Did you know 32 out of 100 biggest retail companies worldwide are grocery store chains and supermarkets? 10% of the consumers regularly do online grocery shopping. 47% of millennials do grocery shopping online. Even the size of the entire grocery market was $632 billion in 2018. Amazing!
This shows that in-store and online grocery shopping is thriving, especially after the Covid 19 outbreak. Grocery stores are thriving because they are convenient, sustainable, and provide a cheaper alternative to go restaurant to eat.
As the demand for online grocery shopping is increasing, grocery stores are facing multiple challenges. Fulfilling online demand efficiency is one of the biggest problems being faced by online grocery stores. Likewise, issues in existing store system technology, online grocery fulfillment costs, low-profit margins, increasing overhead costs, and last-mile delivery are some major challenges. But with the advancement in technology, grocery retailers are trying to overcome these challenges. For instance, grocery retailers are embracing grocery micro-fulfillment centers.
As its name implies, these are small, compact, and automated warehouses designed to set-up within dense urban areas and close proximity to end customers. The Grocery Micro-Fulfillment Centers eliminate the need for the grocery retailers to use existing in-store to fulfill the online grocery orders. Instead, each grocery order is directly sent to a micro-fulfillment facility where the AI and analytics are used to pick the items to deliver them automatically.
Micro-fulfillment centers use automated shelving systems and shuttle robots to efficiently and quickly fulfill online grocery orders without any human intervention. As the customers’ expectations are continued to increase, and competition is intensifying, micro-fulfillment centers seem the only way to meet the expectations.
Maximize the storage space by installing the micro-fulfillment
Since the density of online grocery orders is increasing, the need for storage space is equally increasing. Increasing online grocery orders create additional traffic and jam the aisle for the professionals employed to select, pack, and deliver the items manually.
The existing in-store can also cause orders to go out of stock because of the limited storage space. It isn’t easy to maximize the storage space of the traditional in-store in the urban areas. Here the micro-fulfillment centers come in. They do not just help to quickly and efficiently deliver the online grocery orders, but they allow you to maximize in-store space. Retailers can use the storage space by stacking more goods and take advantage of free vertical space by installing the micro-fulfillment centers that typically occupy only 1/3 of a supermarket’s space.
Getting close to the end customers
The two-day shipping and increasing online grocery shopping have encouraged retailers to get closer to their end customers so that more and more online grocery orders are fulfilled quickly. However, the space in urban areas is highly expensive. Even, it is very difficult to find the space. The idea to reduce the need for 600 000 square foot grocery fulfillment space to just 10 000 square foot grocery micro-fulfillment space makes sense. It will help the grocery retailers take their business close to their end customers and meet their growing expectations, including a two-shipping experience and round-the-clock availability.
Reduces last-mile delivery costs
The higher delivery costs make online grocery delivery a low-profit margin business. This is perhaps one of the biggest concerns of online grocery delivery businesses. Setting-up micro-fulfillment centers close to the end customers will drastically reduce the online grocery fulfillment costs, making the online grocery delivery business more profitable. On top of it, the end customers will get their orders in very little time.
Efficiency is another reason why grocery businesses are embracing micro-fulfillment centers. Since everything is automated in the micro-fulfillment, from picking the items to the shelves to pack the order for delivery, the micro-fulfillment center has improved the grocery order delivery efficiency. Now, more online grocery orders can be processed.
The existing stores are currently over-sized. Micro-fulfillment centers are the ultimate way to optimize the available storage space by stacking more goods strategically. Every grocery retailer needs to set-up a micro-fulfillment center to automate their order pickup and delivery. The micro-fulfillment center will play a significant role in transforming the grocery retail business.
Companies like Autostore can be considered to design the micro-fulfillment center for your grocery business. The famous business analyst has analyzed the significance of micro-fulfillment centers and the latest grocery store marketing strategies. You can read the article post by Brittain Ladd to learn more about how micro-fulfillment works.