01 Jun 2017
Streamlining the Supermarket
Upsetting a trillion-dollar grocery cartRe: Jose Aguerrevere (MBA 2002); Mick Mountz (MBA 1996); Max Pedro (MBA 2002); Rafael Pieretti (GMP 20)by Francis StorrsTopics:
A new alumni-backed venture hopes robots will change how we buy our milk, bread, and eggs. In early 2016, José Vicente Aguerrevere (MBA 2002) attended a talk at HBS by Mick Mountz (MBA 1996), founder of Kiva Systems. Kiva’s small, mobile warehouse robots had brought incredible efficiencies to the order-fulfillment process at Amazon, which acquired the company for $775 million in 2012. Aguerrevere, who had founded a small-format grocery store chain in his native Venezuela, discussed the talk with Max Pedró (MBA 2002), his close friend and former sectionmate, and Rafael Pieretti (GMP 20, 2016), whom he’d known since high school. They were equally intrigued. “We thought, why don’t we use that technology to disrupt the grocery industry by bringing the same type of efficiencies to the supermarket?” Aguerrevere says.
Last November, the partners cofounded TakeOff Technologies to radically remake the traditional grocery store model. TakeOff’s micro fulfillment centers won’t host customers, so a supermarket-sized selection can be squeezed into a 90 percent smaller building footprint. And since mobile robots will retrieve products from the shelves, each center needs only about a dozen full-time employees, slashing labor costs by 90 percent. Those two innovations are expected to add up to a net profit margin of three times that of the overall industry. “And that is really powerful,” Pedró says. “You can actually give those benefits back to your customers and your retail partners.” TakeOff, based in Cambridge, Massachusetts, has already raised $10 million in funding, and has partnered with a supermarket chain to open its first fulfillment center early this fall.
As for customers, they won’t save just money—they’ll also get back a big chunk of the 100 hours they spend grocery shopping every year, Pedró adds. Orders placed online will be ready for curbside pickup in 30 minutes (home delivery will be available for a low fee). TakeOff also plans to partner with grocery stores, so that customers can shop for items like fresh produce and prepared meals while their orders for the boring stuff are gathered for them. “The name of the company, TakeOff—to us it means freedom,” says Aguerrevere.
Illustration by Peter Hoey
1.Using a smartphone or web browser, you select from as many as 50,000 items—basically the selection of a traditional supermarket—and then choose the fulfillment center closest to you, which may be attached to the back of a gas station or convenience store. “Because of their low-cost design and size [most will be 3,000 to 5,000 square feet] we can put fulfillment centers in thousands of places,” Pedró says, including urban food deserts where residents have few healthy-eating options.
2–3.When your order is received, mobile robots retrieve storage containers of products from the shelves and deliver them to picking stations staffed by TakeOff employees. It’s a more efficient system than sending employees up and down supermarket aisles, and it will result in fewer mistaken items showing up in your bags (or missing from them). “Good stores today run with 93 percent accuracy,” Pedró says. “We project 99.9 percent accuracy.”
4.Thirty minutes after placing the order, you pull into a parking bay as a TakeOff employee is alerted to your arrival. Just as you pop your trunk, the employee is there to load up the order and send you on your way. “We’re thinking of this as a pit stop: We want you in and out in under three minutes,” Pedró says.
From Baker Library:
Online spending for groceries could reach 20 percent of total grocery spending by 2025, which represents close to $100 billion in annual consumer sales. A new report from the Grocery Manufacturers Association/Boston Consulting Group cites “click and collect” as one of the “biggest changes ever in the US retail landscape.” Interested in more information about growth within the online grocery sector? Take a look at Statista in eBaker, our online research portal for alumni.