Insider Q&A: March to Your Local Penguin Pick-Up Location

Thursday, August 20, 2015
Kimberley Carrera

Earlier this month we spoke with Egil Moller Nielsen, Senior Vice President at SmartCentres and Head of Penguin Pick-Up, to talk about how Penguin Pick-Up bridges the gap between online and in-store shopping, its contribution to SmartCentres digital strategy and the direction he sees retail and e-commerce heading over the next few years.

Tell me about your role with SmartCentres and how long have been with the organization?

I joined SmartCentres about 12 months ago in July of last year. I was recruited to bring SmartCentres, a traditional brick-and-mortar shopping centre owner/developer, into the online universe. The overall idea was to offer some kind of pick up location for online consumers. But the solution had to be retail agnostic – meaning no matter what retailer the customer shopped with, they could still use this pick-up location to collect their online purchases. They could then go into a store in the same plaza to continue their shopping. Everyone talks about turning ‘bricks to clicks’ which is really what we do.

How it works

For those that are new to the Penguin Pick-Up concept, what kind of traction have you been receiving and how do you feel it is affecting e-commerce?

As with any new business the start is always difficult, especially when you are introducing a new concept that nobody else has offered before. We are the first organization in the world offering this service so we needed to educate the retailers and the consumers who shop with us. After the first two or three months the service really started to get some traction and all of our data supports that — every month we have been growing. Naturally we started from a low base, but now we are seven months old. Some months we’re growing at a rate of several hundred percent, taking huge jumps in volumes.

Recently we have added the ability to store perishable food so you can order frozen food online and use Penguin Pick-Up for that. We have Green Pass certificates as Food Distribution Premises and have commercial coolers and freezers installed to be able to store the frozen/fresh food customers have purchased. That really has attracted a lot of new customers to the concept. When I look into the statistics it’s quite interesting that more than 80% of the people who have registered for Penguin Pick-Up, have used our service. Of those 80%, 95% of those people have used us multiple times. Our retention rate is extremely high. Roughly half of our customer base is representing 80% of our packages. All the numbers indicate that shoppers really like our service and we can see that because they keep coming back. They are adding new shopping behaviours to the Penguin Pick-Up.

Penguin Pick-Up

Understanding consumer behavior is one of the biggest challenges that retailers have in tracking how customers interact. How have you positioned Penguin Pick-Up so that you are constantly aware of not only the buying behaviours of your customers but also how they’re interacting with the brand?

First of all, we designed the IT system ourselves, both the front and the back end. Every single event that is happening on our IT system, [and you can’t do any event without interacting with the system] is tracked. We know exactly when we receive the package, from which retailer, when the consumer comes to pick it up, and how many times they have used our service. We have big data around our transactions. But the good thing about our big data is it is structured in a way that is easily accessible and allows us to pull out analytics and insights very fast. Additionally, we invite our customers to participate in surveys once in a while. Close to 20% of our customers chose to respond. The latest survey asked, “When you go to a Penguin Pick-Up do you carry on doing in-store shopping or do you just go home?” 42.3% said that they pick up their package and then go into stores to continue shopping. That’s a very interesting statistic for us. So, coming back to your question, it is delightful to have access to so much information. We are also fortunate to have so many shoppers who are willing to spend a little bit of their time to give feedback. Because of this, we really know customers well and the types of services they are looking for.

You have a really good (data and analytics) system in play to monitor and better understand your customer’s behaviour. For Penguin Pick-Up which digital tactic is growing the fastest within the industry?

Penguin Pick-Up in itself is not a website where we buy and sell products, so the only traffic we really have is when people sign up for the service. Normally our customers only go to our website once so our traffic isn’t enormous and that is ok – we do not have a desire for casual visitors. Our interest is in getting our retail partners the traffic, which is where we spend our energy. We have a promotion tab where we promote our retailer partners. With that being said, we do promote our own service, but bringing customers and retailers together is our top priority. So Penguin Pick-Up is essentially acting as a landlord in the digital universe.

How important is localization to your business? We partner with Google and notice a lot of trends coming up with local searches, especially in the retail space. Customers are constantly using their phones to not only price shop but to order online. Is that a strategy you are implementing or planning to implement in the future?

We already are, we have always been local. But the way we look at local is probably a little bit different than other companies. So when we say who are our potential customers for Penguin Pick-Up we look at three dimensions – night time population, daytime population and vehicle traffic passing our locations. The daytime population are those that work in the area, but don’t live there, and the night time population are those who live in the area, but don’t necessarily work there. Then we look at the traffic, those who pass by on the main roads on the way to and from work, school, etc. We have traffic counts and we know how many cars are passing by. We also consider if it is a suburban, midtown or downtown area and the corresponding usage rates. For a suburban area we look at 5km radius, midtown is a 3km radius and downtown is 500m. This information lets us know who our target group is for the service.

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From your LinkedIn profile it’s clear that you are very familiar with many markets around the world. How do you see e-commerce and omnichannel in North America evolving?

Well it has been evolving at a slower pace than in Europe and Asia. I think the biggest reason is that North America has been very good in retail – particularly big box retail. Within a five minute drive through a suburban area, you can more or less get everything you want or need. Everything is built around the car because North America is so large geographically, particularly Canada. Europe is pretty dense compared to North America so online and e-commerce makes way more sense. That is why we believe that Penguin Pick-Up is the right solution because our service is a drive-thru solution. You don’t leave your car. As a customer, you pull into a designated Penguin Pick-Up Parking spot, and we will bring everything out to you – it’s a seamless path to purchase. Within 90 seconds or less, you are on your way home.

That’s really interesting and I think you hit the mark. In North America I find there is a strong emphasis on targeting local moments of intent. A lot of consumers are turning to their mobile devices to get specific items instantly either online through e-commerce or by finding the closest store within their location radius. What are your thoughts on this trend and how is your team adapting?

Yes, I noticed that. And for me it’s not either or – omnichannel is the future. I don’t find the word that appealing, but it is a business word. When you talk to a shopper, they don’t know what that means. You say omnichannel and they say ‘omni what’? What do you mean by omnichannel? The point is just that you meet the customers where they want to be met, whether its offline or online or somewhere between. It’s really the choice of the customer, and if you as a merchant can’t provide the product that the customer wants how they want it, then they will just go somewhere else. That was not a choice customers had ten years ago.

Ten years ago, if I wanted to buy printer ink, just to give you an example, I had to go to a Staples store and see if they had it on the shelf. If they didn’t have it, then I had to go to another retailer, like a Wal-Mart. If they didn’t have it, then I would go to a Best Buy and so on. I could spend two or three hours searching before I found a place that had my printer ink. Now I can use my smartphone and say “please show me where I can find this printer ink”. Let’s say it responds with Best Buy. I then have the choice to “reserve, and pick up in store”, or I can decide to order the product online because I don’t have time to go into a store and can wait until tomorrow. By the way, I will not be home tomorrow. So instead of shipping the ink to my house, I can deliver it to Penguin Pick-Up and then I pick it up on my way home. Those are the many choices you now have as a consumer. Nowadays the retailers don’t have the same power over the consumer as they used to have through the store listings. The consumer now has the power to shop wherever they want and instantly. That has been a big shift and it is technology that has enabled the shift.

As technology continues to evolve there are many different trends that are occurring, not only in the digital space, but also in retail. Are there any trends happening right now that really excites you from not only a business perspective, but also as a customer/shopper?

Yes, all of the beacon technology. It is the internet of things and already now you can add a lot of devices into your stationary or your products. As 85% of Canadians have a smartphone, so it is an avenue that is worth exploring and investing in. Utilizing this technology, you can create personalized marketing messages that are engaging and relevant to the customer.

I’ve been to a few conferences this year and one of the biggest underlying theme is the idea behind creating unique personalization strategies at the local level using content to drive the experience. What are your thoughts?

I think that it is great! I am really a big fan of localized advertising content. Everyone should strive for that because as a consumer what really annoys you is getting through all of those impressions every day that aren’t relevant to you. The more relevant the messages you relay are, the better it is for the seller and the shopper.

How important is content for your team when it comes to promoting the concept and the strategy behind Penguin Pickups for both your retailer partners and customers?

It is 100% important. If you asked me twelve months ago I would probably give you a different answer. But I have learned a lot and I found out that advertisements alone add little value. What brings a lot of value is when you combine the advertisement with the right content.

Do you have a content strategy in play?

Yes, we have one. We have a full-time employee who is taking care of all of our social media, online content, blogs etc. I recruited that person simply because I wanted to be in control of the content. It was important for me to have relevant content and to build some kind of personality around our brand. So, our brand Penguin Pick-Up, should be more than an advertisement place, and it should be a place people trust they can visit when they are seeking some form of advice. They can go to our blog or other social media platforms and find something relevant. So, content is really important.

In today’s retail space there is a lot of competition around getting net new customers and increasing their checkout conversions online but also in store. What are some of the biggest challenges you are facing in the business right now?

There are a lot of big players in the marketplace, so even though we are a big company we are a small player in the online universe compared to the Wal-Mart’, Amazon’s and Loblaws of the world. The big players are fighting for the same piece of the pie. We are pretty humble. We are a small startup within a big company. But I am a strong believer that having the best people in the market makes a difference. We want to be a cost and service leader within our space and so far we have proven to be that. On top of that, we want to be innovative, faster than anyone else and we have proven to that as well. So that is really what our competitive advantage is; we offer excellent service, very cost conscious and we are very innovative. We have access to tons of resources through our shopping centers/land development divisions and we have some of the best people. I was borne out of Fast Moving Consumer Goods (FMCG) and I have been working with supply chains, value chains and business strategy all my life. I have been taught to focus on cost, efficiency, quality and service added with business innovation. If you combine all of those factors then you have a winning formula. If you want to win at this game it’s not a matter of being the best marketing person, it is a matter of being the most efficient, innovative, customer centric organization and that is what we are striving for.

Are there any retailers that you can think of right now in the marketplace that are really upping the ante when it comes to omnichannel and digital?

Many times what you see is that the retailers that start online and then go offline are doing a better job than those that started offline and are now getting online. When you have been offline for many years or centuries, then obviously you have inherited a lot of processes that didn’t incorporate technology. As the technology revolution changes rapidly, it is very expensive to repair your stuff all the time to keep up the pace. If you had known twenty years ago what you could do with technology today you may not have designed a building the way you did. You may not have designed your POS systems the way you did. You may not have even designed your supply chain and store network the way you did. But it is simply too expensive to change it now, and the return on investment is not there. That is why I believe that startups, in many ways, have an easier shot at progress than those who have been in the space for a long time. Those startups that are the most insulated are those that started up with the technology and not against it.

You mentioned briefly in our discussions prior to today around the idea of launching or planning to launch the Penguin Pick-Up mobile application, correct?

Yes it is under development and it’s with geo-fencing so we can get announcements from customers who are on their way to pick up their package rather than when they have arrived at the location.

Is there a strategy behind potentially rolling out beacon and proximity based marketing with these programs?

Yes, – it comes back to my supply chain and operation teams where we want to be more efficient. Right now we serve customers in the car – the car arrives and our employee comes out to greet you with the iPad. Based on your unique Penguin Pick-Up ID, we know who you are, and our system will then indicate what packages you have to pick up. We go in, grab your purchases and bring it out to the car. You sign off and show ID to prove that you are the right person and then our associate goes back to our location. The associate is going back and forth twice. An app and geo-fencing can really streamline the process. Whenever we receive your packages we can put a beacon on the parcel that belongs to you. For example, customers could setup the app that when they are 100m away from the Penguin Pick-Up and they have parcels to pick-up, we get a warning and know that they will be there soon. We can go and grab the packages identified with the beacon technology, and we can bring it out to the parking spot even before you have arrived. The smartphone they use confirms their identity. We can eliminate walking in and out of the unit, and bypass a lot of other steps, and that will make us way more efficient. The quality of the service will improve and become even better for that reason. The entire experience becomes seamless. My ambition is to beat a Formula 1 pit-stop. 2.2seconds is the average amount of time it takes the pit crew of an F1 team to change 4 tires. I want to deliver their packages in less time at Penguin Pick-Up. Only with the beacon technology can we do that – though we are already very efficient, having all pick-up done in less than 90 seconds.

As a customer what is your ‘holy grail’ digital product at the moment?

I am a big Apple fan! Everything is integrated and way more seamless than PC’s. If you buy a PC your soft- and hardware is less integrated and doesn’t always speak well to each other. With Apple everything speaks together, which is a huge benefit for a family like ours that owns tablets, smartphones and desktop and laptop computers. As of now we only have Apple at home and have had it for many years. It has in many ways made my life so much easier.

What is your favorite app right now?

I don’t use a lot of apps. I use the LinkedIn app but that’s because I am quite active on LinkedIn and Twitter. I want to be my own content promoter for Penguin Pick-Up. So I am using myself as a marketing person to promote Penguin Pick-Up and to promote content related to e-commerce and omnichannel.

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Interested in learning more about Penguin Pick-Up or signing up yourself? Visit, penguinpickup.com

Contact DAC today to find out more!