We present an edited version of our conversation with David Hardiman-Evans, SVP, North America at Ocado Solutions, from the Coresight Research & Blue Yonder Open for Business webinar held on May 27, 2020. David Hardiman-Evans was appointed in September of 2017 as SVP of North America for Ocado Solutions. He is responsible for leading corporate partnership-development activities in that region. Hardiman-Evans joined Ocado in January 2012 as Head of Investor Relations and Corporate Finance. Prior to Ocado, he was an investment banking Managing Director at DC Advisory Partners and Daiwa Capital Markets, and he also spent some time as a chartered accountant.

An Inflection Point for Online Grocery: Impact of Covid-19

Deborah Weinswig: Today, we are going to discuss innovation and online grocery, Ocado’s global growth, automation robotics and the supply chain of the future. As always, we will launch the poll questions after the start of the call. David, this is really the topic right now in terms of retail: How do you think that Covid-19 has brought us to an inflection point for online grocery? David Hardiman-Evans: Good morning, everybody. I suspect when we look back, we will see this as a very significant inflection point for grocery online. I think some of the transformational activity that we suspected will take several years in the grocery industry, we have seen actually taking place over the last few months. With that, I think online and how to best manage online in the grocery market has really risen to the top of most, if not all, boardroom agendas. We have seen a surge in online demand, I think for obvious reasons, during the Covid outbreak. I think the key question for many is, what would this look like post Covid? Whatever post Covid looks like—the new normal. It is perhaps a little premature to try and put a number on this. No one knows actually. But we can look to something we can see—what some surveys are showing up in terms of consumer activity and consumer behavior. We can see certainly what the impact has been in terms of demand levels. There are a lot of surveys, and one recent Morgan Stanley survey was posing a critical question in terms of those who had gone online during the Covid period for the first time: How many expect to continue as we come out of this? Now, the interesting result was, over half the respondents said, “Yes, we are going to continue shopping online.” About another quarter said, “We’re not sure,” but you can well imagine some of them will also continue. Only about 20% said, “I’m going to revert back to in-store shopping.” I think that is very interesting. I think the other thing that you can look at is, what does online penetrate look like in grocery now? I think it’s very timely, because both Nielsen and Kantar published more data this morning. If you just take the UK—which is often regarded as one of the most highly penetrated online markets globally—between Kantar and Nielsen, they were suggesting that the penetration now in the UK for online in groceries is now somewhere between 11% and 13%. That’s up from about 7% pre-Covid. Now, is that going to continue at that level post-Covid? We don’t know. And if I link it back to the survey results that I was just mentioning, you can see that a fair chunk of that [online grocery shopping] may well continue. The point being, it’s going to continue from a higher base, and it’s going to continue with a lot more attention from a consumer perspective going forward.   I think some of that is very interesting, because we can look at data and we can look at survey results, but actually when you start thinking about it intuitively, you kind of see that it makes sense—because one of the key hurdles/hump points for any consumer shopping online for the first time is exactly that: the first-time shop. Now, what Covid has actually encouraged a lot of consumers to do is get over that first hump: They’ve done that first shop; they’ve spent that time—that 45 minutes, one hour—that it takes to perhaps set up their shopping list for the first time. Not only that, because Covid hasn’t been a one-week phenomenon, guess what? They have come back and done it again and again, and I think history has shown anybody who operates online in the grocery sector, once a customer become accustomed and shops somewhere three, four, five times online, they become very sticky. So, I think that is very reflective in some of the survey results that I shared. Coming back to your question, I think when we move forward and we look back at this moment, I think we’ll all recognize that there has been quite a significant step-change in the interest from the consumer at this particular juncture, which will serve to be a very key inflection point in the continued migration to online grocery. JoAnn Martin: David, that is really interesting, and they pose the question too: When you start to think about that movement onto online, we all know that historically, grocers have operated with razor-thin margins, so how should we start to think about the impacts to profitability for some of the grocers now that the shift has happened, almost unexpectedly, to the degree it has? David Hardiman-Evans: Yeah, JoAnn, I think you raise a great point. How should retailers position their business for the future with more and more online? I think board meetings are now reflecting on how customers becomes sticky the more and more they do it [shop online]—and this particular point in time is encouraging more and more people to do it. The other point is, as you rightly say, the grocery industry is characterized by razor-thin margins. I would add a couple of points as well: It is also characterized by very large volumes—it’s a volume business, to accompany those razor thin margins; and very complex supply chains. So, it is a complex conundrum, a complex set of challenges that grocers face. Grocery has always been about two things in my mind. One is fulfilling and offering to the customer a proposition that is compelling. But, of course, they have to be able to do that at the lowest possible cost. Otherwise, it is not a sustainable business. I think as everybody thinks about how they position themselves and organize their businesses for a higher proportion of online business going forward, it is always about those two things—and that may cause some operators, most operators, to have to rethink around their cost basis. Merely layering on additional cost to an existing operating model may not be the right answer, because you’re impacting one half of the equation in a positive way—you’re addressing the customer—but you’re impacting the other half of the equation in a very negative way; you’re just adding cost. It is a challenge. Deborah Weinswig: David, you talked about this idea of what’s happening in boardrooms. As someone who sits on a few public boards, we are talking frequently, and supply chain is usually kind of at the top of that list. How do you think leaders should be thinking about this idea of e-commerce and online—we’re talking about curbside pickup and buy-online, pick-up-in-store and all kinds of topics that were previously lower on the list—in grocery and as we settle into this idea of a new normal? David Hardiman-Evans: Online shopping is about ordering—using some form of digital interface—and then you’ve got a fulfillment operation, because it’s a physical business. You’ve somehow got to translate that online, digital order into an actual order, a physical order, and that’s around the fulfillment piece. You referenced pickup and you referenced delivery. To me, those are just different forms of last mile, they are different forms of how the order that’s being fulfilled gets to the customer’s home. In one form, the customer is still doing a lot of that work and then in the other form, the retailer is providing that service. And I know, sitting here in the UK, I’m in a fairly privileged position because I have the opportunity to speak to retailers and others involved in the grocery sector globally. It’s less of a debate as to whether it’s pickup versus delivery; it’s, what do you want to offer the customer? What is it that the customer ultimately is seeking, and what is it that is offered in that market in a meaningful way? Because for online grocery services, razor-thin margins means that it is a real challenge to offer a level of service which just offers more and more service to the customer but more and more cost to the retailer. Hence, there has been a reticence to offer more services: Unless the service is good enough, customers don’t take up that service. Now, the interesting part about this whole pandemic is that actually more and more customers, because of the circumstances we all find ourselves in, have been taking whatever service has been available. So, retailers have in many cases perhaps not been able to offer the level of service they would like to offer, but consumers have been delighted to get a slot somewhere. So, they have actually started their online journey with something that might be suboptimal to them as a consumer, and it’s only going to get better—so there is a little bit of irony there. If you think about it intuitively, the ultimate service for a customer is actually home delivery. Why? Because this is grocery shopping. Where do all the products that the customer orders have to actually end up? Well, they have to end up in the customer’s refrigerator, in their pantry, in their bathroom, because they’re all items for the home. But, if sufficient home delivery services aren’t available, or if the level of consistency of that service offering is not high enough yet and pickup is the next best option, then they’ll take the pickup. I think as services improve, particularly for home delivery, and that encourages/forces other competitors to up their game, you may see a bit of an inverse in terms of that pickup versus delivery proportion. But I would suspect you would see—particularly in the US, given where penetration for online is today—I would expect to see both vary.

Responding to the Pandemic: Cost Structures and Assortment Rationalization

JoAnn Martin: When you start to think about that inflection point and moving more online, how do you think about the dark-store methodology? I know that dark stores are not new, but they are definitely a big discussion, especially for grocers that might have been caught a little off guard. So, how should we think about dark stores and their future? David Hardiman-Evans: “Dark” can mean different things to different people. Generally, it means it’s dark to the customer, as in it’s not open for general customer browsing. It generally refers actually to some sort of warehouse operation, and that warehouse operation can be entirely manual or it can have automation in it. You could actually say the very highly automated sophisticated customer fulfillment centers we build are actually dark stores. It comes back to, what are you trying to achieve? I come back to those really two core objectives. You are trying to achieve a level of proposition for the customer which is attractive, but you’re trying to do it in a way that helps you change your cost base from a traditional grocery store. Now, if some form of dark-store operation—be that an existing store that is turned dark or be it some sort of warehouse operation (be that manual, be that with some sort of automation)—helps you to move somewhere towards reducing that cost base, changing that cost structure, then that’s a good direction to be moving in. Deborah Weinswig: David, as someone who studied the grocery industry for a long time, we’ve always looked to the UK for inspiration, and a lot of that was originally around click-and-collect. As we look at lessons from the UK, how can Ocado help inform the world? But also, there have been some questions around scalability and flexibility of Ocado with this huge upsurge in demand. David Hardiman-Evans: It’s interesting. I mean, we’ve seen 10x the demand that we saw going into this crisis. We’ve seen 100x plus web traffic. We’ve seen our average orders go up 50% pretty much across the board. The last set of results that we actually published recently showed sales up 40% plus, year on year. Clearly, we have done a few things that have helped us increase capacity, particularly in this very difficult period for everybody. For example, we have stopped the sale of bottled water for a period. Most people have a tap in their home, so if they really need to drink water, they can get water. What that really enabled us to do was to service thousands more households on a weekly basis with orders, just by removing one category of product that people could get substitutes for. For all of the 20 years of Ocado’s existence as an actual retailer, we have done everything we can think of about encouraging people to come and shop with us. And I think for the first time in history, the one thing we had neglected to do was put in provision to help people and encourage them not to shop with us during this particular period! Is it right that it is a missed opportunity not to be able to service every piece of demand that comes through the door? Well, if you think about it, if I’m in a stores business, is it right that I was not able to service every single customer who wanted to buy as much toilet paper or rice or pasta that they came in to buy because the shelves were bare. Now, is it right to say, “Well, you missed the demand opportunity there”? Of course it’s not. Do you build an operation or build capacity for a pandemic? No, you don’t. What you do, however, and what it does is, it raises interesting questions around balancing capacity and demand, around balancing speed and the service that you provide—and also thinking about range and space. The response of many retailers that we talk to has been to look at their assortment. We’ve seen assortment rationalization—not just for online purposes but for store-based purposes as well. I think a phenomenon we saw in the UK early, which I think has been seen in pretty much every developed market in grocery shopping, has been the panic buying that we saw early on in the process; we saw empty shelves. I think the retail industry has been pretty quick to correct that within their supply chains and also [by] managing the customer (through limiting the amount of certain items that they were permitted to purchase in one shop) in a relatively short space of time. So, I think there are things that we’ve done specifically, as well as things other retailers have done. [caption id="attachment_111547" align="aligncenter" width="700"] David Hardiman-Evans talks about the response of Ocado and other grocery retailers to the panic-buying trend that was seen early on during the coronavirus outbreak.
Source: Coresight Research[/caption]   I think the other important thing is being very clear in who you are trying to serve. We instigated a very orderly queuing system relatively early on in the crisis, where we did prioritize two sets of customers in particular: One was very loyal customers—the ones who shop with us very frequently; and the other was a government-approved list of vulnerable persons. And that has obviously enabled us to grow in this orderly fashion. We also were able to work with our partner in the UK, Morrisons, which is another supermarket group in the UK that we enable from a technology and software perspective in their online business. They have also experienced very rapid growth in their online business, partly enabled and partly supported by the capacity that we provide to them through our fulfillment centers and partly also from the expansion of their install fulfillment operations, which is Ocado-software provided, but they expand in a similar way to other retailers who have been expanding their store-based online fulfillment. Obviously, there is a difference in the cost of that expansion because that does rely, of course, on the other valuable but expensive asset, which is labor. JoAnn Martin: It is fascinating to hear your discussion about some of the changes that you made. Assortment rationalization has absolutely been a big discussion within the grocery sector, but how do you see that in the long term? When you start to think about assortments, do you think it’s a short-term issue based on supply, or do you think ultimately, we will see a reassortment within the stores and a re-rationalization of space and contraction of SKUs [stock keeping units] long term? David Hardiman-Evans: In many ways, we see something different in perhaps some of the European retail than we do in North American and particularly the US. I think that the assortments generally in the US are bigger. Typically, in the UK, an assortment might be somewhere between 15,000 and 25,000 SKUs, whereas in the US, it is very typical to see anywhere from 30,000 to 50,000—so I think the baseline is perhaps different. The principles are very similar, however. I think we’ve seen for some time—long before the Covid crisis struck this year—we’ve seen retailers looking at different ways in which they can help to address some of the cost issues. And one of the costs measures that some of the retailers have been looking at is range rationalization.   Interestingly, that’s at a time when the retail business of Ocado has only done one thing and that’s increase range, increase assortment, because we see as very important consumer choice in what they buy—and assortment has been one of the very key assets of a retail firm to attract and encourage frequency and retention of that customer to come along. As consumers—let’s take our typical order, which might be 45–50 items—we all buy 45-50 items in a grocery shop, and we actually only buy from a relatively narrow range, a personal range; we might buy those 45 items from 200 or 300 items, but everybody on this call today will have a different set of 200 or 300 items that they select from. If you are the retailer that doesn’t have the one item that Deborah absolutely has to have, she’s going to go somewhere else to buy that item, but when she goes somewhere else to buy that item, the chances are she doesn’t go somewhere else to buy that single item; she’ll do a shop there. So, at best, we’ll lose Deborah’s shop this time. At worst, Deborah will come back next week and see that you still don’t have that item and shop again at shop B. Remember what I was saying before, there is a certain stickiness that comes, particularly online, of shopping. When you get in the habit of shopping somewhere else, you start to get used to the brands and the banners that are sold there. At worst, we lose Deborah as a customer forever, so I think range is a very interesting one; it’s a very dangerous to rationalize too much. You may take the view that you’ve already got 40 pepperoni pizzas in your assortment; do you really need 41? That is a perfectly sensible view to be taking, but do you say, “I’m going to cut my 40 to 10, because actually 10 account for 85% of my sales in pepperoni pizzas.” Well, now you’re ostracizing the people who bought the other 15% who may end up going somewhere else. I think range will continue to be a very important part of the customer proposition. But, as I was saying before, I think there is a balance between space and range; there’s a balance between capacity and demand—and I think these are all important things which retailers will be looking at.

Live Poll: Underlying Consumer Trends and Loyalty

Deborah Weinswig: David, I’m going to review the poll questions and results but your topic around range is really interesting as we look at the first question, which is, “When purchasing grocery items, are you purchasing more or less private-label products?”

• 26% are purchasing more.
• 62% are just buying whatever is in stock.
• 12% are purchasing less.

Is that consistent with what you would think? David Hardiman-Evans: Yes, particularly the second point: Consumers are buying whatever they can find! We're shopping for my elderly in laws, who ordinarily don't shop at Ocado. They technically aren't actually placing the order; my wife places the order for them. But they are being delighted by some of the things that they are getting, because they say to us, “I'd like a pork joint,” and we deliver to them one of one of the finest organic joints that they can find, and they love it. They don't know what it costs, but that was all we could actually get our hands on for this particular shop, because we are buying whatever is available. So, I think that does resonate. When you look at the food market, and the distribution behind that, there was one very large section of the food distribution market that could not operate and that's food service—into restaurants, hotels bars and cafes that could not open. The flip side of that is that customers could also not go out to eat… The opportunity—and one of the other reasons you've got a lot more, not just online, but overall grocery, traditional grocery resilience to this pandemic—is the fact that, actually, many more people are eating much more food at home. Many more people are cooking. Many more people are perhaps cooking for the first time. But also there are people who might be thinking, “We’re eating at home. It's a lot cheaper to eat at home than it ever would have been to take my family out to the steakhouse, but I still want a nice steak, so I'm going to order myself a nice steak rather than just going for the cheapest one that I can find or the private-label equivalent.” There are a lot of underlying trends that have been taking place that influence people's choice of product. Deborah Weinswig: Absolutely. The second question is, “Since the outbreak of Covid, have you been purchasing more of your groceries online?”

• “Yes, all of my grocery purchases are now online”: 22%
• “Most, but not all, of my grocery items are purchased online”: 32%
• “I still go into brick-and-mortar grocery stores”: 46%

To have over 50% [select the first two options], it sounds like we've seen already significant changes. The question is, how sticky are those? David Hardiman-Evans:  They are interesting poll results, and I think they are very consistent with some of the things we have touched on already. I think it's also worth reflecting—it's over 50%, and how much more would it have been if there was more capacity available in the system to allow even more people to have shopped online?   I think the interesting one also was the second point there Deborah, that the answer was yes but not exclusively—and I think that is true for many online customers, actually. I think if you talk to retailers who have any meaningful online business today, but also obviously a very large brick-and-mortar business today, they would mostly say that their best customers are those who shop online but they don't necessarily only shop online, because they will tend to do a lot of their main shopping online—because of the convenience of not walking the aisles or doing the checkout—but they do top-up shopping: There’s the “in between the big shops,” the “my son's invited a whole bunch of friends home after football practice and I need to run to the store and buy 10 pizzas, but I hadn't expected that when I was planning my weekly shop.” So, the customers do shop more, but I think the more channels that people are engaging with a retailer, of course, creates more stickiness, not just with a particular channel but with that particular banner or with that particular retailer. JoAnn Martin: The third poll question was, “Have you been purchasing more packaged food over fresh products?”

• 20% said, “Yes, trying to stock up on packaged foods.”
• 50% said, “Depending on what I need for the week.”
• 30% said, “Trying to eat fresh foods.”

David, when you think about this—coupled with sustainability and fresh wastage—what's your reaction to the poll? David Hardiman-Evans: In the early days of the UK lockdown, I think people tried to be very disciplined. Then the schools shut, so the kids were at home all of the time, and then I think people started to go a little stir crazy, so we saw a big spike in things like ice cream and lots of “feel good” stuff. So, I think, it will be down to individuals—those who are trying to be disciplined in what they buy and, going back to the previous poll question as well, “I buy what I can.” I think we mustn't also forget, going back to supply chain, [the UK is] a small island and we import a lot of our food, whereas [the US is] a big landmass and you have a lot more self-sufficiency in certain products, but you also import a lot of your products as well. And, of course, this pandemic has had major impacts on things like the spring harvest, for example. So, depending on where you're sourcing or where particular retailers are sourcing produce, that can also be having an impact on supply chains, and we're certainly seeing that here in Europe. You may see that impact availability of certain products; you may start to see that creep into prices as well as supply and demand dynamics change. JoAnn Martin: That's helpful. Thank you for those insights. When we look at the last poll question, it really goes back to the stickiness conversation we were having and really supports some of your thoughts from before: “For those that have been purchasing online, once restrictions ease, will you continue to purchase online for the foreseeable future?”

• 2% said, “Yes, I will continue to buy all of my groceries online.”
• 68% said, “I will continue to buy some of my groceries online.”
• 30% said, “No, I plan to shop exclusively in store.”

It feels in alignment with some of your comments previously; did you want to expand on that? David Hardiman-Evans: I think that if you take those first two categories, people who shop online for groceries don't necessarily shop 100% for groceries online, but they tend to do the bigger ones. Because if you think about, why do I shop online? I shop online because it is convenient; I shop online because once I have got into the habit of it and once I have got over the initial hump of the first shop or the first few shops, actually it doesn't take very long and I don’t have to move! It takes me five or 10 minutes, and I have done my weekly shop—and I can choose home delivery or plan my time around pickup options. But in between that, as I said, consumers tend to top up somewhere. I think one of the other things is, if people are shopping consistently online, they get used to the private labels they can get a particular grocery store—so when they do go and do a top up, they like the consistency of getting the same private labels or they like the consistency of the brand assortment which is available at that grocery store. So again, that drives the loyalty for that grocery brand.

Q&A: Online Fulfillment Models and the Future of Physical Stores

Deborah Weinswig: Thanks, David. We’ll turn it over to audience Q&A, of which we have an unbelievable amount. We will get through what we can, and thank you everyone for the great questions. I'll kick it off with two from the same participant: “What are some of the challenges in adopting the Ocado fulfillment model in the US?” And then, “What is the difference between Ocado’s model and micro-fulfillment centers?” [caption id="attachment_111550" align="aligncenter" width="700"] Deborah Weinswig presents the audience Q&A, which drives discussion around Ocado’s grocery fulfillment model.
Source: Coresight Research [/caption]   David Hardiman-Evans: Good question. I think many of those on this call may know that we partner in the US with The Kroger Company. It may be a better question addressed another time to our good friends at Kroger! But I think, look, the way we approach operations for grocery online goes back to those core principles that we apply to our own retail business in the UK: We want to be able to enable our retail partners to offer to their customers the best possible proposition online. A lot of that is through having very good software, and a lot of that is around the organizational structure of the fulfillment and everything that comes with that. The other part of it is driving a sustainable cost to serve. I think the two in many ways come hand in hand. If you think about a customer online, online is really a service-led proposition—as in, if the service is not very good, people over time just won't use it. But what is the bare minimum for an online grocery service?

1. Well, we have already established that people tend to buy much bigger baskets, and they're buying 40 or 50 items at once, but they want the precise 50 items that they ordered; they don't want 45 and then five substitutions.
2. We've talked about fresh product, and one of the pushbacks for customers shopping online has been around, “I want to select my fresh produce myself, because I'm the only one who knows how to pick an avocado that's ripe.”Actually, interestingly through this crisis, a lot of people are starting to realize that when they do shop online, they get a pretty decent avocado, so again, they're getting over another hump.
3. Finally, allied to whether it's with home delivery or whether it's pickup, “I select a dedicated slot, and I want it delivered in that time frame that I've selected myself.”

So, those are kind of the three core tenets, and they're all enabled by how we work with partners in building and establishing together the right sort of fulfillment asset capability, allied with the proprietary software that controls it all. The programs that we work with our partners—whether they are in the US or anywhere else in our partnership framework—are aimed toward setting that up accurately and effectively. Outside of the US, we have actually launched—during this pandemic period—the first two international fulfillment centers with two of our other partners, in Paris and in Toronto (with our Canadian partner). Talking about micro-fulfillment… There seems to be this polarization of view that in the red corner, there is a large-scale automated facility approach, and in the blue corner, there's a micro-fulfillment approach. Well, here's something to think about: We build both. We build large ones; we build medium-sized ones; we build small ones; we build micro-fulfillment centers. We have these operating here in the UK. Interestingly, and this should be no big surprise, there is a tradeoff between scale and economics. It's very simple: This is a razor-thin margin business, but it's a very high-volume business. We use our micro-fulfillment centers for a different customer use case: It's more around lead-time immediacy and less about fulfilling the very large, regular orders which make up the mainstream grocery market. So, it may be that you find that different types of fulfillment—in the same way we did—are more suitable to servicing different types of use case. It's not a, sort of, “silver bullet, winner takes all” in this approach. I think as retailers are thinking about how to approach online, I think it's important to understand, what is the geography they're trying to serve? What is the customer catchment they’re trying to serve? And what is the customer use case they're trying to provide for? Because the answer may be different depending on what it is that they're trying to achieve. JoAnn Martin: David, we talked a lot about the impact online, but what can you share about your perspective about the future of actual brick-and-mortar grocery and the impact to them? David Hardiman-Evans: Look, it has been a tough and challenging time for everyone. I think one of the interesting things we've seen, particularly here in the UK and also more broadly in Europe, actually, is that there has been a resilience naturally in traditional grocery retail. One of the things that has perhaps characterized it a little bit is that they've done quite well against one of the other subcategories in the grocery sector, and that's the hard-discount sector, which has been expanding very rapidly in recent years here in the UK and also across many European countries and of course has been knocking on the door and in the US as well. There has been for some time a bit of a debate in terms of the very narrow assortment that hard discounters tend to have as their proposition. And interestingly, in this time of Covid-19, one of the things that consumers are trying to do is limit the frequency that they have to go to the grocery store. They tended to be consolidating multiple trips to the store into a much larger order… They want to consolidate it into one trip, and they want to reduce the frequency of even going to that one store. So, you're seeing much bigger baskets, and you're seeing, in some cases, that they're cutting out the trip to the one store where they really only go to buy just a few items. That's one interesting thing. Obviously, during this difficult time and as we start to have that gentle easing out of this period, what are the provisions that physical retailers also have to be putting in place? Of course, first and foremost and paramount to this is ensuring the safety of customers and the associates who work in that store—so all of the social-distancing requirements, queuing outside of the store, limiting the number in the store at any particular point in time and the careful distancing of open checkouts. All of this slows down the process of getting a set number of customers through your store, so also thinking around operating hours, do you open a little earlier? We've seen here in the UK, and I'm sure you've seen in your markets, retailers opening and giving dedicated hours to certain sets of customers, whether they are key workers in the health profession or whether they are registered vulnerable persons. Do you have later shopping hours? How does that impact with local or state regulation in terms of how long you can open and operate? I think the other thing that has been very apparent has been a willingness and a keenness to share and hear experiences. Grocery is by definition a very local business, but actually the challenges that grocers have been facing during this pandemic are very common. And one of the things we've been able to help facilitate is actually bringing together our global partners to share some of their experiences—and I'm sure other groups, I know certainly in North America, certain industry bodies are bringing retailers together to share some of those experiences very effectively. I think there is nothing like a problem shared to help ease the burden of trying to work out what we should be doing, not just now but also as we move forward. Deborah Weinswig: Well, David, it’s wonderful that you're doing that for the industry. “Looking at the longer term strategically, do you expect online grocery to remain a discrete type of order—i.e., only grocery items—or will the offering and consumer behavior evolve into a mixed basket of groceries and general merchandise? If so, how is Ocado positioned?” David Hardiman-Evans: One of the ways to perhaps think about this is, “How I shop in the offline world? How do I shop by going to stores?” I think the opportunity is, if you're shopping online for your grocery, if you can add in products which naturally come to you and you feel are adjacent to your core grocery shopping, mentally, you'll add them in. If it's something that's too far removed, probably not: For example, if I'm shopping for my groceries, am I really going to also start shopping for a mattress? Probably not. If I'm going out to shop for a mattress (i.e., a general-merchandise item), am I really going to suddenly think, “There’s a grocery store attached to this mattress shop; I'm going to go and do my grocery shop.” Probably not. But if I'm doing my core grocery shop, and I think, “All my socks I use for work have got holes in, and look! There are some socks in the online aisle here!” I'll just add them to my basket; of course I’ll buy them. There are certain categories are very naturally adjacent to your core grocery offering—things to do with a pet, things to do with the home… Clearly health and beauty is an area of extension that you can be thinking about. So, I think there is naturally an opportunity to do that. Are you likely to do your core grocery shopping and be thinking about fast fashion, necessarily, as part of the same mission? Maybe, but it becomes slightly more tenuous. They are kind of different missions. Remember grocery shopping is also quick. It is a chore, in many respects, and it's one you want to do relatively swiftly. If it's an item where actually you'd rather spend some time researching, it's probably not something that naturally comes as part of your regular grocery shop. The challenge of selling things online is different for food and grocery than perhaps it is for, you know, selling a new camera lens, where you're going to do quite a lot of research before you press buy: They’re different missions. I think that the bottom line is, if you can consistently attract your customer to readily shop grocery, then the opportunity to add further categories in is there. I think the reverse is not necessarily true. If you are a general-merchandise retailer, you don't have that frequency regularity of your customer coming into your online shop, and hence the opportunity to sell more is more limited. Deborah Weinswig: I want to thank David for his extensive answers, and thank you JoAnn. Thank you so much for the great questions, and we’ll see everyone soon.