When H-E-B launched their line of Joe V’s Smart Shop in 2010, retailers across the industry were curious to see how the value-first store would perform. Aside from initial criticism by Trader Joe’s on account of the name, the first store received a highly positive response from shoppers in the Greater Houston Area.
The barn-like entrance of the store differentiated it from other discounters, and once inside, customers were met with great values. The chain’s motto is “Low Prices, Quality Groceries,” a phrase that rings true today based on a price analysis conducted by Engage3. The ninth Joe V’s Smart Shop opened at the end of 2018 in Pasadena, Texas, showing that H-E-B’s investment in a discount banner continues to draw in new customers year after year. We visited a Houston-area Joe V’s to compare it to H-E-B’s main stores.
To begin, Joe V’s Smart Shop has a very distinctive entrance. The recessed sign is eye-catching and separates it from other stores in the area. The carts were standard supermarket size, and there were no flatbed carts like those available at warehouse retailers like Sam’s Club and Costco.
When we entered the store, items marked as “special buys” lined the sides and advertised especially good deals. From here, it was easy to guess that the majority of the products in the store would be bulk-packaged.
These deals continued into the main aisle, with prices marked on large yellow signs leading all the way into the produce section. Products were stacked in pallets three levels high and were priced lower than an average grocery store, but they were also in their original bulk packaging.
When we reached the end of this aisle, the store opened up to the produce section and the other areas inside. Fruits and vegetables were piled high, allowing customers to move between the different produce items, a big change from the carefully curated displays in a normal H-E-B store. The focus here was on the value and volume Joe V’s offers.
Alongside the produce section was a Sushiya booth, a staple of H-E-B markets. This is where sushi is prepared and sold. From here, we had the option of going into the warehouse-style portion of Joe V’s or continue in grocery. We stopped by the meat section, seeing a sign advertising freshly-butchered meat. The selection was not as expansive as a traditional H-E-B location. This trend continued in the bakery, where there was a large sign boasting eight bread rolls for a dollar.
Once we left the fresh food areas, Joe V’s resembled a warehouse retailer much more closely. Bulk items, pallets, and spacious aisles made the store feel entirely different from a supermarket. Here lies Joe V’s biggest strength – the prices that consumers typically find at warehouse retailers without the membership fees. The store’s true character came out in these aisles, making the store seem inviting despite the bulk packaging and bright yellow signs.
General merchandise like cookware were also scattered throughout the store, but it was never overwhelming or unexpected. Joe V’s mainly sells groceries, and these items were stocked to complement the rest of the store’s inventory. The store’s weekly ad, available on the Joe V’s website, only lists food items and related products like paper towels.
When we were ready to leave the store, we had a checkout experience we have never seen before. At first, it resembled a typical grocery store setup. There was a long conveyor belt, a cashier, and a bagging area. The difference was how the customers were paying for their goods.
The cashiers do not handle money. No cash, no coins, and no cards ever cross their hands. Instead, they were focused on ringing up the items and bagging them as quickly as possible to keep the lines down. The cashiers were friendly and had animated conversations with shoppers as they loaded up the carts. Customers either used the card payment system or inserted their bills and coins into a device that looked like an ATM.
The hybrid system created an experience similar to a self-checkout machine without having shoppers bag and scan their own purchases. It looked like this unassisted payment system was quicker and let customers still interact with a human cashier.
Warehouse Prices – Is it Sustainable?
Though Joe V’s Smart Shop shares many characteristics with other stores like warehouse retailers, it gave us a unique shopping experience. It provided value comparable to a membership warehouse, but without the membership fees.
Joe V’s checkout system is notable in an industry adopting tech innovations. Pure self-checkout kiosks face criticism from customers who are looking for a human connection while shopping. With Joe V’s checkout method, shoppers get human interaction, and cashiers are freed up to scan and bag quickly.
Overall, we think that the store delivers on its promise — “Low Prices, Quality Groceries.” The combination of an efficient labor model (cashier-less payment and the use of vendor boxes for display), bulk-size offerings, less assortment, and the use of H-E-B’s low-tier private label — all add up to a unique strategy that might prove to be a winning idea.
Read about our reviews of other stores like Raley’s Market 5-ONE-5 or Sam’s Club Now: A Review in our Engage3 Visits series.
In the months since it has opened, Raley’s organic-focused concept store in downtown Sacramento has settled into the neighborhood. Its closeness to office buildings makes it a convenient stop for customers on their way to or from work, and there are very few competitors in the area. Engage3 visited the small-format store to take a closer look at its selection, and what is contributing to its popularity.
The parking lot is spacious, and allows for customers to park their cars without worry (there’s a 90 minute time limit, but Sacramento is notoriously difficult to park in to begin with). In front of the store is an ample amount of bike parking, as well as lockboxes for cautious bikers. There were a few electric-assisted bicycles to rent, the kind that are popular in downtown Sacramento and other cities. Market 5-ONE-5 is reasonable biking distance for customers working downtown or at the state Capitol.
Once inside, I noted the size of the store immediately. Though it resembled a Whole Foods or a local food co-operative, the store was scaled down to fit a wide selection of products.
As I walked through the aisles, I looked up to find that there were no signs indicating the products in each aisle. Instead, there were a great number of employees roaming in the miniature grocery store. When I asked a floor employee where I could find a certain product, he led me directly over to the aisle and gave a few short product recommendations. It seemed that Market 5-ONE-5 was focused on knowledgeable and friendly employees to enhance the shopping experience, an approach that was unique to a small-format store with an organic-only selection.
Still, there something missing while I browsed through the aisles, and it took me a while to think of the answer. I kept seeing organic cookies and soups and soaps, but I found that there were no private label products. With Raley’s private label brand being so easy to identify, it came as a shock that they would pass on the opportunity to advertise it.
This may be the result of having very little competition nearby, as well as a slight boost to margins from both convenience pricing and organic-only products. Whatever the reason, it seemed that Raley’s was relying primarily on word-of-mouth marketing and customer loyalty to succeed with Market 5-ONE-5.
I became more convinced of this when I made my way to the food bar section of the store. In addition to a salad bar and hot food bar, the store offered fresh deli meals like soups and sandwiches. According to Yelp reviews of the store, this section was the crowd favorite, and several reviewers preferred it over the Whole Foods hot bar. Next to this was also a small coffee counter proudly displaying signs for a local coffee roaster.
A bit of background: since the city officially changed its title from the “City of Trees” to the “Farm-to-Fork Capital,” Sacramento and its residents have taken great pride in promoting local businesses and the food supply chain. When giving the option, shoppers who frequent grocery stores like Market 5-ONE-5 will typically buy local goods. The product selection in the store matched this sentiment.
After ordering my coffee (which was from a place called Temple Coffee, several signs told me) I sat down in the cafe area of the store to observe for a short while. Market 5-ONE-5 is currently partnered with Instacart, and a small sign near the food bar gave instructions for customers wanting their groceries delivered in the future. The store location makes it easy for Instacart to pick up groceries and deliver them to office buildings throughout downtown, from what I could tell.
I got up and explored more of the store, stopping by the meat department and refrigerated sections. Though there was a wide selection of fresh meat and seafood lining back end of the store, and it was all ethically sourced (with the price tag to match). The refrigerated sectioned fared better in terms of price, fitting into the range of a typical organic grocer or food co-operative.
The wine aisle was reasonably large but not overwhelming, and featured many bottles in the $10 to $20 range that I had never seen before coming to this store. About one quarter of the wine came from local wineries in the Sacramento and Lodi, California area.
As I made my way to the checkout counter, I also had a closer look at the fresh produce section. Consistent with store policy, every item was organic. The selection was limited to what was currently in-season with some exceptions for popular fruits and vegetables. Though the area was small, the produce displays were meticulously arranged to make up for it.
I finally checked out at a counter that looked like it belonged in a clothing store. There were no conveyor belts, magazines, or candy displays–just a cashier waiting to scan and bag your purchases. Though the experience was odd at first, I found that the transaction was more personal. I had no fear of holding up the next person in line or taking too long to finish my purchase.
I left Market 5-ONE-5 impressed by the range of products they offered in such a compact space. The lack of private labels items also was a significant surprise, and Raley’s seems to be fostering store loyalty rather than chain loyalty with this location. There were no in-store or online markers that suggested this was a Raley’s venture, focusing instead on the product selection and appealing to the downtown Sacramento crowd.
The store’s slogan is “Organics – Nutrition – Education,” fitting with the larger goal of providing ethical and sustainable goods to downtown residents. Based on the signage throughout, Market 5-ONE-5 aims to be a community space promoting local businesses. This idea was cemented in my mind when I walked out and saw a delivery van from the featured coffee roaster.
Even after nine months, Market 5-ONE-5 has a loyal customer base in Sacramento and continues to grow. To read about other stores in our Engage3 Visits series, you can start with our review of Falling Prices–where prices drop from $6 to $0.25 over the course of a week.
The latest store turning heads in Northern California isn’t known for its purchase-tracking cameras or smart shelf tags—-it’s drawing crowds to its particle board bins. Engage3 visited Falling Prices for a full report on what the discounter has to offer.
Falling Prices, a store based in the Sacramento-area city of Carmichael, serves as a liquidator of Target and Amazon goods. The store is attracting customers through word of mouth and local news coverage, touting a unique pricing model. Though the store is only open 5 days a week, prices fall—as the store name suggests— from $6 to 25 cents throughout the week.
If any goods are left in the store by the end of Saturday, when everything is priced at 25 cents, they are thrown away. Interested shoppers have to balance savings and selection throughout the week before the store is restocked.
When I arrived in the parking lot, the thing I immediately noticed was the sign hanging from the storefront. “Falling Prices” was printed on a white banner held up by four ropes. It was a Thursday, or a $2 day at the store, and there was still a variety of items to search through.
Outside, one of the windowed walls displayed the price schedule and a list of the product types that the store carried. While standing outside, I noticed a steady stream of customers going in and out of the store, despite it being an ,early afternoon on a weekday.
When I stepped inside, what caught my eye was the furniture in the store. Every piece of furniture, from bins to shelves to the checkout counter, was made from particle board. The shoppers paid no mind to the decor, and instead were busy sifting through the various bins.
The particle board bins were filled to the brim with shelf-stable food products and toys, among other items. I could see dozens of shoppers wading through the bins, uncovering hidden objects, and placing them in their carts. Here, a four-pack of chocolate almond milk; there, children’s Halloween costumes of every size.
On the far end of the store was a section dedicated to holiday decorations. Wrapping paper, string lights, and home goods made up the bulk of the items here. Immediately next to this area was a bin full of showerhead replacements. Signage was unnecessary, as everyone in the store knew it was $2 Day at Falling Prices.
I continued through the aisles, stopping to search through the bins and pick up odd items. In my cart I carried a collection of bobbleheads, canned sparkling water, a pair of headphones, and a showerhead attachment from an earlier bin.
Despite the appearance of the store, I could feel the excitement of the shoppers around me. The combination of discounted items and a treasure hunt vibe made the store enjoyable to explore.
After taking a few pictures and retracing my steps through the aisles, I was ready to check out. The wait was on the longer side, but this was mainly from the sheer amount of items that customers ahead of me had picked up in the store. Each cart had 20 or more items inside, and I was tempted to go back and pick out a few more items.
I walked away from the store with more than I expected, both in purchases and in opinion. According to a news interview, the owner of the liquidation store is looking to expand to a second location. Bargain hunters may find stores of a similar kind popping up in the area, but competitors will struggle to find a pricing strategy clever enough to outdo Falling Prices.
Local news stations featured Falling Prices during its second week of opening, attracting a larger crowd of shoppers and more items to liquidate. In the video below from the KCRA 3 Facebook page, you can see a larger variety of the products available.
This article is part of the Engage3 Visits series, where we explore concept stores and innovative retail technology. To learn more about our earlier visit to Sam’s Club Now in Dallas, you can read the blog here. For more information on our visit to Amazon 4-Star, the retailer’s customer-curated offering, you can click here.
At the inaugural GroceryShop event in Las Vegas late last year, Frank Scorpiniti, CEO of health and wellness store Earth Fare, sat down with Ken Ouimet, CEO of Engage3.
Frank talked about hiring a Chief Medical Officer for his stores, bringing more value to his health and wellness shoppers, and how he envisions a future of 1:1 customer-centric marketing using loyalty data in the very near future.
Ken: Welcome, Frank, thanks for being here at the show with us today. What’d you think of the show?
Frank: The show’s been well organized, there’s an immense amount of emerging technology that really excites us for the potential to have it help Earth Fare continue to grow.
Ken: Is there any particular technology you’re most impressed with?
Frank: Well I spent some time on the exhibit floor and I was pretty impressed with what seems to be some off-the-shelf technologies to help us eventually create more attribute conversation with our customers, right on the sales shelf. And our customers are really seeking better health and wellness, so in order to tell a product story is something that we’re really looking forward to leveraging.
Ken: How would you communicate that to customers?
Frank: Well I think we have a lot of work to do to figure that out. That’s been a big challenge for us. As the leading grocer in North America with the cleanest product assortments, one of the biggest challenges we have is getting the message across to our customers about how unique our assortment really is, so I don’t have that solved yet.
Ken: One of the technologies that I was really impressed with was seeing the advances in the speech recognition.
Ken: At one end I saw something by Apple recently where it actually had a bot that could schedule a haircut for somebody, and get through all the navigation of a real conversation. I was curious to get your thoughts, as we get these digital assistants starting to have these capabilities that talk to people in real time, you see an opportunity where we could use technology to get back to the old store where the grocer knew the customer, and have a more intimate relationship with each consumer.
Frank: Why, I suppose that’s an opportunity, I think customers have a lot of questions in our stores. We have fantastic team members that, many of whom are lifestylers, they live the health and wellness lifestyle, but some of the questions are becoming more complicated about health, so the potential to have that kind of on-demand understanding and data could potentially create an experience for a customer that’s above what we can achieve today.
Ken: Yeah, I imagine as people become more aware of the foods they eat and the effects it has on their bodies, they’re getting more particular on what they eat.
Frank: Yes, consumers are starting to become very aware of the U.S. food supply and that over the years it’s had many, many more chemicals go into it. Some may say some of these products aren’t foods, maybe they’re stuffs with calories. We think that more Americans are looking for healthy foods to feed their family and feel good about what they’re doing.
Ken: I’ve seen a naturopath the last ten years and they routinely will take blood samples and test food sensitivity.
Ken: And I was blown away when I asked them how many people were affected by food sensitivities, and he said it was roughly 70% is what they’re estimating, but only less than 5% are aware of it. There’s a lot of people out there that are affected but don’t know that they’re affected, and some of the athletes are starting to realize that they need to cut out the foods they’re sensitive to and their performance goes up. My brother has a doctor that, he has his office on top of a grocery store, and walks his customers through the aisles to show them what to eat. I’m just wondering, have you thought about having maybe even naturopaths. I know you have a medical officer, is that any direction you’re going?
Frank: We have a Chief Medical Officer, Dr. Angela Hind, and she keeps us on the cutting edge of making sure that we take out of our stores. We’re trying to keep away from things that make our customers sick, and she can only be in one place at one time. Some of the exciting stuff that I think is in our future, particularly with what you’re working on at Engage3, Ken, is our ability to take our loyalty data, where our customers share with us some of their needs around health, and be able to customer-centrically create one-to-one offers. And maybe that could take the place of the naturopath, probably not all the way to the extent your brother experiences or having a naturopath above a store, but the opportunity to guide a particular person with food sensitivities into things that are safe for them, say through an app that [ Earth Fare ] eventually could offer our customers, that could be an incredible experience that I don’t see happening today.
Ken: Yeah, I think there’s a real need for that, because you start looking at reading the labels for what fits your diet, that’s a lot of work. I would think as a consumer I would want something that navigates me around the store like the GPS navigates me around the city.
Frank: I think that could be just an incredible advancement in retail for [ Earth Fare ], we have a food philosophy that disallows a lot of artificial ingredients, and so we say to our customers, “We read the labels so you don’t have to.” That’s removing a lot of the chemicals, but to take it to the next level that you’re describing, then tailor the shop for each individual consumer, it really could excite our customer base. And they’re already looking for better health so it’s the right audience.
Engage3 Competitive Intelligence Platform helps retailers like Earth Fare improve their pricing performance and compete more profitably through data science & analytics. To learn more about voice-activated shopping and other innovations discussed at GroceryShop, watch this video of Tim Ouimet discussing the rise of agent-based shopping.
We wish you and your families the best this holiday season. Enjoy our version of Winter Wonderland!
November 8, 2018 – BERKELEY, Calif.
With the launch of the latest store, Amazon now has three Amazon 4-star retail locations in the United States. The second store opened last week in Lone Tree, Colorado, surprising consumers that expected the Berkeley, California location to open first. Engage3 took a trip to the opening last week to see it in person, and here are some of our observations.
The Amazon 4-star in Berkeley opened its doors on November 5th to a short line of people, but soon the store was full of shoppers and press eager to see the products available. In the weeks leading up to the launch, I had read comments from small businesses in the area expressing their concern, but seeing it in person made it clear that the 4-star experience is not directly competing with these business owners.
Compared to Amazon’s other retail ventures, 4-star is fairly tame; the concept of the store is to offer well-reviewed products from the online site in a brick-and-mortar location. No tracking cameras are set up and no cashier-free checkout is offered, making the store more like a traditional retailer than a cutting-edge convenience store competitor (Business Insider). We were allowed to openly browse the selection of products once inside.
What makes the store unique is how it approaches brick-and-mortar selling. Customer reviews are the basis for which items are sold in the store; if something is for sale, it means a large amount of online customers enjoyed the product. Amazon 4-star is also localized to the surrounding area, displaying a selection of products popular with Berkeley customers. These curated collections are available in the Lone Tree and Manhattan as well, and we will likely see this trend continue as more stores open.
The products in stock are all highly rated, pushing for quality over quantity.
Books and recommendations make up a large portion of the store, similar to Amazon Books.
Items are curated for the surrounding area and based on popular orders.
Aside from the tables lined with trending purchases, the majority of items in the store were hanging on the walls with little separation. As soon as I left the table area, the number of items became overwhelming and difficult to sort through. If found myself looking at the curated collections more than anything else, and the shoppers around me were doing the same.
Compared to looking for gifts on the Amazon site, the experience of looking through seemingly endless shelves felt lacking. The categories were clearly displayed, but I had no interest of going row by row to look for something specific. A large Roomba vacuum exhibit dominated the back half of the store where the electronics were kept, and few customers were venturing into that territory. Shoppers focused on the curated tables and book displays instead. The scene reminded me of another brick-and-mortar bookseller in a condensed format.
To recreate the online shopping experience, recommended and related items appeared next to each other throughout the store. Online reviews and short descriptions accompanied many of the store’s products, but these when afterthoughts when compared to the Amazon Prime integration.
While I went through the store, I noticed that many products have two price points: one for Prime members and one for non-members. The e-ink displays clearly tell a shopper the online rating for the product and how much they are saving with their membership. Every item had an Electronic Shelf Label that the employees could change when necessary.
The labels caught my attention, because they displays the online rating and number of reviews. Amazon was meticulous on this point, making sure every single item in the store had a dynamic label.
Many shoppers and news outlets are comparing the 4-star experience to existing “everything under one roof” retailers. The store has even been called a Millennial Brookstone (Forbes). However, what sets Amazon apart from these retailers is a focus on membership and community interaction.
The Berkeley location seemed more welcoming than Amazon’s other physical stores, especially compared to Amazon Go. Most of the customers in the store were curious families and couples, and it is refreshing to see the online retailer focus on more than their usual tech-savvy demographic.
Overall, the Amazon 4-star favors a traditional layout over revolutionary tech. It shares a target demographic with the retailer’s convenience stores, but offers a more reserved shopping experience. Even though the store was overwhelming at times, it felt warmer and more human than any of Amazon’s previous brick-and-mortar attempts. With its wide product selection, I can see holiday shoppers close to these stores turning to 4-star for their gift-giving.
The grocery cart, now a retail standard, originally looked nothing like it does today. In 1936, Sylvan Goldman and a young mechanic by the name of Fred Young invented the first commercial grocery cart. It was humble at first, but the pair’s invention went on to change the retail world forever.
The original design was two metal folding chairs stacked on top of one another with wheels at the base of the legs to roll the cart around a supermarket.
In 1934, Goldman bought the grocery chains Piggly Wiggly and Humpty-Dumpty, both based in Oklahoma City. Around this time shoppers were buying new, heavier kinds of products but still using hand baskets to carry them. The increase in canned goods and refrigerated items inspired Goldman to make shopping easier for his customers. He grabbed his handyman Fred Young and a few supplies, and the two spent a night coming up with a prototype of a rolling grocery basket.
At first, Goldman’s plan didn’t succeed. Women compared the cart to a baby stroller and refused to push around the cart while they shopped. “I’ve pushed my last baby buggy,” they told him. Men were offended at the idea that they could not carry all their groceries around the store, and worried that the carts made them seem weak. Still, Goldman persevered.
He hired young women to model the carts and push them around his supermarkets, demonstrating their utility. This strategy immediately converted a few people. He then recruited male and female actors of all ages to advertise his grocery carts, and suddenly his stores were filled with happy shoppers unburdened by their groceries. Goldman began selling his carts to competitors, and quickly turned his former folding chairs into a booming business.
The grocery industry, however, would soon be introduced to a landmark invention: telescoping carts. In Missouri, business owner and machinist Orla Watson came up with a design for a grocery cart that improved upon Goldman’s basket-carriers. The cart allowed for space-saving convenience in supermarkets and parking lots by nesting multiple carts together instead of disassembling them. Watson filed for a patent in 1946, but had his invention contested by Goldman. In the meantime, Goldman produced replicas of the nesting carts to compete against the new challenger. Goldman sold his new carts for three dollars less than Watson’s, using his manufacturing resources to effectively drive his competitor out of the market. Finally, after an extended legal battle, Watson was granted the patent in 1949. Goldman was required to pay him royalties for each nesting cart produced.
The design of the grocery cart would remain the same for decades, but minor additions helped to shape the cart into what it is today. Most notably, carts were outfitted with seats for children beginning in the mid-1950s. These seats cemented the grocery cart as a supermarket necessity.
The shopping cart can be found today in any website with a product to sell, but its history is rooted in a late-night idea and some tinkering in an Oklahoma supermarket. In the next installment of this history of the shopping cart, we’ll be looking at some of the modern additions to grocery cart design, ranging from security devices to complete redesigns and the jump to online shopping. We’ll also look at where cart-less retailers stand in the market today. Click here to subscribe to our newsletter, and stay up-to-date on future videos and publications.
The University of California, Davis presented the 2018 Distinguished Alumni medal to Ken Ouimet, CEO and Founder of AI retail price innovator, Engage3. Ken received the award alongside JoeBen Bevirt and Cynthia Murphy-Ortega at a special alumni celebration at the Mondavi Center on October 26, 2018. The award is given to alumni who have achieved an overall high distinction in their field and have contributed a distinguished service to the college, profession or the community.
Ken joins the ranks of other notable and decorated alumni of the College of Engineering, including Mars Lander Team Lead Adam Steltzner, Astronaut Steve Robinson, and Hyundai Motors Vice Chairman of R&D Woong-chul Yang. Watch the Mars Lander video “7 Minutes of Terror: The Challenges of Getting to Mars” here.
The College of Engineering has had over 22,500 graduates since its inception in 1962. Among the alumni are company executives, doctors, technological innovators, and an astronaut-turned-professor. Beginning in 1989, UC Davis began awarding the honor of Distinguished Engineering Alumni annually. To date, only 64 awards have been given out.