Transform Retail Operations to Meet Emerging Consumer Demands

The coronavirus outbreak and resulting stay-at-home orders that disrupted shoppers’ previously normal behaviors have challenged retailers like never before. Pre-pandemic, consumers were steadily adopting to online buying experiences. But after more than three months in pandemic conditions, it’s clear consumers are buying merchandise online at a scale no one expected when 2020 began.

In a recent On The Move webinar, Applying DC Science to the Art of Retail With Voice, we discussed the emergence of three critical trends that will influence how retailers such as grocers operate and remain successful. These trends add complexity to in-store processes that now require the use of proven distribution center (DC) technologies to address online order fulfillment challenges. Here’s what’s changing:

Consumer behaviors and expectations are rapidly shifting.

Recent global events around the coronavirus jump-started the push by consumers in retail areas like groceries to shop more frequently on websites and with mobile apps instead of in person at brick-and-mortar stores. 

Customers now demand faster, more accurate fulfillment for groceries, medicine and other essentials. They also expect reduced costs — all while shopping in the comfort and safety of their homes. Online retailing is not what’s new, but its sheer scale and volume are. Traffic to online supermarkets jumped 161 percent in late March as the impact of the coronavirus in the U.S. became clear. [1]
 
Distribution centers are becoming decentralized.

The largest retailers have long operated massive DCs to supply the national reach of their chain stores. From these regional DCs, big retailers can restock their stores typically within a day or two. Health care and pharmaceutical organizations also utilize this model, as do grocery stores, to supply their supermarkets and hypermarkets. In a few short months, however, grocery store fulfillment has become far more complex. Online grocery orders must be filled and delivered quickly — sometimes in less than a day. 

In response, grocery retailers opened micro-fulfillment centers closer to local markets to speed up deliveries for online orders. They’re also running more fulfillment operations out of existing brick-and-mortar stores. What’s more, retailers opened dark stores, which might look like a traditional store on the outside, but are not open to customers. The dark stores are filled with products and workers, many of whom manually pick online orders. These store buildings have in effect become micro-fulfillment centers that bring the grocery supply chain even closer to online shoppers.

The pandemic is forcing retailers to roll out these solutions faster than anyone anticipated, and many are still trying to evaluate the full impacts on their business strategies. Some dark store locations may be a temporary stopgap for a few retailers. Other retailers already have announced their intention to utilize dark stores permanently.

Since March, we’ve seen retailers rush to deploy technology to help improve store operations and increase customer satisfaction.

They’ve had to automate as much online order picking and restocking as possible because home delivery and store pickup of online grocery sales increased 37 percent in April. [2] Now they’re taking a breath and pausing investments to assess how they can maintain the same level of productivity as well as be as profitable as they were pre-pandemic. 

The speed at which the online channel is being activated defines the new normal for grocery retailers:

• Online sales are on track to double to $60 billion by 2023. [3] 
• More than 30 million grocery app users are expected by 2022. [4]

What’s changed the most? The pandemic escalated the number of online shoppers. They’ve had positive experiences — so much so that 75 percent of consumers now prefer to shop online for repeat purchases, according to Salesforce Research. [5] This fact alone will influence how retailers invest in online sales and fulfillment technologies. 

Unlocking Greater Sales and Productivity

Manual picking can take approximately an hour for each grocery order. Automating in-store fulfillment processes with advanced technology such as our new Guided Work for Retail solution can help grocery retailers achieve the following:

• Increase store sales by 1 percent with shopping apps, digital marketing and customer routing
• Reduce out-of-stock items by 25 percent as a result of increased accuracy of inventory records and pick path routing
• Increase productivity by 20 percent through voice guidance paired with engineered standards and predictive planning

Guided Work for Retail is built on proven voice-guided capabilities used in DCs. Workers utilize Honeywell Voice to increase productivity and streamline process efficiencies. Workers receive directions to receive, stage and put away inventory — or to pick, pack and fulfill online orders — and interact with the system to confirm each step.

What’s Next: Transforming the Grocery Shopping Experience

Retailers can come out on the other side of the pandemic well-positioned to deal with the large-scale shift to online shopping. But they must take steps now to identify opportunities to invest in people, processes and technology. Investments in automation can help offset additional labor requirements (and costs) while establishing a reliable method for adapting to online shopping behaviors. Guided Work for Retail can help retailers make this essential transition.

To learn how Guided Work for Retail can transform your traditional retail operations into a highly efficient distribution center that supports in-store processes and online fulfillment — and deliver shopping experiences that keep customers coming back — view this webinar, Applying DC Science to the Art of Retail With Voice. 

To subscribe to our blog and receive exclusive communications and updates from Honeywell Intelligrated, click here.    

Sources

_______________________

[1] ContentSquare; ID 1105486
[2] Supermarket News, April 2020.
[3] Statista (ID-293707); IGD – USDA Foreign Agricultural Service
[4] Supermarket News (May 2020); Statista (ID-1013926); eMarketer 
[5] Source: Statista (ID-897678); Salesforce Research