1. How Consumer Opinion Leaders Think about Online Produce Purchasing
Drew Schwartzhoff
Director of Marketing
Personal Introduction
-15+ years in Food business –meat, dairy and produce
-Introduce topics of:
1. What we see from our retail supply chain customers on omni-channel and how it is changing their supply chains
2. What a small panel of leading produce consumers are saying about this new emerging channel
August 19, 2013

2. C.H. Robinson in Retail & Produce
Global 3PL leader
10+ million shipments handled annually
45%+ of these shipments are in the retail/food & beverage vertical
100+ years of fresh produce experience
Leading Producer, Marketer and Distributor
500+ Million cases sold over the last 5 years
Wide range of products and brands
Fortune 300 company
Publicly owned and traded on NASDAQ (Symbol: CHRW)
High level overview of CHR and why we bring expertise to this subject
- Our Scale
Our business as a 3PL in this channel
Our business as a produce supplier

3. Yesterday’s Supply Chain is linear
In a less complex supply chain of the past, customers were looking for a single service to help ‘be the supply chain’
As global supply chains develop customers want a multi-dimensional solution
This simple supply chain still exists for several of our customers. . . We can’t ignore it,
But given the changes in the broader marketplace and need for innovation, we must adapt in segments of our business and be bold enough to invest in innovation to serve the supply chain of today and tomorrow if we want to capitalize on more complex opportunities.

4. Today’s Supply Chain is More Complex
According to the US Census Bureau, the growth of E-Commerce has outpaced traditional retail by 9.1 TIMES
E-Commerce creates unique SC Transportation and Distribution Challenges
The models are uniquely different
Some multi-channel Retailers that offer brick and mortar plus E-commerce are forced to run two SC, two different teams
Two networks, two sets of providers
OMNI CHANNEL Providers are offering more flexible options that drive even more complex SC and Transportation challenges:
i.e. Nordstrom: customers can select pick from store, deliver from store, deliver from DC
We talked earlier about the consumer being at the center of today’s supply chain. Because of that, product distribution and inventory models are constantly evolving and developing. An Online order can result in product being shipped from or picked up in a store , shipped from a distribution center direct to the consumer or being shipped direct from a manufacturer among other options. Traditional big-box retailers are being challenged to keep pace with these new channels.
While these are important factors in today’s supply chain, they are not the only ones that will cause us to continue to adapt and innovate. Because of political, economic and intellectual property concerns as well as the ongoing consideration of total landed costs, there is a constant ebb and flow and questions to be answered through analysis around off-shore, near-shore and on-shore manufacturing and supply chain strategies.
And while projected growth is expected to slow, emerging economies such as the BRIC nations will continue to grow at a rate higher than more developed economies. This will continue to add global demand for the consumable and durable goods that many of us have come to take for granted as the global middle class expands. The world continues to get smaller and the supply chain more complex.
Demand for innovative global integrated supply chain solutions has never been stronger. Because of complexity of today’s supply chain, speed is imperative. Potential clients don’t have the time or desire to slow down to evaluate and link multiple services from multiple suppliers to achieve their goals, they want single platform integrated solutions that they can leverage to achieve their outcomes.
We can be that end to end supply chain for our customers, we have the capabilities from a global modes and services portfolio, inventory management and replenishment to distribution and data management and analytics.

5. Online Produce Headlines Vary
So how does this impact produce?
Well, it is tough to tell from what you read - -but their certainly is a lot written about it . . .
This is why we decided to ask consumers directly what they thought . .
This research is not meant to be projectable or definitive, but rather just meant to get you to challenge some of your current thinking on this area - -are you thinking about how this will impact your supply and demand chain - -how about your customers?

6. CHR Consumer Opinion Leaders Panel
Background
Objective
Methodology
Panel Composition
Today’s Results
Objective
Provide CHR and our customers with opportunities to learn directly from produce consumers who are “opinion leaders”
Methodology
“Qualitative-Quantitative” surveys conducted online throughout the year using our panel of 140 respondents
Today’s Results
From survey conducted July 15-19, with 102 panel members participating
Panel
Composition
140 consumers responsible for grocery shopping and meal prep
Geographically distributed across US & Canada
High school graduate or higher education
Age 25-54
At least two children in household
HH income $50K+ (35% of panel is $100K+)
Consider produce as one of two most important departments in store
Purchase at least 8 produce categories annually; at least 3 produce categories every week
Have purchased/consumed more produce in past year than before

7. About half of all consumer opinion leaders have purchased groceries online
Respondents Purchasing Category Online
90.2% Books/CD/DVDs
92.2%
Clothing
52.9%
Groceries
A higher percentage than you might estimate have purchased groceries on line - - but there is still a lot of room to grow to get to some non consumable items like books or clothes
45.1% Pet Supplies
47.1% Flowers

8. No more than a quarter have tried any one type of online grocery service
Tried Online Grocery Service Type
Delivered to home
Pickup at local store
Pick-up at separate facility
Of the 3 primary models, delivery to the home is the most common amongst these panels
Same Day: 11.8%
Next Day: 24.5%
Same Day: 8.1%
Next Day: 9.8%
Same Day: 2.0%
Next Day: 2.0%

9. Most opinion leaders who try online do not stick with it
Still Using Online Grocery Service Type
Delivered to home
Pickup at local store
Pick-up at separate facility
But so far, it has been pretty limited, and not a weekly routine for most
Same Day: 4.9%
Next Day: 3.9%
Same Day: 3.9%
Next Day: 2.9%
Same Day: 1.0%
Next Day: 0.0%

10. Nevertheless, many consumer opinion leaders remain intrigued with the idea
Finds Online Grocery Service Type Very Appealing/Appealing
Delivered to home
Pickup at local store
Pick-up at separate facility
But while it may not be yet, it does appear the concept is extremely appealing to this group of consumers, and given they are heavy produce buying group, it would indicate that someone while find a way to deliver on this concept for our primary shoppers.
Same Day: 69.6%
Next Day: 52.9%
Same Day: 53.0%
Next Day: 43.1%
Same Day: 61.4%
Next Day: 52.9%

11. Opinion leaders think retailers can do the best job running EVERY service type
What Online Grocery Service Type They Expect Will Do Best Job
Company specializing in selling online
A different retail store
My current retail store
Delivered to home
21.1
7.0
71.8
Pick-up at local store
10.9
14.5
74.5
Pick-up at separate facility
12.7
27.0
60.3
Brick and Mortar store brands not suprisingly have the equity for consumers to believe they are most likely to do this service the best.

12. About a quarter of opinion leaders have purchased produce online
Quality & Freshness is executed well online
Price value is still a disadvantage for online produce
Items most often ordered:
Apples
Oranges
Full-sized Tomatoes
Bell Peppers
Produce specific purchases is only at about 25% within this panel, but from that limited group their experience was positive, other than price/value still being at a disadvantage to in-store shopping.
No indication that they would only buy “hearty” items, or just fruit from the limited data we gathered.

13. For produce shopping, in-store advantaged in some but not all areas
Shopping in-store better
Freshness
Quality
Deals, discounts and promotions
Finding what I need
Wide variety
Shopping Online better
Overall convenience
Speed
Hard to find items
Clearly, shopping in store still has some perceived advantages with this group - - but how many of these can be over came with an on-line experience?
i.e. if they find the quality and freshness they get when buying online is excellent, will this barrier go away - - same could be true for many of these other areas . .
Shopping/online about the same
Brands I prefer
Everyday prices
Customer service

14. Opinion leaders attitudes paint a complicated picture
On one hand…
Most like going to the store: 69.8% agree “I personally don’t mind going to the store to do my grocery shopping…it’s something I actually enjoy doing.”
Most are nervous about buying produce online: 71.6% agree “Of all the different groceries I purchase, fresh produce is among those that I am most nervous about purchasing through an online grocery service”
…but on the other hand…
Most are open to letting others select produce for them: 53.2% indicated they are potentially open to having someone else “selecting my produce items in the store.”
Most believe an online service is capable of doing a good job on freshness and quality: 53.9% agree with the statement “If you go with the right online grocery service, you can feel confident they will bring you produce that is fresh and high quality.”
And as you try and research this item, similar to the headlines we looked at a minute ago, it really depends how you ask the question - - so be mindful as you read what is out there on this subject - -what is the angle of the question/research - -and who has a vested interest in the answer?

15. How to make consumers feel more positive
Emphasize New Benefits
Access to:
68.6%
more complete line of organics
82.4%
a wider variety; specialty items
75.5%
more local
produce
Our take is on-line is still small in produce, but is a very appealing concept for consumers and something that if a few areas are addressed the purchase barriers could go away very quickly . .
In fact, many on the companies in this space today (Peapod, Fresh Direct, Amazon) are already doing this today
First, you could emphasize new benefits

16. How to make consumers feel more positive
Offer Innovations
89.2%
Carries a “daily freshness rating” so you know quality before ordering
89.2%
Product is delivered in temperature-controlled packaging and kept separate from other groceries
88.2%
Comes with a 100% customer satisfaction guarantee
89.2%
Offering a strong quality and freshness guarantee

17. Change is Happening Fast!
Your Supply Chain and your customers supply chain is changing - - and faster than ever before
Your consumers buying behaviors are changing in how they purchase goods
Are you doing enough to stay ahead of this change?
We can discuss your supply chain changes and how it is impacting your business today/tomorrow
We can cover the research results with your team in an individualized session - - or you can download on-line
We can potentially include your questions in our next found Consumer Opinion Leader research
This research is not meant to be projectable or definitive, but rather just meant to get you to challenge some of your current thinking on this area - -are you thinking about how this will impact your supply and demand chain - -how about your customers?