The grocery industry experienced tremendous change in the past few years, much of it spurred by the onset of the pandemic in 2020. Digital grocery sales have stabilized at 14.4% of total sales and are expected to grow to 15.3% in 2023 despite major macroeconomic headwinds.
While online ordering, curbside pickup and same-day delivery existed before the pandemic, these services have transformed the way we interact with consumers and their expectations of us. Consumers have become accustomed to 2-day (or shorter) shipping when online shopping, quick food delivery to their door at the push of a button, and the ability to have items brought to their vehicle with short notice to reduce contact. Digital grocery sales totaled $128 billion in 2022, so these shifts in consumer expectations pose a challenge of creating a sustainable business model that addresses consumer wants while achieving profitable growth.
Curbside pickup is here to stay. Improved operational efficiency can lead to substantial cost savings, ensuring our grocery customers are in a strong position to carry their robust curbside pickup plans forward.
Curbside pickup is table stakes for shoppers and many stores are realizing the need to focus more of their resources on this convenient service. Unfortunately, there are many moving parts that need to work seamlessly to accomplish such a dramatic pivot, and some stores are still navigating through the pain points of logistics and operations to deliver this pickup experience for their customers.
Despite the meteoric rise in e-grocery revenue over the last several years, profitability continues to be a struggle. Fulfilling the consumer expectations for timely, accurate and convenient no-contact shopping options is straining grocers due to the cost of labor and training, coupled with constraints around volume and quality control.
Profitability is a major concern Liviri is tracking. The Grocery Industry lost $298 million in margin loss on their digital grocery business in 2022. Grocery stores desperately need to shorten their lead times, improve their operations and utilize their labor force more efficiently to run an effective curbside pickup program. When it comes to grocery click & collect, a well-organized, pick, pack, stage and pickup process is of utmost importance, as is avoiding any process-related issues that rear their heads.
A quick win is to use thermally insulated and reusable totes for picking and staging, which decreases the amount of labor and touch points needed in the staging environment by eliminating the need to repack picked orders into refrigerator and freezers until customer pickup. Grocers can save upwards of $1M annually with every minute saved by optimizing their click & collect process. Working closely with our grocer partners, we’ve learned that reusable insulated boxes coupled with the improved operational efficiency can lead to substantial cost savings, ensuring our grocery customers are in a strong position to carry their robust curbside pickup plans forward.
The coming year will bring a unique set of opportunities and challenges for grocers – something they are surely getting accustomed to after the past few years. By creating an actionable vision for their curbside operations and working with appropriate partners with experience in the sector, this current “growing pain” can become a lucrative portion of their overall business as the years progress.