The ‘Amazon Effect’ has led to increasing demand for speed and convenience in online grocery shopping.
Charles Dawson, International Development Director at Dawsongroup TCS, believes that is why the future of food distribution lies in flexible refrigeration. He writes exclusively for Grocery Trader.
The combined impact of the coronavirus pandemic and the rapid adoption of e-commerce globally have resulted in a seismic shift in consumer behaviour that has challenged the food distribution supply chain.
Excessive growth in consumerism in the developed world is having an ever-increasing influence on everything that we do. From changing what we eat and where we shop to how we exercise and interact with others, food wholesalers (and their supply chains) have had to adjust to these new trends accordingly. Improving efficiency and placing convenience right at the core of their value proposition and operations is vital to ensure survival in a highly competitive world.
Exploring the Amazon Effect
While many traditional retailers have struggled to deal with the disruption in the current climate, online outlets have been quick to reap the rewards of a consumer market that has shifted to clicks rather than bricks to fulfil their shopping needs.
Referred to as the ‘Amazon Effect1’, perhaps unsurprisingly as the poster child for online shopping reported record profits2 this year, this trend identifies the growing demand for speed and convenience over the physical buying experience.
An article from Nielsen suggested that even pre-pandemic, in 2017 New Zealanders spent approximately $10 billion buying products online and younger buyers were happy to choose convenience over price when it comes to groceries3.
A decrease in stock-keeping units, as supermarkets look to reduce costs, lower in-store footfall and a drop in product demand as restaurants open their doors again, have all meant agility has become paramount to survival.
Convenience is king
Convenience has never been more important, and many outlets have been quick to adapt to meet this demand. The emergence of the dark store model4, across the globe, is another example of how businesses are adapting their offer for convenience to reach new consumer audiences.
Deliveroo, for example, has expanded its offering with a new grocery delivery service across its takeaway platform, while UK supermarket Sainsbury’s recently launched its new Chop Chop app offering 20-minute delivery slots. Gorillas is promising fresh goods and groceries to your door within 10 minutes in Denmark, Italy, the Netherlands, Spain, France, Germany and the UK, with challenger brands Jiffy and Getir now delivering in London within ‘minutes’.
The food industry has always been one of the most competitive sectors but, with a newly altered post-pandemic landscape, increased pressure from new competitors coming to market, reduced margins and limited investment, the ability to be fast and flexible is vital.
Online for the long haul
Research by US real estate giant Coldwell Banker Richard Ellis (CBRE) and Forrester, demonstrates how e-commerce demand for cold foods currently outpaces nearly every other product for home delivery in terms of growth. Refrigerated food sales via e-commerce were at 84 per cent last year, compared to 54 per cent pre-pandemic, while frozen foods had increased to 74 per cent from 63 per cent.5
A trend report from fresh produce trade organisation, United Fresh6, said in 2019 less than 10 per cent of New Zealanders shopped for groceries online. A number that has surged to nearly 30 per cent since. In other parts of the world, numbers are set to increase even more with online grocery shopping up 25 per cent in the United States and 40 per cent in Asia7.
Supporting with cold storage
Where localised convenience is increasingly important, scaling up capacity for temperature- controlled storage in multiple locations is key. In places where there is less cold chain infrastructure readily available, there is even more of a need.
Convenience, fresh food, pharmaceutical storage and other cold chain applications are driving demand for storage, yet it is often perceived as a high cost, complex solution to install8. Our team at Dawsongroup TCS don’t believe it needs to be that way though.
Flexible and affordable cold storage
Our POLARºSTORE™ modular cold storage range provides the vital agility that food producers, wholesalers, supermarkets and their supply chains need to stay ahead of the game. Designed to be cost-effective, reliable and sustainable, these portable complexes – supplied on a sale or rental basis – offer a flexible and adaptable temperature-controlled solution for grocery and food distribution businesses of every size.
The modular design helps ensure plans can be adapted and changes implemented with minimal disruption, whether it’s increasing storage space in the future or adding a temporary loading dock to optimise loading and unloading while improving cold chain integrity.
Bespoke temperature-controlled solutions
Committed to working with our customers to find the best bespoke refrigeration solution for their needs, the Dawsongroup TCS team were recently able to support a French food producer who had an urgent need to meet growing demand from supermarkets for its frozen pastry products. The original storage solutions were proving insufficient to meet supply chain requirements.
Following a consultation with our team to meet the exact specifications, three POLAR°STORE™ modular complexes were purchased. One modular unit was for raw materials, stored at -20°C, a second unit for processed products, which also needed to be stored at -20°C and a third for fresh pastry, requiring a temperature of +4°C.
The solution provided a flexible and cost-effective way to quickly scale while meeting different temperature requirements and increasing both production and storage capacity.
So, with the consumer landscape altered indefinitely and the continuing demand for online convenience showing no sign of slowing down, shrewd businesses need to be poised for embracing flexible refrigeration. For more details about Dawsongroup global temperature control solutions visit: www.dgglobal.org/polarstore.