New grocery paradigm requires new solutions

This year’s Christmas peak is set to provide a glimpse into the future for grocery retailers across the UK. The Covid-19 pandemic has accelerated growth in the sector, with the major outlets having to adjust to consumer behaviour that has leapt forward – with online and home delivery forecasts being pushed forward by more than two to three years.

Across the board the supermarket giants have noticed the surge in demand. In Q1, Tesco’s overall eCommerce sales rose by 48% year-on-year (peaking at a 90% increase in May alone); while Sainsbury’s enjoyed a 136% boost in June.

Solution for the future

Pop-up fulfilment centres are a solution for the short-term, but a move towards large dark stores is the ultimate solution, particularly in urban areas with large volumes of deliveries. Wincanton has expanded into this space recently by partnering with Waitrose.com to open a fulfilment centre in West London to serve its online consumers. This is a major shift for both businesses, with Waitrose reacting to clear trends in the market and Wincanton using its expertise and experience in eCommerce to provide a solution that suits changing consumer behaviour; in the process becoming the first UK 3PL to run such an operation.

This is an exciting vision into the future of UK grocery logistics. Large facilities designed to increase efficiency and improve experience are a logical step for grocers that have been using methods such as in-store picking to fulfil online orders alongside traditional activity.

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For the major supermarkets to be all things, to all consumers, in all channels, there needs to be a mixture of different methods. Dark stores are among the most efficient ways of serving densely populated areas with large volumes of deliveries, but hybrid approaches such as in-store picking on traditional shop floors can make sense. Equally, repurposed retail and/or logistics facilities could provide ideal bases for home delivery or click-and-collect networks, especially if drops in footfall continue through 2021.

One thing that is certain though is the need for robust supply chains and facilities that are ready for potential disruption. Collaborating with logistics providers or even direct competitors is making more and more sense in a landscape that’s changing quickly. From shared distribution networks through to partnerships with businesses that have clear mutual benefits, collaboration is creating first-mover advantage opportunities.

As we’ve seen through the Covid-19 pandemic, nobody can truly go it alone; both in everyday life and business. There’s a massive opportunity for all of the actors in the grocery supply chain to partner in new ways and position themselves to thrive in a new landscape.

James Hurrell, managing director of grocery and consumer, Wincanton

For more information, visit www.wincanton.co.uk/markets/grocery