Published November 26, 2019
Despite conflicting predictions, online grocery is beginning to gain momentum, with sales estimated to reach $29.7 billion in 2021, more than double the $14.2 billion in sales in 2017, according to Statista. Grocery is largely responsible for Walmart’s e-commerce growth in the last 12 months, with the retail giant posting its strongest quarterly growth in Q3 with a 41 percent increase in e-commerce sales. This can be attributed to recent advances in grocery offerings, including free and same-day pickup and delivery services for thousands of locations across the U.S.
Amazon is also investing in grocery, with the e-commerce behemoth scheduled to open a new grocery chain early next year and ramping up its grocery delivery offerings with free 2-hour delivery and elimination of its $14.99 monthly fee for Prime members using Amazon Fresh. Amazon will also reportedly use its new stores-along with Whole Foods stores-as distribution centers to support its online grocery sales.
In constant competition to offer both online and in-store options, grocers are now exploring new methods, including micro-fulfillment centers and “dark stores,” where part of a brick-and-mortar location is converted into an employee-only mini fulfillment hub. While grocery initially lagged in e-commerce sales and growth, the segment has surpassed other industries in early adoption of micro-fulfillment strategies. In the U.S., Albertsons and Stop & Shop are among the major chains currently testing out micro-fulfillment centers in store backrooms, while Canadian grocer Loblaw is planning open an automated facility in one of its Toronto stores next year.
But like other industries, consumer demands are steep for grocery orders, with most expecting delivery in 30 minutes to an hour. Traditional grocery retailers are faced with fulfilling online orders from their stores or from their distribution centers; neither is the best option. Opening dark stores or introducing micro-fulfillment centers powered by robotics are the next generation supply chain and logistics strategies that can help retailers cost-effectively meet the growing needs of consumers. Not only do these fulfillment methods present a myriad of benefits and savings to grocers, they also improve the customer experience by solving consumer demands for rapid, accurate delivery.
Check out this blog post to learn more about how robotics can help transform retail backrooms into mini fulfillment centers.
