Advances in artificial intelligence are poised to drive “huge” growth in online grocery delivery, according to the head of Picnic, a Dutch app-only supermarket that is rapidly expanding into Germany and France.
Picnic has disrupted the Dutch supermarket landscape with its offering of free delivery within 20 minutes – made possible by squeezing efficiency from vast amounts of data.
The company already uses AI for a wide range of activities, explains CEO Michiel Muller (59) in the company’s 43,000 square meter distribution center in Utrecht, central Netherlands.
“For example, by predicting how many bananas we will sell in three weeks. Or what happens if the weather is good or bad. Or by making our entire route planning,” he told AFP.
As technology improves and data sets grow, predictions will become more accurate, further reducing food waste and offering customers even more accurate time slots, he predicts.
“Remember, 60 years ago, supermarkets didn’t exist yet. You just had smaller stores. So there’s always movement around new technology and new ways of delivering goods.”
“The supermarket will stay. That’s for sure. Shops will stay. But the online part will grow enormously,” he says.
Picnic has developed its own in-house software to fine-tune every element of the delivery process, from processing and packing stock in the warehouse to the famously complex “last mile” of delivering the goods.
Delivery times are calculated with extraordinary precision, with the vast amounts of information processed by 300 data analysts and 300 software engineers at Picnic’s headquarters.
“We know exactly how long it takes to walk around the vehicle and if it is dark outside we add six seconds to the delivery time,” said Muller.
Unlike a physical supermarket, every order is received via the app, so the company knows exactly what to order, deliver and how long it should take.
The company estimates that this results in seven times less food waste than regular supermarkets.
“There is not a single baguette that is ordered and not delivered,” says Gregoire Borgoltz, head of Picnic’s operations in France.
The company’s drivers in the ubiquitous white Picnic vans are rated after each trip based on their driving behavior, even assessing whether they drove too fast through the bends.
– ‘Automation level’ –
The huge investments required in custom software, plus the company’s distribution centers with 8 miles of conveyor belts, make it difficult to turn a profit.
Turnover has increased from 10 million euros in 2016 to 1.25 billion euros in 2023, with the workforce increasing from 100 to 17,000 in the same period.
But Muller said the company suffered losses of “around 200 million euros” last year due to expansions in Germany – opening slots in Berlin, Hamburg and Hannover.
For the first time since its founding in 2015, it finally grossed a profit in its home market this year. “It took eight years before it was profitable in the Netherlands,” he says.
Earlier this year, the company raised 355 million euros from investors to finance its invasion of Germany and France, mainly from the Bill & Melinda Gates Foundation and German retail giant Edeka.
When it comes to profits, again it all comes down to technology, Muller said.
“Basically the level of automation determines our level of profitability,” he said.
“Today we have automated about 30 percent in the Netherlands. In a few years we will grow to 100 percent,” while Germany and France will quickly follow.
So far, Picnic is mainly active in the northern French city of Lille and the larger suburbs of Paris. Central Paris offers “great opportunities, but also some of the worst traffic congestion,” Borgoltz said.
“We are going to Paris, but we have to find the right time.”
Muller has ambitions to further spread the company. “Well, there are 183 countries in the world,” he jokes when asked where Picnic will expand to.
But for now, he said the company would consolidate its operations in Germany and France before looking further afield – not ruling out a push outside Europe.
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