Target is leveraging its e-commerce strength in grocery to drive overall company growth. In a call with analysts Tuesday (March 1) discussing the retailer’s fourth quarter and full-year 2021 results, Target executives emphasized the pivotal role this category has come to occupy.
“We’ve been on a grocery journey at Target,” said Rick Gomez, executive vice president of Target and chief food and beverage officer. “Food has always played an important role…but we knew there was so much more we could do in this space. Today, … we are a company that celebrates food with a grocery store that drives trips and basket sizes and, most importantly, loyalty. It’s now part of the differentiated experience that separates Target from the pack.
Gomez added that the company’s rapid digital evolution in the early months of the pandemic, bolstering its online grocery order fulfillment capabilities, was a game-changer, noting that food and beverage penetration is increased from 2.3% at the end of 2019 to 9.6% at the end of 2019. at the end of 2020 to 13.2% by the end of 2021. Going forward, the company aims to increase its logistics to keep pace with this growth.
“We are working … to better utilize our food distribution centers to meet rapidly growing demand,” Gomez said.
According to data from the PYMNTS Decoding Customer Affinity: The Customer Loyalty to Merchants Survey 2022, created in collaboration with Toshiba Global Business Solutions. The study, which is based on the results of a late fall survey of a balanced panel of more than 2,000 U.S. consumers, found that 23% of grocery shoppers say ability to shop online would improve their loyalty to their grocers.
Get the full report: Decoding Consumer Affinity: The 2022 Merchant Customer Loyalty Survey
Kroger Expands First-Party Fulfillment with Automated Warehouse
As grocers increasingly look for ways to process e-commerce orders directly, rather than outsourcing to third-party marketplaces, some are turning to automated warehouses to efficiently run digital businesses outside of their stores by contact with consumers.
Kroger, for its part, announced on Wednesday, March 2 before reporting its fourth quarter and full year 2021 results on Thursday, that it will open a new fulfillment center in northeast Ohio using Ocado Group’s automated grocery logistics technology. The location will feature over 1,000 robots moving through the center’s three-dimensional grid structure.
“The Cleveland area facility is an accelerator in our strategy to double our digital sales and profitability by the end of 2023,” said Gabriel Arreaga, senior vice president of supply chain. of Kroger, in a press release.
Kroger has opened such distribution centers in Monroe, Ohio; Groveland, Florida and Forest Park, Georgia, with the next set to open soon in Dallas, Texas. Additional future locations have been announced in California, Maryland, Arizona, Wisconsin, Michigan and South Florida.
The move “marks another milestone in the development of Kroger’s seamless fulfillment ecosystem across the United States,” said Luke Jensen, CEO of Ocado Solutions. “Ocado’s proven technology will allow Kroger to achieve the lowest cost of service in the market.”
Ahold Delhaize announces multi-brand in-house distribution center
Ahold Delhaize is taking a similar approach, expanding its internal distribution network.
On Tuesday, ADUSA Supply Chain, the multinational grocer group of supply chain companies in the United States, announced that it had converted a facility in Bethlehem, Pennsylvania, to its self-managed distribution network, the location fulfilling the order of more than 200 stores of Stop & Shop and The Giant Company stores.
“This is not only the first facility to convert in 2022, but with the addition of this distribution center, we now have the first facility in the network that serves more than one Ahold Delhaize USA brand,” Bob L’Heureux , vice president of supply chain services for ADUSA Supply Chain Services and responsible for implementing self-distribution, said in a statement. “This is an important capability to add as we continue to transform the supply chain network into an integrated and flexible model that supports omnichannel growth for the brands we serve.”
Philippines eGrocer SariSuki Announces Expansion of Superfast Delivery
Around the world, despite reports of the model’s economic shortcomings, super-fast grocery shopping continues to proliferate.
Most recently, Philippines-based social commerce grocery startup SariSuki announced that with a recent fundraiser boosting its 2021 funding to $10.5 million, the company is expanding into the super-fast grocery store with an app that promises to deliver items in less than 15 minutes.
Brian Cu, co-founder of SariSuki and former president of Grab Philippines, said in a statement, “We are a group of founders who grew up in the Philippines and understand our market. This, combined with our experience in scaling large technology companies in the region, made us realize that we can do more with the supply chain infrastructure we have built.