Global online grocery shopping grew by more than 15% in 2021, making e-commerce the fastest-growing sales channel in the fast-moving consumer goods (FMCG) sector. While the pandemic served as an initial catalyst, this rapid growth is forecast to continue. In the United States, the current online grocery customer base comprises around 150 million shoppers, with revenue expected to exceed the $24 billion mark in 2023.
Many grocers, however, don't feel adequately prepared to take advantage of this boom, with two-thirds of retailers in the United States expecting to lose market share as consumers increasingly shift to online shopping.
A wait-and-see approach is no longer feasible in today's fast-paced digital economy. Consumers expect nothing less than efficient, reliable, high-quality service delivery both online and offline. Retailers recognize that to remain relevant and hold onto their competitive edge they need to invest in automation.
AutoStore takes a closer look at five important factors to consider when automating your grocery logistics.
The best solutions are versatile and customizable, providing a scalable system that can grow as you grow. You’ll want a system that allows you to gradually adapt to changing market forces, increasing your capacity as needed.
Expansion should be quick and seamless so you avoid any operational downtime. This is particularly important when you need to cater to a surge in consumer demand – for example, during seasonal shopping peaks around the holidays. Your automation system must adapt and integrate easily with your space. It should be designed to adapt to any layout, shape, or size, meeting your unique business needs.
A dark store, for instance, helps reduce real estate costs as it can service multiple grocery stores. The store also doesn't have to be in a high-cost area with frequent foot traffic. MFCs, like dark stores, can be set up in a separate location. But, like fast pick areas, they can also be installed on the extra floor space within a store. Both offer the dual advantage of proximity to in-store customers and efficient automation.
All three options provide a dedicated space for processing online orders, translating into more accurate inventory management, reduced labor costs, and shorter turnaround times for customer delivery.
When investing in an automating system, it’s essential to look for the most space-efficient solution available. MFCs and dark stores, for example, can hold up to 80% or more of a grocer’s SKU count and take up around 8,000 to 15,000 sf. A regional grocery chain warehouse, in turn, can cover 600,000 sf or more. With a compact automation solution, you can store more products per square foot than a regular store and save on property costs.
If you’re considering an omnichannel in-store approach, an automated, fast pick area, which reduces the number of aisles needed, will add space to your store. In turn, your customers will enjoy a more pleasant, streamlined shopping experience.
Servicing both your online and in-store customers from the aisles becomes problematic as the shift to e-commerce gains momentum. You’ll want to avoid your staff outnumbering customers on the shop floor, processing online orders. Overall, it’s an inefficient system, and the congestion can be unpleasant for in-store customers.
Online shoppers primarily crave convenience – same-day delivery is therefore no longer a nice-to-have; it's a must for grocers competing in the digital space. Investing in automation will give you the edge here, keeping your current customers satisfied and attracting those who are not experiencing the same level of on-demand service elsewhere.
In the past, grocery stores could expect an average customer lifetime value (CLV) of 10 years. The rise of e-commerce, however, has made this an incredibly competitive space. As a result, customers now regularly bounce around searching for grocers best meeting their needs.
In-store shoppers easily get annoyed by staff clogging up aisles and competing with them for products. In turn, online shoppers get frustrated when products are out of stock and substitutes are sent. Providing a great online delivery service without compromising the in-store experience is key to keeping customers loyal.
Automating your operations allows you complete, accurate visibility of your entire inventory, leading to better SKU management, far fewer order errors, and, ultimately, happier customers who know what they’re getting every time.
“Having inventory transparency will increase your revenue and enable a positive customer experience. So why do we have this laissez-faire approach to accurate grocery deliveries? Even though people are okay with it, it doesn’t mean it’s something we shouldn’t strive to improve,” says Andrew Benzinger, Business Development Manager at AutoStore.
With the right solution, you can scale your business at your unique pace, serving more customers more efficiently. Automation will help keep your customers satisfied, turning them into repeat shoppers, regardless of the shopping channel they use.
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