In the blink of an eye With one eye, millennials, moms and grandparents have abandoned the decades-old practice of wandering dusty grocery aisles for a convenient and innovative use of online grocery shopping. While Instacart, Amazon Fresh and others have offered an alternative to traditional groceries for years, it is the pandemic that has categorized them as essential businesses and has given them a clear competitive advantage more than ever.
But the past few months have seen not only sweeping changes in consumer behavior, but also fundamental shifts in the business models adopted by grocers around the world. These changes aren't temporary - in fact, they're here to stay, corona-catalyzed and permanent.
Innovation in delivery can boost efficiency and reduce costs
For the consumer, online grocery shopping usually begins and ends the same way: they place their order on an app or website, and hours later it shows up at their doorstep. But the way these commands are executed runs the gamut.
The best-known approach comes from Instacart, which relies on hundreds of thousands of human shoppers filling customers' online grocery orders by shopping side-by-side with regular physical customers. The model clearly works for Instacart, which is valued at nearly $ 14 billion after its latest raise.
However, this model is far from ideal. Even before COVID, buyers were notorious for crowding out repeat customers, not to mention introducing high shipping costs and the element of human error into the handling process.
One obvious solution has become the Central Distribution Center, or CFC. CFCs are large, stand-alone warehouses - often serving separate geographies - that can cater for both physical stores and online grocery deliveries. As order volumes increase and consumers demand ever faster delivery times, innovation has already been introduced into the CFC model.
Some grocers, notably Kroger, believe that the introduction of robotic automation in CFCs through solutions such as Ocado can create economies of scale for realization. These CFCs deploy execution robots, controlled by air traffic control technology, which operate along a grid system and move the goods through categorized crates. Kroger continues to invest in the model, recently announcing three new Ocado automated CFCs in the Western, Pacific Northwest and Great Lakes regions of the United States. The smallest site measures over 150,000 square feet.
While Kroger remains only attached to CFC, Albertsons / Safeway, Walmart model and many others prefer the microfulfillment center (MFC). MFCs, typically much smaller in size (around 10,000 square feet), are automated warehouses dug into the back of existing stores that speed up turnaround times in a smaller geographic area, allowing retail chains to utilize their many geographic locations to act as effectively. fulfillment / delivery centers for online grocery coverage.
