Connected Homes – The Ultimate Convenience?
As a “strong convenience and food service provider” operating around 2,800 stores in various formats in six European countries, Valora is undoubtedly extremely busy all year round, ensuring its network of 15,000 employees delights their customers every day as they have done since setting up in Switzerland over 100 years ago in 1905.
While consumers delight in the baked goods and easy access to their everyday groceries, it’s the company’s digital and technology strategy that is attracting the most interest from industry leaders. In 2017, industry body NACS recognised Valora’s “pioneering role” in technology in the retail sector for its impressive innovation – in particular the k kiosk loyalty app, with other exciting ideas now starting to come out of the company’s innovation labs.
Most recently, Valora has recognised the power and potential of connecting homes and stores, and is seeing fantastic adoption of its trials with a concept called the “ok.- button”. It delivers the simplicity of online ordering directly from the customer’s kitchen – without them even needing to pick up their phone. With the success of this concept, it’s clear that a whole new sales channel is quickly emerging in convenience retail.
Investment in Innovation
While many global brands have opened offices in San Francisco’s Silicon Valley, Valora is the only Swiss retail brand to have a permanent presence there. This lab was opened in early 2016 to support work already being done in Zurich and Muttenz (near Basel).
Led by Cyril Dorsaz, the Valora Lab in San Francisco was created with a mission to “build new shopping experiences” showing a clear intention to lead the industry, and demonstrate how critical innovation is seen as a key success factor for Valora’s future.
Dorsaz explained that Valora had two main reasons for investing in the Silicon Valley location – firstly to ensure the innovation team could work closely alongside industry disruptors and technology start-ups based there, and secondly to tap in to the “Silicon Valley Mindset” that can offer truly unique ideas in any industry.
Gartner has described connected homes as an exciting “experience upgrade, moving from being simply a connected home to “an intelligent, proactive home” which allows customers the convenience and benefits of auto-replenishment as a result. This term that was typically used within convenience stores for stock management is now becoming a real possibility for connected consumers – promising to take the hassle out of monitoring and managing everyday household needs.
With Gartner predicting [PDF] over 20 BILLION internet or IoT-enabled devices in under two years, it’s no surprise that Dorsaz shares the excitement that the technology brings, and he has written this article in order to share the latest thinking on retail innovation from Silicon Valley. He compares the scale of the connected home opportunity to the launch of the iPhone just over ten years ago, and predicts similar dramatic adoption of connecting homes to convenience stores in the next decade, so it truly is an entirely new sales channel we see emerging.
Valora is one of the first companies in the world to tap in to the opportunity with the launch of their ok.– button trial – a device which allows a one-click order from the customer’s home of one single product (24 cans of the ok.– energy drink).
The ok.- Button – How it Works:
Before launching the ok.- button, a number of factors were tested in the innovation lab to listen and learn what customers actually like. Using agile methodologies, the team can quickly launch and then continually iterate their process. The diagram here shows the simple process now in use in hundreds of Swiss homes, with various insights and learnings included below.
ok.- Button Orders – Key Learnings
• As leading edge technology, customers think it’s cool! As a result, interest from the initial trials was huge and many ok.- buttons were initially ordered but not always activated as customers were not always motivated to complete the full installation. Valora has since implemented a small charge to buy the button (CHF 5) to ensure it’s only attractive to customers genuinely interested in the product. The nominal fee is fully refundable against product spend and it has resulted in higher quality engagement and activations.
• User’s main concerns in the trial in Switzerland were around security of their credit card details on the app, rather than any concerns about the Connected Home technology or privacy concerns around the ok.- Button itself.
• A surprising result was how popular the order button is with companies rather than homes. A result perhaps of the energy product being trialed but notable nonetheless.
• Customer usage is now exceeding the business case assumptions, with the simplicity of the ordering solution driving increased consumption and purchase behaviour. And it’s perfect for heavier products such as canned drinks that customers may not otherwise choose to buy in bulk.
• From a business perspective, Valora has spent time updating and sharing its learnings with its suppliers and partners, as the team will need the support of the entire industry to build the eco-system needed for the technology to reach its full potential.
• The main concern has simply been that customers are asking for MORE products to buy – so ok.- Iced Tea drinks have now been added to the options available to ‘press and buy’ with the ok.- button. A high quality problem indeed.
Loyalty Through Innovation
As trials and adoption continue, Valora’s Innovation Labs are busy behind the scenes creating other new and exciting ideas to bring to market. With Dorsaz, we share the perspective that innovations like this which makes the customer’s life so much easier, are key drivers of customer loyalty.