‘Our fleet of electric vehicles is the largest in Europe’

A conversation with Frederik Nieuwenhuys, Picnic.

Picnic grew within ten years to become the first online supermarket with nearly a national reach. Now they’re taking Germany and France by storm. Founder Frederik Nieuwenhuys is convinced that his company can beat the traditional supermarkets thanks to technology and sustainability.

Picnic’s first fully automated distribution centre in Utrecht houses a unique combination of man and machine. Crates go from one point to another in fully automated fashion, while hundreds of hands help to fill them at the same time. Along with its twin facility in Dordrecht, this distribution centre of Picnic’s is unique in the world of supermarkets. Unlike at the distribution centres of traditional supermarket chains, here they sort deliveries for end customers instead of stores. That’s something customers do themselves in traditional supermarkets.

Doing it all themselves

That uniqueness is what Frederik Nieuwenhuys, who founded Picnic nine years ago along with Joris Beckers, does it all for. After selling Fredhopper, his own business in online shop software, he felt he needed to do something that nobody had ever done before. ‘The home delivery of supermarket products was just barely getting off the ground at that time. I thought it would be cool to set the world of supermarkets in motion with a company built to do that on a large scale. Lots of friends thought I was crazy and said: “Why not limit yourself to just one part of the process?” But my co-founders and I came to the conclusion that we needed to run the whole thing from start to finish: the app, purchasing and collecting the goods, delivery and customer service. That’s really the only way to make the difference.’ 

And it’s true: at Picnic they do everything themselves and do almost everything differently than others. That comes together in their proprietary software, which orchestrates all activities in the company. The lack of physical shelves and stores gives them complete freedom to be innovative in how they operate. 

Man and machine

New technology is pivotal to Picnic’s success, Nieuwenhuys knows. They’re trying to lead the way on all fronts, also in artificial intelligence. ‘We have about 30 to 50 applications that help us do things like predict how many deliveries we’ll be making, how long those will take and what products we need to procure and when. In addition, our automation is highly advanced, such as at the distribution centre here in Utrecht. It’s here that the groceries for 150,000 families a week are packed in crates by hand. We eventually want to replace part of that work with robots. Even today, that’s no problem with well packaged products, but things like bananas still get tricky. No matter what, the distribution centre will always need people. A pair of eyes and hands can always do more than a robot.’ Picnic needs to keep things human in this regard, believes Nieuwenhuys. ‘In the past, we were sometimes stern with delivery drivers who didn’t return on time. That’s the wrong way for us to react, because nine out of ten times it’s due to our planning or unforeseen circumstances.’

It’ll be interesting to see whether Picnic will soon be able to make do with fewer people than a traditional supermarket. By skipping the in-between step of a store, at least they don’t need employees for that. On the other hand, it takes more manpower to collect the groceries for customers and deliver to their doorstep. Nieuwenhuys is convinced that the sum will work out in Picnic’s favour. ‘If we continue developing the distribution centres with robotics, I think we’ll need fewer people than a traditional supermarket chain.’

Sustainability

Another big way for Picnic to beat the competition is with sustainability, believes Nieuwenhuys. ‘We have Europe’s largest fleet of electric vehicles. We’ve been using electric carts to make deliveries from day one. You won’t see us driving through neighbourhoods in smoking diesels. Nor do our customers have to drive to our stores in their own car.’ Another important green plus point is that they prevent the wastage of food, says Nieuwenhuys. ‘Since we don’t spread our stock of products across stores, we waste almost 75% less than traditional supermarkets.’

Strong partners

Within a period of ten years, Picnic has grown to become a supermarket with more than 60 hubs in the Netherlands. At the same time, the company is making waves in Germany and France. By now, Germany even has more hubs than the Netherlands, and business in France is growing steadily with 15 locations. That growth is kept under control, explains Nieuwenhuys. ‘Whenever we expand, we start with distribution centres where we sort the groceries completely manually. It takes between twelve and fourteen weeks to start one up. Once we achieve more volume, we can move to automated distribution centres, like in Utrecht and Dordrecht.’

That growth calls for strong partners who can provide sufficient goods and financing, says Nieuwenhuys. ‘For goods, we work with German retailer Edeka, which is a joint shareholder and the one that helped us establish Everest, a European purchasing consortium located in the Netherlands.  For financing, we work with several financial partners, including providers of family capital and banks like BNP Paribas that finance assets. Our policy is that it’s going to be a long journey and that we need robust partners along the way.’

The winners of tomorrow

The partnership between BNP Paribas and Picnic started two years ago with the financing of the automated distribution centre in Dordrecht. The bank also helps the online supermarket chain scout out new locations. Co-Head of Corporate Coverage Guido van den Brande of BNP Paribas says that the bank took a long, hard look before deciding to fund the distribution centre. ‘We risked our neck. If you see it purely from a banker’s perspective, something like that is hard to finance. It’s a lot of money, while the cash flows to repay the loan are uncertain. To make a distribution centre like that profitable, the company needs sufficient sales volume. That’s why it’s smart that Picnic grows in stages in new areas such as in the neighbouring countries and then steps up the capital-intensive automation.’

That’s worth it, thinks Van den Brande. He sees Picnic as a great prospect for BNP Paribas because of the expectations for the coming ten to fifteen years. ‘This company is doing something unique. They take work off the hands of supermarket customers so they can spend that time on other things. I myself am happy to benefit from that service too.’ Another thing he likes is that Picnic is at the forefront of technology and sustainability. ‘We want to invest in the winners of tomorrow, and we see Picnic as one of the greats of the future. We can’t wait to grow along with them.’