Target is leveraging its eCommerce strength in grocery to drive the business’s overall growth. On a call with analysts Tuesday (March 1) discussing the retailer’s fourth-quarter and full-year 2021 earnings, Target executives highlighted the central role that this category has come to occupy.
“We’ve been on a journey when it comes to groceries at Target,” Target Executive Vice President and Chief Food and Beverage Officer Rick Gomez said. “Food has always played an important role … but we knew we could do so much more in this space. Today, … we are a company that celebrates food with a grocery business that’s driving trips and basket size and, even more importantly, loyalty. It’s become part of the differentiated experience that separates Target from the pack.”
Gomez added that the company’s quick digital evolution during the early months of the pandemic, building out its eGrocery order fulfillment capabilities, was a “game changer,” noting that food and beverage penetration grew from 2.3% at the close of 2019 to 9.6% at 2020’s end to 13.2% by the end of 2021. Going forward, the company aims to increase its logistics to keep pace with this growth.
“We’re … working to better utilize our food distribution centers to keep up with the fast-growing demand,” said Gomez.
Online purchasing capability is important to a relatively small but still significant share of grocery shoppers, according to data from PYMNTS’ study Decoding Customer Affinity: The Customer Loyalty to Merchants Survey 2022, created in collaboration with Toshiba Global Commerce Solutions. The study, which drew from the results of a survey of a census-balanced panel of more than 2,000 U.S. consumers conducted in the late fall, found that 23% of grocery shoppers say that online purchasing capability would improve their loyalty to their grocery merchants.
Get the full report: Decoding Consumer Affinity: The Customer Loyalty To Merchants Survey 2022
Kroger Builds Out First-Party Fulfillment With Automated Warehouse
As grocers increasingly seek look for ways to directly fulfill ecommerce orders, rather than outsourcing to third-party marketplaces, some are looking to automated warehouses to efficiently operate digital businesses outside of their consumer-facing stores.
Kroger, for one, announced Wednesday (March 2) in advance of announcing its fourth-quarter and full-year 2021 results Thursday, that it will open a new customer fulfillment center in northeast Ohio utilizing the Ocado Group’s automated grocery logistics technology. The location will feature more than 1,000 robots moving through the center’s three-dimensional grid structure.
“The Cleveland region facility is an accelerant to our strategy to achieve the doubling of our digital sales and profitability rate by the end of 2023,” Kroger Senior Vice President of Supply Chain Gabriel Arreaga said in a statement.
Kroger has opened such fulfillment centers in Monroe, Ohio; Groveland, Florida and Forest Park, Georgia, with the next one scheduled 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 to developing 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-to-serve in the market.”
Ahold Delhaize Announces Multi-Brand In-House Distribution Center
Ahold Delhaize is taking a similar tack, building out its in-house fulfillment network.
On Tuesday, ADUSA Supply Chain, the multinational grocer’s group of United States supply chain companies, announced that it has converted a facility in Bethlehem, Pennsylvania into its self-managed distribution network, with the location fulfilling order for over 200 stores from Stop & Shop and The Giant Company stores.
“It’s 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, VP of supply chain services for ADUSA Supply Chain Services and self-distribution implementation lead, said in a statement. “This is an important capability to add as we continue to transform the supply chain network into an integrated, flexible model that supports omnichannel growth for the brands we serve.”
Philippines eGrocer SariSuki Announces Expansion to Ultrafast Delivery
All around the world, despite reports of the economic shortcomings of the model, ultrafast grocery continues to proliferate.
Most recently, Philippines-based social commerce grocery startup SariSuki announced that, with the help of a recent fundraise bringing its 2021 funding to $10.5 million, the company is expanding into ultrafast grocery with an app promising to deliver items in under 15 minutes.
Brian Cu, co-founder of SariSuki and former Grab Philippines President, said in a statement, “We are a set of founders that grew up in the Philippines and have an understanding of our market. This, combined with our background in scaling up large tech companies in the region, made us realize that we can do more with the supply chain infrastructure we have built.”
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