“Pre-coronavirus, online grocery was too expensive to grow. Since last March, we have seen the growth in online grocery penetration explode and it is now too expensive to ignore” – this was the comment from one of our expert industry advisors at the end of 2020. A sentiment that will be echoed by many in both the UK and global grocery retail.
Up until the early Spring of last year, there was a lack of consensus on how online food and grocery retail would complement traditional brick-and-mortar stores, click-and-collect, or pickup models in an industry where margins are already razor-thin.
Since then, we have seen coronavirus arrive and almost overnight a generation’s worth of growth in online food and grocery retail penetration. The rate of change has been unprecedented, and it has forced retailers to immediately shift their operating models. And all whilst dealing with increased costs of security and safety, high rates of staff absence from enforced isolation or illness, supply chain and logistical issues, and, at least in the UK, Brexit, and its many challenges. Store margins are already thin and getting thinner as they deal with these changes.
At the very early stages of the pandemic, as caloric consumption shifted from bars and restaurants to the home and online demand grew, one smart and economical decision that retailers took was to leverage the assets they already had to satisfy their shoppers. Leverage the store network, the forward-deployed inventory, and in-store space and staff for their online services. Why try to invest in larger and dedicated fulfillment centers or additional logistical infrastructure to support the growth when they can sweat the assets they already hold?
To leverage these assets, they had to first free the space and then manage the changes and installation of technology to manage this larger online operation. This is just one of the factors driving the creation of our new retail remodeling optimization solution – RemodelInsight. The solution uses an advanced genetic algorithm and available store space, range, change schedules, and metadata to identify available space whilst creating optimal plans which minimize disruption and cost.
Retail project and real estate management can plan full remodels through to smaller special projects, helping manage the introduction of online grocery fulfillment zones, self-checkout reconfigurations, flooring refurbishments, and fixture refreshes.
The solution is currently live in North America and in one Tier 1 client it has allowed them to strategically meet the changes from this operational shift to online efficiently and effectively, already generating impressive returns:
In addition, RemodelInsight is designed to allow for bespoke changes, such as optimizing against other metrics, including range reviews and logistic costs. What this means, is that we can prioritize certain KPIs – such as sales disruption, project duration, and range reviews – to ensure that the final retail remodeling plan created is optimized across any, or all, of those measures.
Change in grocery retail stores is inevitable and unlikely to slow over the coming years as we respond to the pandemic and, hopefully, recover from it. As our industry advisor said, “the store of the future is hidden in plain sight – it is where it has always been – but optimizing the use and allocation of its space is where the magic will happen.”