Where robots fit into the online grocery store ops equation
Supermarket retailers are faced with a huge labor challenge. The explosion of ecommerce is amplifying this by creating the need for more order pickers, whether store employees or third-party providers, to manually fulfill e-grocery orders from stores.
Grocers are taking several approaches to address the issue. The initial goal is to improve manual order picking speed and accuracy. What worked when ecommerce order volumes were low no longer handles the larger volume of ecommerce orders being fulfilled today.
To get more orders out of the same headcount, retailers use a combination of technology, process improvements and sometimes shelves in the back of the store with fast-moving inventory that’s dedicated to filling online orders. Each of these steps can help retailers move toward achieving pick rate targets of 65 to 75 items per hour.
But pick rate improvements only solve part of the problem. There remains the issue of overcoming shopper dissatisfaction with substitutions and out of stocks. Compounding this is the challenge of picking orders from a dynamic inventory of live store shelves that makes it difficult to know what’s in stock.
As e-grocery volumes continue to increase, some retailers have started adding automated systems to further reduce labor and improve order accuracy. Current systems on the market can provide a variety of functions, including storing items, picking orders, handling store-picked orders and dispensing orders across ambient, refrigerated and frozen products.
Automation can improve pick rates by eight to 10 times, which becomes critical as order volumes climb. These systems also deliver the added benefits of reduced labor requirements and increased order accuracy due to the total visibility of products available for sale.
When items are out of stock, retailers must resort to a substitution process that can include calling or texting a customer, which further reduces pick rates in any system. Substitutions and incomplete orders also contribute to lowering customer satisfaction levels. Shoppers have been trained to get what they order through digital-first retail and won’t understand why e-grocery breaks the ecommerce promise.
It’s true that automated systems require a significant upfront investment and are best suited to support higher e-grocery order volumes. But the payout in getting more orders out of the same workforce and meeting customer expectations are two powerful advantages over manual picking.
DISCUSSION QUESTIONS: What are the best strategies and tactics for grocery retailers when bringing in automation to replace manual online order fulfillment at the store level? How quickly will fulfillment automation come to the majority of supermarket chain stores?
Ken MorrisManaging Partner Cambridge Retail Advisors
Ken MorrisManaging Partner Cambridge Retail Advisors
Ken MorrisManaging Partner Cambridge Retail Advisors
Ken MorrisManaging Partner Cambridge Retail Advisors
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4 Comments on "Where robots fit into the online grocery store ops equation"
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Managing Partner Cambridge Retail Advisors
President, Protonik
It will be interesting to see what happens with ideas like this. I’ve just discovered we have a Safeway curbside/delivery store (no shopping) opening in our neighborhood.
Competing with the store paid shoppers in the aisles is frustrating — so Safeway is apparently testing something new. Yet, I don’t see it working out well. In part, the economics are always against e-commerce — assuming stores continue to attempt to deliver e-commerce for the same low prices as going to the store to shop.
My expectation is that our new local store will, within 2 years, either close or convert back to a traditional store. But time will tell.
Founder, CEO, Black Monk Consulting
Stores are designed for browsing, dwelling, and strolling. Warehouses are designed for efficient picking and order assembly. Trying to do both at the same time, in the same unit (as currently designed) is probably a losing formula long-term. This suggests that stores need to be reconfigured into two connected boxes – the first for humans to shop in and the second for robots to pick from. But, that still isn’t going to make the problem go away. Whether it’s a robotic or a human arm reaching for an item, that item has to be in-stock to satisfy a customer. Ditto for substitutions. The best way to ensure consumer satisfaction (today) is to have a human being carefully check the finished order. One more point, that person can call you and apologize for an out-of-stock or incorrect substitution. Automated systems can’t, and that sets up potential service recovery issues.
Professor, International Business, Guizhou University of Finance & Economics and University of Sanya, China.