Will Online Retail Transform Grocery Shopping?

The online shopping revolution, pioneered by Amazon, could not happen without an extensive warehouse infrastructure. And as digital shopping grows, so too will the need for warehouse space. In early June, investment management group Blackstone Group LP provided a clear signal that growth is expected to continue strongly in this space. The company purchased 179 million square feet of urban logistics properties for $18.7 billion.

And now, the shifts in shopping habits have begun to affect grocery stores. While digital trends won’t cause the neighborhood supermarket to disappear anytime soon, the online shopping component is beginning to grab an increasing percentage of sales. And many chains are now offering their shoppers a virtual shopping alternative, complemented with an easy in-store pickup or home delivery option.

Chris Owens, Americold’s Vice President of Business Development responsible for the Retail vertical, has been watching developments in food retail closely. “Online grocery shopping is going to continue to grow rapidly. There is no indication it will slow down, and I think many grocers have recognized this and adapted well. Some were slow out of the gate, but in the last 24 months the leaders have demonstrated a clear commitment to digital shopping.”

Grocers are challenged with managing a traditional store approach as well as an online order fulfillment component.  New customized fulfillment locations will be needed to support multilayered digital strategies that offer a variety of shopping options.    

For example, one answer is to deploy small scale warehouses in markets close to the shopper’s neighborhood.  Early versions of this are seen in “dark store” strategies where a retail store is converted to dedicated fulfillment center.  The next generation of this strategy is now emerging, as grocers deploy custom-built, fully automated “micro fulfillment centers” in expanded store backrooms or as standalone fulfillment structures.

Americold is working with many customers to develop these and other solutions, and has been incorporating digital fulfillment elements into Distribution Center designs. “We will help customers design supply chains of the future from a physical infrastructure standpoint, as well as help them understand how online purchases are flowing through supply chains to them. There are opportunities to move goods faster and at a lower cost,” says Owens.

These are interesting times for supply chain infrastructure providers and their retailer customers, and when they come together to problem solve, new and exciting solutions will be the result.