a natural products retailer to offer a similar business model, Crawford said. But there are ways to compete.

"Paying extra attention to key items to ensure that they are never out of stock is one thing retailers can do," he said. "If a product is out of stock, retailers can offer to call or ship orders to a customer's home."

In the March 2012 issue of Natural Foods Merchandiser, Kyle Faino, director of ecommerce and marketing for Seattle–based Super Supplements offers the following additional tips to help brick-and-mortar stores compete with "virtual" competition.

  1. Know your customer.
    Understand exactly what your customers want and what they perceive as value. It might be service. It might be selection. It might be exposure to exciting new products.
  2. Make shopping simple.
    When Super Supplements created its online channel, it set up a “Send-to-Store” option that allows customers to shop online and pick up orders at one of our retail locations. Also, customers can purchase online but initiate a return at the physical store and vice-versa.
  3. Create an experience.
    Supper Supplements feels good when customers leave its stores with the right products for their individual needs or goals. It's even better when customers leave feeling well taken care of, better informed and inspired to live healthfully. To facilitate this, the retailer provides ongoing staff education and remodels its stores regularly. Both stores and customer service are designed to provide an accommodating place to browse, learn and shop in ways that discount-centric stores would have a hard time matching.
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