Grocers are losing a lot of money during Covid-19 times!
Grocers are losing a lot of money during Covid-19 times… because their sales are substantially rising!
Moreover - according to CNBC and Bain & Co. who released a report recently on e-grocery - they will lose even more - as the growth of e-grocery is going to continue in the next years - especially if there will be a “second wave”.
No matter which scenario happens it's going to be a fast ride forward for the next several years. In 2020 alone - acceleration is going to be 2+ years in US, 4+ years in UK, 3+ years in FR. And up to 1,5x maximum expected increase in online grocery penetration in 2025 vs. pre-Covid-19 forecast.
The growth and its acceleration is amazing. Covid-19 was the "push forward" the industry needed to enter the mass market. To cross the chasm. And this trend is all over the world. One of our partners said - that in April they had a 100% rise in grocery orders and could have had a 400 or 500% if they had the right infrastructure introduced.
Why are grocers losing money?
Simple. Because their margins are much smaller than the cost of picking the order combined with the last mile costs. And the customers do not want to cover them!
So now - it’s a “wake-up call”. Grocers need to fix their online business model… and human operated curbside pickup or increasing the margins are not the solution for the real profitability and growth.
What is the solution?
To cut the long story short - as Melisa Repko from CNBC suggests - grocers need to invest in (1) MFC’s (micro fulfillment centers) or CFC's to lower the cost of picking, and (2) “vending machine-like micro-fulfillment centers” to lower the costs of the last mile.
Only the combination of these two - leads to real profits.
The first part can by covered MFC's providers such as Dematic, Take-off or Ocado. And this is slowly being introduced internationally by some retailers. Great people working to make it happen. And this is amazing news. I will not get into details in this text as most of you read a lot of articles about the miracles it can do to retailers profits.
The second part can be covered by our Arctan - a robotic e-grocery click&collect solution developed by us at Retail Robotics. And this is happening, too. Starting in France this year.
Arctan has a high capacity, small footprint, it’s fast and can serve many clients at a time. And what is most important from grocers' perspective - it decreases the cost of the last mile by 70% thanks to big "hub effect". It's also is much more convenient in terms of times of delivery and makes ‘same day delivery’ much easier to fulfill. And, last but not least, click&collect solution is much safer in the times of pandemic - less contact.
What is important - the solution is much more effective in terms of functionality and savings than traditional refrigerated parcel lockers that are characterized by limited capacity and big footprint. The basic version of Arctan has a capacity of 202 logistic bins (capacity of 14 traditional solutions) and it can be combined in clusters of 2, 4 or more - to serve even more clients and more orders, and create an even bigger value. It can also be placed next to a micro fulfillment center.
Beneath you can find a comparison of Arctan network and home delivery efficiency. With our solution 1 courier can deliver even 300 orders a day!
We shall be introducing Arctans in Paris in the coming months, and we are talking about pilots in UK and US. Arctan was recently featured in Winsight Grocery Business by Jon Springer in an article "Is This the Future of Click-and-Collect?”.
We are happy to be an important solution for the current broken business model. And shall be more than happy to fix it with you.
Marek Piotrowski, CMO & Partner at Retail Robotics
- "The Next Five Years in Online Grocery: Going Mainstream, Fast" - Bain & Co. report - https://www.bain.com/insights/the-next-five-years-in-online-grocery-snap-chart/
- "Grocers urgently need to fix broken online business model, as pandemic shifts more to web, report says" - by Melissa Repko, CNBC - https://www.cnbc.com/2020/07/09/coronavirus-grocers-must-fix-broken-online-model-report-says.html
- "Is This the Future of Click-and-Collect?” - by Jon Springer, Winsight Grocery Business - https://www.winsightgrocerybusiness.com/technology/future-click-collect
- About Arctan: https://www.rrobotics.co/product/arctan
Arctan is a high performance click and collect solution for e-grocery retailers. At the moment - it is the most efficient solution for last mile in e-grocery on the market. It has smallest footprint and high capacity and it:
- Reduces delivery costs by 70%
- 3x effectiveness compared to human operated pick-up - by reducing space and labor cost
- Serves 2-3 customers at a same time
- Offers simultaneous consumer pick-up and courier drop-off
- Supports same day delivery services