Alex Ruhter, JackBe Grocery founder and CEO, opened his new pick-up grocery store last month, and he talks about how the grocery industry has rapidly changed and adapted to changing consumers.
What are the biggest shifts in the grocery industry that you’ve seen in the last couple of years?
For starters, COVID changed things in nearly every industry. What we saw in the grocery industry was a growing trend of people that were intrigued to try out ordering ahead and picking up — for those that don’t want to go into the store or don’t have time to go in the store. COVID forced that to be a mainstream option — for nearly everybody — for a significant amount of time. And so, what we really saw in the last few years was the fast-tracking of what already was the trend, and it has now become expected for a lot of people. And all the retailers had to pivot very quickly to meet that demand and, I would argue, are still trying to figure out what that looks like.
Those shifts have led you to start your grocery business, which is quite different from the traditional model. Can you explain your concept? Why do you think this model will be sustainable for the future?
Interestingly enough, the idea for this concept came nearly 17 years ago. COVID didn’t actually bring the idea. The idea came long before that. The idea being: Every grocery store that exists in the country has historically been designed and built to serve people that come inside to shop and choose what they want. Fifteen to 20 years ago, there was already a significant group of people that would find themselves in a time crunch or a scheduling difficulty or whatever the busyness of your life looked like, where the ability to get inside a grocery store was getting harder and harder. The need for what we’re doing has existed for quite some time, there just wasn’t a framework available to achieve it. We didn’t have the technology that could support it, and the efficiencies that we now have access to, to make it sustainable as a business. What we have done at this point is, we’ve taken the online grocery submarket and we’ve built our entire company to support that thesis. We don’t have to worry about customers coming inside our store, which completely changes everything about what we’ve built. Our goal has been from the beginning that we would be able to create a model that is financially sustainable, when traditional grocery stores haven’t figured out a way to make that possible when they add it on as an external service versus what they do as the primary part of their business.
How do you foresee the industry continuing to shift in the coming year and years?
In the last few months, we’ve seen an explosion of articles discussing what the most viable option is for meeting the demand of the growing online grocery market. I recently read that by 2026, the online grocery industry will be $235 billion, which is going to be close to 25% of the grocery industry in the U.S. — an absolutely staggering number! Everyone seems to be asking the same question: What is going to be the solution that works? There have been a myriad of startups across many industries that have attempted to tap into answering that question and providing a solution. COVID, of course, brought a lot of those, but even since COVID, all the legacy grocers are still trying to figure out what that looks like. If I had to predict what will happen over the next year or two, you’re going to see companies scrambling to determine what the sustainable option is to meet this demand. We just so happen to believe that we’ve already figured it out!
How much are consumers driving these changes?
I think consumers are the only thing that’s driving these changes! For traditional grocery stores to have to service the online grocery industry through their existing business model – I would venture to say – is almost a headache for them. To think about having the staff necessary to handpick orders through a store that was designed for people to shop for themselves, and then schedule the pick-up in an efficient way so that everyone doesn’t come at the same time, I think has been an extreme challenge for a lot of grocers. So what they’re doing is they’re having to pivot in an attempt to retain customers, not necessarily attract new ones, because it seems that nearly everybody is asking for the ability to get groceries without having to go in the store anymore!
Are you still experiencing supply chain issues? If so, when do you think supply chains will not be an issue?
I think everybody is experiencing supply chain issues to some degree. We’ve felt it while building our facilities and ordering equipment. On the food side, there’s still a significant number of items that we order that we’re not able to get at the time we want them. We were aware of this as we were building our business model, and so one of our advantages is that we don’t carry the vast array of variations that a typical grocery carries. This means that the chance of us being out of stock is lower than you would typically find. And you’re simply unable to purchase something from us that we don’t physically have in the store. So while we may not have something that you want, what we can guarantee is that what you order is what you will get!
Do you foresee other grocery chains adapting to the changing consumer, similar to JackBe?
I would say that it is an extraordinary challenge for an existing grocery store to position itself in a way to reach the growing online demand. This is inherently the premise of why we started our company! What I think you will see, and we already have, is other companies attempting to do what we’ve done through other nuanced approaches. This will bring about a new age of competition to see which ones will be able to survive.
What has been the initial reaction to JackBe entering the marketplace?
We had an unexpected reach in PR as news of our first store opening seemed to capture the attention of people across the country. That was not what we were anticipating and indicates to us that our concept has struck something that many people have felt is needed.
What do you want people to understand about JackBe?
Not too often do people start new grocery stores. We knew this would be a challenge — it’s one of the reasons we’re opening three stores this year. We must push through what may take people some time to adapt to because the concept is so new. Most people have experienced going inside grocery stores; therefore, they know what exists. People can’t do that with JackBe. What we must help people understand is that we are a trusted, full-service grocery store intending to carry most of the things you need on a daily and weekly basis for your family’s needs. Once they give that a try and they begin to trust us as a grocery store, the demand and the need for what we have created is going to grow exponentially.