Beyond Grocery Disruption: Charting a Course for New Growth
By Colman Roche
Vice President, E-Commerce & Retail, Swisslog Americas
For many grocers, 2023 will provide an opportunity to focus on recovering from the disruptions and consumer changes of the last three years and bring more predictability to their operations.
As the digital grocery market continues to expand, most grocers are gaining a better understanding of the complexities of e-grocery pickup and delivery models and implementing the organizational changes and technology deployments required to support their digital strategies.
As the digital grocery market continues to expand, grocers are implementing organizational changes and deploying automation technology to bring more predictability to their operations.
Here are five e-grocery trends emerging for the year.
- Continuous focus on customer experience: In many ways, e-grocery has hit a tipping point, with shoppers becoming more comfortable with the idea and liking the convenience it provides. Those who previously avoided shopping for groceries online because of product selection concerns are being converted.
Consumers are placing smaller, more frequent online orders. As a result, grocers are focusing on automation systems and e-grocery strategies that enable greater agility in responding to changing order profiles. They are also investing in technologies and processes that enhance the simplicity and accuracy of the process to maintain customer satisfaction. Grocers are beginning to understand the importance of being “all-in” with their automation system deployment, to maintain a cohesive customer experience. This can include cooperation amongst different departments.
- Rise of e-grocery automation best practices: We have not yet reached the point where most automation systems can be standardized for all applications. Choices often depend on the strategy, throughput and available space. However, we have reached the point where we do have best practices, much of which focus on the design and configuration of the system, as well as on the implementation and the operational side.
Most of these best practices come from early automation adopters working closely with technology providers to take the lead on establishing digital grocery as a viable, profitable option for both grocers and consumers. This experience is helping guide other grocers as they determine their e-grocery strategy and deploy automation solutions. It is also showing grocers how they can modify their business to squeeze the most efficiency and performance out of the automation. Even non-grocery retailers are watching what is happening in the e-grocery space and considering the best practices.
- Flexibility over speed: As consumers got more comfortable with online grocery shopping and the convenience it provides, they initially expected quick order fulfillment times. Grocers were experiencing this pressure and saw shrinking fulfillment times as a way to enhance customer experience and create differentiation. There were predictions that the gold standard for e-grocery pickup and delivery would be around 30 minutes.
As e-grocery matures, flexibility is now becoming more important than speed for consumers when it comes to fulfillment. Shoppers are growing less concerned about having their grocery pickup or delivery as quickly as possible. Rather, they prefer that the pickup or delivery time fits into their busy schedule. This can mean scheduling the delivery time for specific day of the week or scheduling pickup to coincide with driving home from work.
- Overcoming the labor shortage: For a number of years, there was a stigma hanging over automation. The common belief held by many was that if you deploy automation, you are replacing human workers. Most companies, including grocers, are realizing that this is simply not the case.
Grocers are not immune to the current labor shortage that is being felt across industries. They see automation systems as valuable assets to not only help meet consumer demand, but also enhance productivity of human workers, create innovative environments that attract skilled labor, and improve workplace safety and ergonomics. Highly efficient delivery systems, including hub-and-spoke, single store and micro-fulfillment centers, are providing enough cost benefits to create a business model.
- Software takes center stage: Consolidation of ambient, chilled and freezer items in combination with tight delivery and pickup windows makes e-grocery much more complex than your average e-commerce fulfillment operation. Grocers realize they need software that has been tailored to the requirements of e-grocery and provides single-system control and orchestration of all processes and systems within the fulfillment center.
One way to tell whether software is tailored to e-grocery requirements is whether it can manage local inventory in real-time based on shelf life and expiration dates. The software should also enable complete order tracking, including automated and non-automated picking processes and support easy integration of essential equipment, such as weigh scales.
Colman Roche is Vice President, E-Commerce/Retail, Swisslog Americas. He brings more than 20 years of supply chain and material handling industry experience to the role, having served in senior leadership roles for material handling systems suppliers as well as consulting and systems integration firms.
His vast experience includes designing machines, processes and systems and implementing ASRS, order fulfillment and manufacturing systems in retail, hospital, governmental, semi-conductor and pharmaceutical sectors. In the last year, Colman and his team have provided more than 8,000 consultancy hours to the world’s leading retailers and created more than 50 concepts to tackle e-commerce grocery challenges. They have worked closely with numerous grocers, including Ahold Delhaize USA, H-E-B and The GIANT Company, to identify, design and install the automation systems they need to continue to meet evolving consumer needs.
Colman earned his BSc in Mechanical Engineering from Dublin Institute of Technology, Ireland, his MBA from Rutgers, The State University of New Jersey – Newark, and completed the Program for Leadership Development at the Harvard Business School.