Since it’s strongly believed that over half of the current online behaviour will be maintained after the pandemic ends, retailers are scrambling to come up with faster modes of delivery and more efficient ways to fulfil orders.
A number of grocers have invested heavily in huge automated warehouses, a few are using the strength of partnerships, while most retailers are relying on their existing store footprint to satisfy this massive surge in demand.
In-store grocery fulfilment is by far the most widely adopted approach. It has the huge benefit of being close to the customer, which minimises delivery costs or eliminates those costs if the customer picks up. However, there are drawbacks that have only been exacerbated by the uptake in online order volumes, and now a tipping-point has been reached.
Unrelenting online demand is taking its toll on the in-store customer experience, with online pickers roaming the aisles competing with store customers for products on the shelves and large cumbersome picking trolleys causing congestion. What’s more, retail stores are designed and laid out for browsing shoppers, which is not the most efficient format for order picking. The result is that online fulfilment costs are going through the roof and customer service is being impacted on both channels.
The technology makes picking much faster and more accurate, offering the capability to provide online grocery pickup in under an hour from placing an order, while saving on expensive manual labour and distancing picking operations from browsing customers. Most of an order is picked in the automated system and presented to staff for consolidation and delivery, supplemented by an element of manual picking for frozen, deli or loose weighed items.
A key advantage of the automation is that it maximises use of the cube, enabling a wide range of products to be stored densely and retrieved quickly, enhancing product choice, availability and customer service. And locating a Micro-fulfilment Centre (MFC) inside a store benefits from the site being an established replenishment point on the grocer’s main network, so no additional drops are required.
Importantly, MFCs are far less capital-intensive than large warehouses to set up and can be fully functional within just a few months – reducing risk, smoothing investment against volume growth, and providing opportunities to test and learn through modular implementation across a wider grocery network.
Sweating existing assets in this way enables creative property solutions in space-constrained locations, which not only helps to maximise returns on real estate commitments but enables a holy grail of retail to be achieved – proximity to the fast-growing urban eComm-shopping population.
Overall, micro-fulfilment has the potential to deliver substantial labour savings, faster order processing, enhanced value from property assets, a strong local connection with the customer and a significantly reduced cost-to-serve, which addresses the all-important profitability challenge.
