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Inside Retail & Knapp

Here’s why micro fulfilment centres are transforming grocery

When Woolworths’ CEO Brad Banducci unveiled the grocery giant’s micro fulfilment centre (MFC) earlier this month, he declared it “a gamechanger”. Indeed, it has transformed the way that the supermarket picks, packs and dispatches orders for Australian customers.

According to a report from the Australian Financial Review, 10 orders can now be done within just four minutes. Manually, it would normally take between 30 minutes and one hour to pick and dispatch. The MFC can also dispatch five times the online order volume of a typical Woolworths online store and hold up to 10,000 of the most in-demand grocery products. Meanwhile, it also reduces the need for team members to walk up and down aisles of supermarkets or ‘dark stores’ to find products.

We’re living in historic times

Albertsons is North America’s second largest supermarket chain and it was the first in the country to embrace multiple MFCs. Albertsons’ MFCs combine the proximity of brick-and-mortar stores with the productivity gains of an automated warehouse. 

“We operate like a normal store from an order perspective. Incoming goods arrive from the same warehouses and, on arrival at the store, are tagged either for the store up front or in the MFC,” explains Vivek Sankaran, president and CEO at Albertsons. 

“That means no incremental deliveries or new routing logistics for delivery vendors. It’s close enough to our customers that we can get same-day delivery to them. We can use last-mile partners as needed and we get a lot of flexibility in doing that.”

Given the skyrocketing rise of online retail in the time of Covid, the launch of an MFC could not happen at a better time. According to figures from the Retail Doctor Group 26 per cent of Australians now prefer to shop online.

“We are living in historic times. The grocery industry is transforming its way into the future. Grocers using MFCs will be the ones getting it right first,” says Curt Avallone, chief business officer at Takeoff Technologies, which created the MFC for Woolies and is an exclusive partner of Knapp.

Takeoff Technologies has also worked with nine other major grocery retailers on the development of their MFCs.

“Down the line, you’ll see there is no reason you can’t get your pizza and groceries delivered together. I think the largest opportunities for growth in the grocery industry is the joining of cross channels. Thirty years ago when I got into the business, most American meals came from supermarkets. Now it’s less than half, so we have to find a way to bridge the fulfillment of these experiences.”

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