Americans purchased more than $680 billion in groceries in 2019, and this has steadily risen over the past few years. To meet the increasing demand, grocery retailers operate nationwide in over 38,000 stores. The grocery industry is now faced with a new emerging challenge, the growth of online grocery ordering and delivery.
The pandemic created a surge in online ordering, causing most grocery retailers to rethink how they conduct their business. The question is where to start? Deviating from the prior business model and changing the entire way they conduct business poses a large amount of risk, especially if they are uncertain of the residual value.
The Era of Change is Now
Since the onset of the pandemic, industries are seeing many disruptive changes. Businesses are rushing to adapt to the new landscape while also operating under a new set of expectations arising from customer demand, leading many industries to question where to begin. The process starts with the evaluation of their current operations and breaking that down into more manageable areas to consider.
Here are some questions a business should be asking themselves as they begin the process:
- What is the number one pain point the business is encountering?
- What do we expect to be the next development in our industry? New technologies, increased demand from customers, more online ordering?
- Where do we want to be in 5, 10, 15 years as a company?
Like with any new endeavor, taking the first step is difficult, however, the opportunity for growth, the ability to compete, and scalability increases with successful implementation.
Proactive vs. Reactive
Like with any industry, the focus on margins and keeping costs down is a driving factor. The biggest area of opportunity is lowering costs associated with online grocery and delivery services.
One way of doing this is by leveraging the technology in the marketplace. Many grocers are seeing a rise in the adoption of micro-fulfillment centers to automate the fulfillment process. There have already been recent developments in this area to include curbside pickup, online delivery, and click and collect meal planning. However, these viable options still do not achieve the convenience and personalization that consumers so strongly desire. Therefore, the future of grocery and retail is omni-channel to bridge the online and in-store experiences and give customers more flexibility. An omni-store is a physical store paired with digital services. It is the seamless combination of the online and the brick-and-mortar store.
Utilizing options such as the AutoStore grid and other emerging technologies, current brick-and-mortar stores can utilize their center aisles for high density storage for space efficiency. Customers can have their groceries or retail goods consolidated in less than 10 minutes via the AutoStore system and fulfillment applications such as KPI-S (Kommand Performance Intelligent Software). Grocery stores utilizing KPI-S fulfillment application can pick and pack an order quickly and efficiently. This reserves the outside aisles for customizable options such as deli items, fresh produce, cafes, and the more personalized and tailored services customer’s desire.
Grocers need to consider different layout options for their stores based on their customer’s behaviors, encourage a greater in-store experience with options like cafes, and continue to track their spending habits and online orders to create a more unique and scalable solution to meet both the in-store and online order demands.