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Food for thought Groceries growing online

Supermarkets to startups, industry is finding ways to use the web to do business

In an era in which few traces remain of what business was like prior to e-commerce, the food industry straggled in getting online — with sales on the web accounting for as little as 1 percent of total food and beverage purchases in years past by some estimates.While still relatively underdeveloped compared with other retail channels, the industry seems ripe for growth, as recent stories from companies with a local presence suggest.

Only months after the New Jersey launch of direct-to-consumer meal kit startup HelloFresh, in February 2015, the company opened a 44,000-square-foot warehouse and storage facility in Linden.

And then, within about a year, that Germany-based startup was already looking to occupy the 352,000-square-foot space in Newark it’s in now.

“Since starting (in New Jersey) in June 2015, we’ve seen the business grow exponentially — from three or four times the size we were in just over a year and a half,” said John Reeves, the director of HelloFresh’s New Jersey distribution center. “With growth comes a lot of opportunities — as well as some challenges, but they’re good problems to have.”

One of those challenges for the company, which entered the increasingly competitive field of businesses offering subscriptions for people to have ingredients for recipes delivered to them, is on their supply side.

“Six weeks in advance, we might need to tell a supplier we need 16,000 jars of mayo for recipes; but if, instead, we need 80,000, it’s not so easy for them to procure that,” Reeves said.

Another challenge stems from labor.

“If you’re growing at the rate we’re growing, a good amount of the workforce is temporary labor,” he said. “With those employees, it’s sometimes hard for us to get them bought into the process and idea of the company.”

Reeves said the startup has been developing a good system for onboarding, adding that being in Newark and near the New York metropolitan area has allowed the company to have access a quality pool of talent to pull from.

“We’re very excited to be in New Jersey,” he said. “And Linden was a great city to work out of, but they just didn’t have the infrastructure for us.”

At the same time that food companies with nontraditional business models are expanding, the around $675 billion sector that is the country’s grocery business is becoming more invested in the e-commerce space, with major players such as Amazon developing an online grocery delivery business line.

New Jersey’s own Wakefern Food Corp., the largest co-operative group of supermarkets in the country, also has been adding online options for shoppers through its ShopRite brand.

Among its efforts has been an online shopping service, ShopRite from Home, which allows customers to order groceries from their electronic devices and pick it up at ShopRite locations or have it delivered.

It’s the type of program the industry is likely to see more of.

“Online customers now represent one of the fastest growing segments of our business,” a spokeswoman with Wakefern said. “We know digital is a huge part of this new world.”

E-mail to: brettj@njbiz.com
On Twitter: @reporterbrett

Brett Johnson

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