2022 has been a challenging year for many retailers. Issues such as supply chain disruptions that have delayed shipments of inventory are preventing retailers from setting their stores up with the products customers want most. Many retailers are facing a situation of having too much of the wrong inventory (paywall). Even large retailers like Walmart and Target are reportedly struggling with too much of the wrong inventory. Target reported that its inventory increased 43% in the last quarter.

Arguably, one of the retailers that has been impacted the most in 2022 is Amazon. According to the Wall Street Journal (paywall), Amazon acquired a lot of space at warehouses and distribution centers but is now subleasing some of that space after reporting slow growth in April. Now, there are signs that the “Next Big Thing” at Amazon may be automated micro-fulfillment centers. For example, Amazon Robotics has begun advertising for specialists to lead the development of Amazon’s next-generation micro-fulfillment solutions. By serving customers “at the point of need,” as some job descriptions explain, Amazon will likely be able to fulfill orders quickly and with precision.

Micro-fulfillment is a strategy that places small-scale warehouse facilities in densely populated urban locations closer to the consumer to improve delivery times.

In my opinion, micro-fulfillment is the best way for brands to bypass the use of retail stores or expensive fulfillment services by shipping their inventory direct to micro-fulfillment centers located in cities across the U.S. Then they can pick, pack and ship orders within minutes or hours depending on the service-level commitment they made to the customer.

But I believe micro-fulfillment isn’t just the next big thing for Amazon; it’s also the next big thing for retail.

I am considered a leading expert on the topics of supply chain management, logistics, e-commerce and micro-fulfillment. In 2013, I designed one of the first automated micro-fulfillment centers (MFC) for use inside a retail store. A micro-fulfillment center (or MFC) is a small, sometimes highly automated fulfillment center that can fulfill e-commerce orders as well as local store pickups.

MFCs may be located in an existing store or warehouse or a dedicated small distribution or warehouse space. MFCs can also be opened inside retail stores. Walmart is opening automated MFCs from the company Alert Innovation inside select Walmart stores.

Read the full article on Forbes

By John Lert
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Not that long ago—before 2017, in fact—the idea of robots picking orders inside local supermarkets instead of customers would have seemed a fanciful and distantly futuristic concept. Now, it’s beginning to seem like a logical next step in the evolution of food retailing, with far-reaching implications for the retail and CPG industries.

First, a quick look back.

Grocery shopping underwent a radical change about a century ago when Clarence Saunders launched Piggly Wiggly, the first successful operator of “self-serving” food stores, where there were no clerks or counters between the customers and the products. Customers collected their own items in hand-carried baskets and then went through a checkout station to pay for them, enjoying the 20% reduction in prices due to improved operating efficiency.

Shoppers preferred self-service over clerk service because it provided direct access to product information and prices, enabling them to make purchase decisions at their own pace. This led to a rapid shift to the self-service model, which transformed not just food retail but eventually all of retail.

The next evolutionary leap in shopping occurred when King Cullen opened the first modern-day supermarket, combining a dry-grocery section with produce and meats and much more over time. By aggregating food shopping and saving the customer time, this innovative format quickly came to dominate food retail and still does, with practically every modern supermarket featuring a “center store” selling packaged goods and “perimeter departments” selling fresh goods.

While these two “markets” are conveniently available to shoppers under the same roof, the customer experience when shopping them is very different. The key difference derives from the fact most individual center store SKUs are identical, which is not true of fresh goods.

For example, a customer may spend time in the store evaluating which brand, size or variant of ketchup to buy, but once that decision is made, almost no time is spent selecting which specific bottle to buy. Why would they – they’re all the same. In the fresh market, by contrast, customers spend time selecting not only which products to buy, but also—because they are not identical—the specific unit of each product, often with great care.

Continue to read the full article on CPGmatters

by John Hennessy

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.

Continue to read full article on Retail Wire.