Getting the Most From Micro Fulfillment
Progressive Grocer|September 2020
AS GROCERY E-COMMERCE GROWS, FOOD RETAILERS NEED BETTER WAYS TO PICK ONLINE ORDERS.
Thad Rueter
A big bright spot — if you can call it that — during the pandemic has been the blazing growth of food retail e-commerce, which is enjoying triple-digit sales growth.

But even as evidence mounts that many grocery shoppers will stick with e-commerce — online ordering, curbside pickup, home deliveries — after the pandemic subsides, food retailers face the stiff challenge of how to keep up with all of that digital growth and activity. That helps to explain the quickening rise of micro fulfillment centers, which are designed to act as mini distribution centers that enable grocery workers to efficiently and profitably pick online orders without disrupting other store operations.

“Micro fulfillment is central to our expansion strategy,” says Tim Knoll, COO of Bronx, N.Y.-based FreshDirect.

During the pandemic, the online grocer has seen a 100% growth surge in its suburban footprint and is now working to quickly expand its services while consumer interest in food retail e-commerce reaches all-time highs.

“The combination of the technology with our expertise in automation and fresh food enables us to get closer to our customers quicker and more efficiently with two-hour on-demand delivery of the same great-tasting, quality fresh and prepared food selection mix we offer our customers in New York City,” Knoll adds.

MFC Models

But deploying micro fulfillment center (MFC) systems can be much easier said than done. Still, strategies and best practices centered on micro fulfillment are taking shape quickly, thanks to trends that solidified during the pandemic.

“Most people using curbside pickup will continue using it in some fashion” after the pandemic subsides, says Coleman Roche, VP, sales and consulting retail, e-commerce Americas for Swisslog. Home delivery interest might fade a bit, given the cost of the service, but e-commerce will remain strong in the food retail world. As Roche notes, “The upswing is largely here to stay.”

Indeed, according to U.K. company Interact Analysis, food retailers plan to increase their spending on warehouse automation infrastructure by 20% each year over the next five years. You can bet that much of that money will go toward MFCs, which come in various models.

Food retailers can buy MFC systems that make use of empty retail space, or which deploy automated and robotic systems within a grocery store’s existing real estate. A supercenter retail store might support its own MFC.

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