There’s a new kind of grocery store in Norwood, but you can’t go inside.
Addie’s, which only accepts online orders that customers pick up, opened on Thursday along the Route 1 “Automile.”
It’s the brainchild of Jim McQuade, an aerospace engineer by training, who says he became “obsessed” with the online grocery concept more than a decade ago, after his wife asked him to pick up a few items for dinner: balsamic vinaigrette, feta cheese, and walnuts.
“I go into a supermarket, and of course it’s, ‘how do you find these three things?,’” he said. “Twenty-five minutes later, I finally find these three items...but when I get home, the kids are hungry, nobody’s happy.”
McQuade, who was then working on an MBA at Harvard Business School, figured there was a better way for busy families to get their groceries. He came up with an idea for a drive-up store ― customers would simply pull into a parking spot and receive their order in minutes.
That was in 2013, and McQuade said the idea never took off. “It was too early,” he said. “There was no curbside pickup from any grocery store.”
McQuade resurrected Addie’s in 2020 at the start of the pandemic, when suddenly everyone was avoiding in-person shopping and looking for alternatives.
“I had folks reach out to me and say, ‘Remember that thing you were working on? I need that in my life now,’” McQuade said.
Addie’s raised $10 million in a deal led by the Disruptive Innovation Fund, the venture capital arm of Rose Park Advisors in Boston, which was cofounded by the late Clayton Christensen and his son, Matt Christensen.
Consumers have been going to traditional grocery stores for more than 100 years. But recently, investors have been pouring billions of dollars into startups that are trying to make the shopping process faster, more convenient, and less expensive.
Many online delivery companies, however, have failed.
“The biggest challenge from an investor perspective is [that] online grocery to date, by and large, has not been profitable,” McQuade said.
Addie’s won’t be profitable until it opens multiple stores, he said, but it has already demonstrated the ability to fulfill profitable orders.
Still, many challenges remain for online grocers such as Addie’s. Matt Newberg, founder of HNGRY, a media platform that examines how technology is reshaping the food industry, said he’s skeptical of the pickup-only business model, in part because in-person shopping drives most of the profit for grocers.
He also believes that Addie’s a goal to open 2,000 stores in 10 years will face steep competition from much larger grocery chains, including Amazon, Walmart, and Albertsons, which all offer pickup options and are investing in automation technologies.
“People are used to shopping at Whole Foods or any number of retailers that already offer pickup and delivery,” Newberg said. “[Addie’s] has to unlock lower prices or a better experience.”
McQuade said Addie’s addresses several of the obstacles that come with existing pickup options. For example, some stores offer a limited number of pickup slots per hour, or they end up frequently making substitutes for out-of-stock products. He said Addie’s can serve hundreds of customers per hour, and its software ensures the products customers see online are actually in-stock.
McQuade doesn’t sound fazed by the competition. He believes it will be more efficient to pack pickup orders in a grocery store that isn’t open to the public. Most stores’ inventories are designed keep customers shopping for a longer period of time, whereas Addie’s is arranged in a way that allows its employees to pick items the fastest.
“Where’s the milk in every supermarket you’ve ever gone into?,’” McQuade asked. “It’s all the way in the back left corner.”
As online orders become more prevalent, he said, traditional grocery stores won’t be able to keep up.
“Running online grocery out of a customer-facing supermarket is like trying to run Zappos out of the shoe department of a Macy’s,” he said.