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01/24/2021

The Future of Digital Fulfillment

The Future of Digital Fulfillment
The QuickCollect GL system from Bell and Howell enables consumers to get high-quality meats and meals ordered via the Munsee Meats e-commerce site.

Just before the new year, Munsee Meats, which touts itself as Indiana’s premiere meat provider, made one of the latest advances in digital fulfillment — a reflection of a trend that promises to grow even more intense in 2021 as more grocery consumers shop online.

Munsee Meats began offering local customers a new method, dubbed the “Automated Farmers Market,” of picking up their orders placed through the company’s website.

The retailer partners with local farmers to deliver premium meats and locally sourced goods to customers in east central Indiana, covering Indianapolis, Fort Wayne and the areas between. While traditionally only servicing local restaurants and institutions, Munsee Meats expanded its vision to offer its unique selection of meats and goods to retail customers. By leveraging the QuickCollect GL system from Durham, North Carolina-based Bell and Howell, Munsee Meats took the first step to change how local customers interact with local farmers, artisans and even restaurants by automating farm-to-table food delivery.

Once online customers place an order on MunseeMeats.com, their order will be filled and stocked in the Automated Farmers Market. Customers will then receive a confirmation QR code that their order is ready for pickup. When a customer arrives at the lockers, they scan the QR code and retrieve their order from the self-serve lockers.

“We are always looking for unique ways to grow, especially our e-commerce efforts,” says Jason Mauck, CEO of Muncie, Ind.-based Munsee Meats. “The QuickCollect GL is a unique locker solution that helps us offer the safest and quickest method for families to get the highest-quality meats, meals and local goods. It also enables us to scale our reach very quickly and cost-effectively. We are revolutionizing the way people interact with their local farmers and business.”

Online Growth Spurt

One of the biggest stories of 2020 was how the pandemic produced a growth spurt in food retail e-commerce — Boston-based L.E.K. Consulting estimates that some 35% of U.S. households now buy groceries via online or mobile channels. One of the biggest stories of 2021 will be how food retailers will refashion supply-chain and fulfillment services to handle all of that e-commerce demand — and, as is the case with Munsee Meats, serve new customers and otherwise expand business.

The QuickCollect GL, part of the QuickCollect Solutions portfolio of automated pickup solutions offered by Bell and Howell, is a modular, temperature-controlled locker engineered for indoor and outdoor installations. Each column in the modular design can be remotely adjusted to be any temperature, from frozen to heated, to meet any specific storage temperature requirements. The lockers will first be available in select locations in the Muncie area, with rapid expansion plans in the works.

“We are proud to partner with an innovator like Munsee Meats,” says Joe Zuech, VP of online grocery solutions for Bell and Howell. “With our temperature-controlled grocery lockers, Munsee Meats can now deliver an easy, convenient order pickup option that their customers will love.”

Expect to see more such innovation. The numbers point the way.

According to L.E.K, for instance, without the pandemic and the improvisation that it forced upon the food retail world, it would have taken three to five years to reach the level of e-commerce achieved in 2020.

The consulting firm has found that the trend is being fueled by various demographics. These include older consumers trying online grocery shopping — L.E.K. says that of first-time grocery online shoppers in March 2020, 39% were age 60 and up. In four years, the percentage of consumers who have ever purchased groceries online could reach about 66%, according to a forecast by Barrington, Ill.-based consultancy Brick Meets Click. While not all grocers were ready for such a rapid shift, they’ll need a strong e-commerce strategy going forward, the L.E.K. report notes.

Quick Reactions

Food retailers, in turn, are having to react quickly to that rapid shift — with more changes to come in 2021 and beyond.

“As consumers increasingly demand same-day delivery, grocers are expected to expand back rooms in order to create more space in stores for online order fulfillment,” the L.E.K. report says. “Grocers are also likely to perform SKU rationalization in order to create a more targeted in-store assortment, maximizing the decreased selling store space as a result of expanded back rooms, and broadening online assortment.”

Food retailers are tailoring fulfillment operations to deal with the rise in contactless pickup and other e-commerce-related services, which have spiked during the ongoing pandemic.

And that’s hardly all that’s going on as food retailers reconfigure their spaces — and, in some cases, offer similar services to those of Munsee Meats.

“Growth in demand for curbside pickup is expected to drive retailers to reserve existing parking lot space for pickup customers, and add lockers or automated pickup depots that customers can access via drive-thru,” the report adds. “For example, Whole Foods has converted in-store cafés to e-commerce staging areas in high-order-volume cities such as Atlanta and Philadelphia. Walmart is testing automated kiosks that serve as vending machines for online grocery orders. And Hy-Vee introduced grocery pickup lockers outside existing stores and at nearby locations (e.g., in local hospital parking lots).”

Pickup’s Bright Future

Of all of those fulfillment methods, curbside pickup would seem to have the brightest future, at least in the short term — and worthy of the lion’s share of attention from most food retailers in 2021.

InMarket, a Los Angeles-based marketing platform and app developer, has found that curbside visits outpaced traditional grocery visits in 13 of 15 brands recently sampled.

More specifically, Lakeland, Fla.-based Publix Super Markets is the most popular supermarket chain for curbside pickup, with customers using curbside an average of four times over the quarter, more than one visit more per customer than traditional shopping trips. Food Lion, Kroger, Giant Food and Safeway (in that order) were the next most popular grocery chains for curbside pickup. Of the grocery chains sampled, Wegmans Food Markets was the only brand to record less curbside visits than traditional ones — one reason could be that the Rochester, N.Y.-based grocer’s online prices are higher than store prices to cover the cost of picking items for e-commerce orders.

MFCs and Dark Stores

As for the next big digital fulfillment trend, a strong case could be made for micro-fulfillment centers, which also scored a big boost in 2020, thanks to pandemic shopping. As L.E.K puts it, “[M]icro-fulfillment centers allow retailers to leverage existing stores in order to increase online order fulfillment efficiency and enable same-day delivery. The last-mile delivery cost is shifted to the consumer, who drives to the store to pick up their click-and-collect purchase.”

Those facilities allow for automated picking, reducing manual labor costs, and typically cover 70% to 80% of an order — in many cases, employees will need to manually pick bulk items and frozen and refrigerated items, although innovative efforts could eventually help solve that program if the micro-fulfillment trend continues to gain energy.

So-called “dark stores” are being used by Austin, Texas-based Whole Foods Market and other retailers, meanwhile, to help handle digital fulfillment tasks. Make no mistake: Using empty retail space to fulfill online orders is a larger retail trend. In late 2020, for instance, Los Angeles-based commerce real estate and services firm CRBE found that stores could increasingly take on such functions as high-tech fitting rooms, hospitality lounges, on-site processing of merchandise returns, and the shipment of online orders.

These are just a few of the features and functions that retailers are adopting to meld in-store shopping and e-commerce fulfillment in the same space, according to the CRBE’s report.

“Brick-and-mortar stores will remain vital for retailers for branding purposes and essential customer interaction, but the store’s purpose will shift to supporting the rise of the multichannel consumer — a consumer who uses physical stores, e-commerce, mobile commerce, and social media for shopping and purchasing,” says John Morris, CBRE’s Retail and Industrial & Logistics leader. “This will be key for cost control, as shipping for online orders can eat away profits if retailer supply chains are not efficient. To improve this, stores will now include a big portion of their overall footprint for inventory control, product sorting and shipping/receiving.”

Digital fulfillment continues to advance, with best practices promising to emerge alongside more experimental innovations. This time next year, it’s not unreasonable to expect that more companies like Munsee Meats will have launched their own new tools to serve the increasingly digital food retail customer.

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