Latest / GrocerTalk / Continente’s Guilherme Cardoso on Profitable E-Commerce, Quick Commerce & AI | Live from Paris

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Continente’s Guilherme Cardoso on Profitable E-Commerce, Quick Commerce & AI | Live from Paris · GrocerTalk

• 0:00
  Hello everyone.
• 0:00
  This is Omni Talk Retail.
• 0:02
  I'm Ben Miller.
• 0:03
  I'm coming to you live from the Viewsion podcast booth on the morning of day two of NRF's Retail Big Show Europe in Paris.
• 0:13
  Joining me now is the head of e Commerce at SonimContanente.
• 0:19
  And we're going to unpick how all these different bits of the business fit together.
• 0:24
  Guillaume.
• 0:24
  Guillaume, please can you start by introducing yourself?
• 0:27
  Sure.
• 0:28
  Good morning.
• 0:29
  Good morning everyone.
• 0:30
  I'm Guilhem Cardoz and I lead E Commerce for Continente.
• 0:33
  Continente is Portugal's largest grocery retailer.
• 0:37
  We do food and non food and just to untangle everything, we are part of a company called Son IMC which is around retail.
• 0:47
  We also have our wealth and beauty unit, which is Wells, Drunian Arenal within the whole Peninsula, Iberian Peninsula.
• 0:58
  And as a whole, we're part of the Sonai group, which is one of the largest Portugal conglomerates that spans from retail to malls to industry, telco.
• 1:08
  So very banking.
• 1:10
  A very wide group.
• 1:12
  So a very wide group.
• 1:13
  Yep.
• 1:14
  Continenti is the food retail division.
• 1:16
  And.
• 1:17
  And you very bashfully not said that you are the market leader in Portugal.
• 1:21
  Yeah, we are the market leader in grocery, also in E commerce.
• 1:26
  And we are now running.
• 1:27
  So our E commerce business, which I run, is basically composed of two parts.
• 1:35
  We cater to three main shopping missions.
• 1:38
  The first one is stock up, so weekly shopping large baskets.
• 1:45
  Second one is one off shopping mostly with non food where we sell a wide range from toys to books to DIY homeware, everything.
• 1:55
  Okay.
• 1:56
  The third one, is that for a marketplace or is that.
• 1:58
  No, this is just one p.
• 1:59
  Just one p.
• 2:00
  And then our second business, we call it pop up shopping missions and it's around QWI Commerce, where we are present in aggregators as Uber Eats and Glovo.
• 2:11
  Okay.
• 2:11
  And we have our own delivery app called Kiko.
• 2:14
  Okay.
• 2:14
  With.
• 2:14
  With shorter time spans for delivery.
• 2:17
  So although I think you're already hitting onto one of the trends that we've been talking about, which is the drive for shorter trends.
• 2:24
  But stepping back, you're managing this E comm business.
• 2:28
  What are the big trends you're seeing from Portuguese consumers right now as it relates to E comm and grocery?
• 2:35
  Yeah.
• 2:36
  So.
• 2:37
  So when you look at the market, Portugal still lags behind what are I would say European averages on E commerce penetration?
• 2:44
  So we're still a bit below.
• 2:46
  Okay.
• 2:47
  We've been seeing.
• 2:49
  Where does it sort of run.
• 2:50
  We.
• 2:51
  So Portugal, there's no accurate market data.
• 2:55
  We estimate on food for the penetration to be around 2%.
• 3:00
  Okay, 2%.
• 3:01
  Yes, those are estimates.
• 3:03
  Okay.
• 3:03
  Our penetration is around 4, a bit, a bit above 4 now.
• 3:09
  4% on total sales.
• 3:10
  Okay.
• 3:12
  And the trends we're seeing obviously growth.
• 3:15
  So growth in the grocery market in Portugal has been higher than expected over the past years around.
• 3:24
  So like for.
• 3:24
  Likes around 6 to 8% which is for.
• 3:27
  Food is very good.
• 3:29
  We've had a lot of people come into the country.
• 3:31
  Of course when you look at the growth around e commerce on food, e commerce and non food e commerce obviously the growth rates are much higher.
• 3:40
  So we are seeing larger adoption on clients.
• 3:45
  Our number of clients and steady clients has been increasing consistently.
• 3:50
  I would say that the largest trend has been around quick commerce with the entrance of the aggregators.
• 3:57
  And so there's been a mix of.
• 3:59
  I think there's increasing demand but obviously increasing supply.
• 4:04
  So supply is driving demand as well in the market.
• 4:06
  Interesting, interesting thing I want to talk about, I want to go straight into that 4% number.
• 4:15
  Whenever we talk to grocers around the world about how you create a profitable econ business, there's a reoccurring theme of scale and density.
• 4:25
  So when you're at 4%, how are you thinking about driving profitability in your business?
• 4:34
  That's going to take a few hours, but I'm sure we can make it shorter.
• 4:38
  I'll make myself comfortable.
• 4:39
  So the way we look at the E commerce business within Continent is it serves as a shop window into Continent's value proposition.
• 4:48
  Not the offline value proposition but the value proposition itself.
• 4:51
  So you need to make sure that the prices are there, the promotions are there, the loyalty is there, the wide variety of products is there.
• 4:58
  And that's a non negotiable for us.
• 5:00
  Okay.
• 5:02
  You're not cutting any of the offers.
• 5:06
  Yeah, we cut parts of the offline offer which are not reasonable to supply online.
• 5:11
  For example, if I'm talking about parts of the.
• 5:16
  I'm going to miss the English word for that now, but parts of the.
• 5:20
  Where you need the counter supply.
• 5:23
  So counter.
• 5:24
  Yeah, kind of fresh, delicate estimates.
• 5:26
  For example.
• 5:27
  So we have parts of it, we don't have everything.
• 5:29
  Otherwise it becomes unmanageable in an operational way.
• 5:32
  But the way we look at the business is this is non negotiable, the value proposition part.
• 5:37
  And then we need to figure out a triangle which is growth, profitability and customer experience which seem to be on their own opposite ends of the triangle.
• 5:47
  But we try not to look at them as mutually exclusive.
• 5:52
  So the way we are looking into this, obviously scale helps scale Helps because you can dilute a lot of the costs.
• 6:00
  4% off the biggest number is a bigger number.
• 6:02
  But we try to be, I would say, reasonable on the growth end to make sure that we have decent promotions, obviously the best prices.
• 6:10
  We keep winning the online supermarket with the best price prices.
• 6:15
  But we try not to go too far on that, to not erode profitability.
• 6:20
  That then would keep us from either getting profitability or getting a good customer experience.
• 6:27
  So we mostly focus on how to run an efficient operation with lower costs and leverage our assets that we already have.
• 6:35
  So our fulfillment network we'll talk about that is largely based on our current store.
• 6:41
  Okay, so you a store pick model?
• 6:43
  Yeah, our fulfillment model is adapted to regional and value proposition constraints, meaning we do have a dark store in Lisbon which caters to most of the Lisbon area because the volume is high enough to enable it.
• 6:58
  And it would just offset what we want to be a good shopper experience in the offline world.
• 7:05
  So we find that if, if e commerce weight goes too far, then it becomes a tension hard to manage between pickers, in store pickers and customers.
• 7:16
  And we need to respect that.
• 7:18
  But most of our network is either done through.
• 7:23
  We have a centralized warehouse for non food, for toys and all of that because in store and the range and managing all that didn't make sense.
• 7:31
  Makes sense.
• 7:32
  Yeah.
• 7:32
  The rest of it is done through, through in store picking where we are able to leverage all the work that our excellent offline network does in fulfillment, in store replenishment, in shelf replenishment, and use that to get a
• 7:46
  good service for our online customers.
• 7:47
  Yeah, that makes complete sense.
• 7:49
  Now that's your store pick.
• 7:52
  When we got to delivery, you mentioned you work with the marketplaces, the aggregators, and that's growing.
• 8:00
  What are you hearing from your customers?
• 8:03
  What are you seeing in terms of the demand for quick delivery and the sort of baskets and items they're buying in Portugal?
• 8:11
  So it's been changing across time.
• 8:14
  So obviously when the quick commerce boom happened during and after Covid, we heard a lot of talk about under 30 minutes, under 15 minutes.
• 8:24
  And, and that's really tricky and let's face it, expensive to do.
• 8:29
  I think the market has proved that it's too expensive to work, at least in our type of market.
• 8:36
  What we've been seeing is that under one hour for convenience and quick deliveries is okay, that's okay in Portugal.
• 8:43
  And then what comes more is are you getting all the products in?
• 8:48
  Do you have a lot of stock outs?
• 8:51
  Do you have a wide enough range that you can cater to different shopping missions even within the pop up mission I was talking about.
• 9:02
  So obviously Continent is a wide range supermarket, full service store.
• 9:07
  So it wouldn't make sense to have 2K SKUs as its offer because people would feel some things were missing.
• 9:13
  And obviously we don't have for example all of our non food offering in quick commerce because people don't buy it and they don't fit in motorcycles.
• 9:23
  But I would say we have a wide range.
• 9:26
  That's something the clients keep telling us it's important.
• 9:30
  You were asked about also what the basket looks like.
• 9:34
  The basket is nearly around 1/5 of the size of the stock up missions.
• 9:40
  We see a larger weight of things like fresh fruits, dairy products within quick commerce versus the stock up mission.
• 9:49
  Okay, interesting.
• 9:51
  And we have an average basket that tends to be around 10, 11 items which is not that small but it's smaller than the stock up one.
• 9:59
  It's sort of bigger than the item merchant.
• 10:01
  I've forgotten my bottle of wine.
• 10:04
  We tend to see that people tend to top up their pop up order to get either a free delivery or to get out of service costs.
• 10:13
  So we use that to nudge people into getting more stuff into the bags.
• 10:18
  I'm remindful of your time so I want to change tact.
• 10:22
  You know, Portugal is one of the smaller European economies relatively, but yet you have an incredible reputation of an organization for innovation, particularly in grocery.
• 10:33
  And I'm kind of really interested to know firstly what are you working on at the moment?
• 10:38
  What's the next exciting, exciting thing that we're going to say?
• 10:41
  Our CEO tends to say we deserve the larger country.
• 10:46
  I love that sentence.
• 10:47
  I love that.
• 10:48
  Yeah, that comes from the Sonai DNA from way back since our founder.
• 10:54
  The drive to look for new opportunities to be ahead of the pack and to if needed to invent a pack.
• 11:00
  If there is no pack in E commerce specifically, I think the competitive environment could be better, could push us farther.
• 11:07
  We try to do it ourselves.
• 11:11
  Well, as for news in the coming times, our major project is one that we're doing now that if all goes well, no one will see which is we're renewing all of our backend.
• 11:24
  Okay, well it's a tough one but hopefully it will be done within the next few months and again maybe we'll have some, some changes in the delivery value proposition because we have our flexibility but it's really something that
• 11:38
  we're working on and hardware, software, process hardware and software and processes.
• 11:45
  So I tend to joke and say it's like a referee in a match.
• 11:48
  If all goes well, no one will notice.
• 11:51
  If someone notices, then it's a conversation.
• 11:54
  But more interesting, I would say for customers.
• 11:57
  We are working on, obviously it's inevitable to talk about AI.
• 12:00
  Yeah, we're working on agents.
• 12:03
  We're working on improving the personalization and the experience in the website to make it to make not only to make friction lower in the website, but to help customers do more than they are doing today and to help
• 12:18
  them with their purchases in E commerce.
• 12:20
  That's what you're doing.
• 12:21
  I think overall in the company we could discuss for a longer time.
• 12:24
  I think it's going to be exciting times ahead.
• 12:25
  In which case, one last question to get you out of here on one of the things that OmniTalk we've tracked for a number of years now is the growth, development, evolution of autonomous stores as an idea.
• 12:37
  And so now was I think still is running the largest autonomous store, grocery store in the world.
• 12:47
  Tell us like, where are you on that?
• 12:48
  What's your thinking?
• 12:50
  What's the outlook in your mind on that project?
• 12:53
  Yeah, obviously not an E commerce project, but I know it's we did launch, I think it still is the largest autonomous store.
• 13:02
  Over time we've learned a lot about what kind of shopping missions we can fulfill with that model.
• 13:10
  Learned a lot naturally about the accuracy and the technological development of the solution that we have with our partners.
• 13:18
  That store, it's still running.
• 13:20
  We are now running it as a hybrid store because we realized that that's one of the learnings which was expected initially.
• 13:28
  We learned that some shopping missions, for example large baskets became cumbersome for customers to walk with the cart.
• 13:35
  They didn't really fit.
• 13:36
  The accuracy sometimes lagged a bit on if you're buying 60 items, the likelihood that one is not going to match is higher.
• 13:46
  And so we took the learnings we took still we're still running it.
• 13:51
  We don't have further plans to open new ones now, but definitely something that we'll keep looking into and probably will change with AI and other things that are coming ahead.
• 14:01
  Really interesting.
• 14:02
  On that note, thank you so much for joining us this morning.
• 14:05
  Thank you to the team at Fusion and the NRF Big Show Europe for making our coverage of this conference possible.
• 14:12
  And stay tuned for more.