If “pivot” was one of 2020’s business buzzwords of the year, surely “accelerate” will land on that list for 2021. In the grocery space, the COVID-19 pandemic fast-forwarded retailers’ forays into e-commerce and prompted a critical look at where automation could be better utilized to save time and money—and to avoid the bottlenecks and inventory challenges that frustrate consumers and store managers alike.
The pandemic—and the altered consumer landscape that emerges in its aftermath—may prove to be a tipping point in the adoption of smart equipment management technology in grocery stores. And with operating margins squeezed thanks to rising e-commerce demands as well as the massive safety and sanitation investments they’ve made in response to COVID-19, retailers are keenly focused on cutting excess costs and enabling operational agility.
Perhaps nowhere is that need more pronounced than in cold storage. More consumers ordering groceries online has meant expanded need for temperature-controlled capacity—as in front-of-store refrigerated cases—to hold customer orders for delivery or pickup. Now, too, with additional retailers (such as Stop & Shop in Boston) experimenting with temperature-controlled lockers and other devices (such as Walmart’s front-porch “smart boxes”) for holding customers’ online orders, smarter, more-efficient management of everything needed to keep cold items cold is more critical than ever.
Here’s a look at three trends driving the digital transformation of cold storage.
- More Accessible Smart Sensors
Internet of things-connected sensors that provide real-time data about energy-intensive assets such as walk-in coolers, for example, can help stores pinpoint equipment issues that contribute to higher energy use and potentially put product at risk early. If a freezer seal is worn down or a fan motor is about to fail—raising the temperature of a case out of spec and risking the integrity of the products inside—a smart sensor can trigger an alert to personnel who are monitoring equipment remotely. The sooner an emerging issue is identified, the sooner it can be addressed, helping a store avoid or minimize unplanned equipment downtime and the product waste that often accompanies it.
“Sensors and computer-aided predictive analytics are a game-changer for food retailers looking to maintain food integrity, manage costs and balance an evolving business environment,” says Aaron Daly, principal with Ratio Institute, a Santa Cruz, Calif.-based not-for-profit that works with grocery stores to advance measurable sustainability initiatives. “As refrigeration systems become more complex and energy costs rise, the need for near-real-time visibility into system operations is growing, and the availability of low-cost smart sensors and analytical tools is making it all possible.”
He adds: “Predictive analytics can empower today’s small teams to accomplish a level of system reliability and operational performance that was previously not possible.”
- Keep Cold and Hold: E-commerce’s Demands
Online grocery spending surged 133% in 2020, New York-based 1010data reported in March. A poll from the Consumer Brands Association and Ipsos found that 47% of respondents had ordered groceries online for delivery or click-and-collect pickup, and three-quarters of these consumers planned to continue to order online post-pandemic. The rapid and continued rise in the use of delivery and buy online, pickup in-store/curbside services from March onward has stressed store infrastructures, Viking Cold Solutions President and CEO James Bell says.
“That put a huge strain on the system,” Bell says, necessitating more cold storage in fulfillment centers and refrigerator and freezer cases sometimes moved around in stores. With the need to invest in greater cold-storage capacity, however, comes the opportunity to accelerate adoption of internet of things technologies that offer real-time visibility into unit use and performance.
It gets to the truism that you can’t manage what you don’t measure, Bell says. And with better data about what products are moving when, retailers can better identify consumer purchasing patterns and cold-storage capacity utilization trends, helping them manage labor, in-store replenishment and online order fulfillment more efficiently.
Going forward, “Everyone’s going to be trying to respond to the changing requirements of the customer, and therefore the data about that—the use patterns and things—there’s going to have to be a lot more flexibility,” says Bell. Some of that flexibility can be built into store designs themselves, with new stores allocating more room at the front of the store for holding online orders.
With digitization comes “more ability to use big data to make good decisions,” he adds. “You can react much more quickly and be more responsive to the end customer.” No more restricting customers from placing online orders for pickup or delivery because store freezers are at their limit, for example.
Remotely monitored and managed cold storage is critical as well for grocery pickup lockers, such as those in trial by Quincy, Mass.-based Stop & Shop (in Boston) and Boise, Idaho-based Albertsons (in Chicago). Walmart, taking cold storage directly to the consumer, announced in January plans to trial grocery delivery to internet of things-connected home “smart boxes” in the retailer’s hometown of Bentonville, Ark., this spring. The smart boxes will have three temperature zones for frozen, refrigerated and shelf-stable products and will give customers “the ability to receive secure, contactless deliveries with the peace of mind knowing their grocery items will stay fresh,” Walmart U.S. SVP of Customer Product Tom Ward said at the time.
Photograph courtesy of Walmart
For Walmart, the opportunity for cold storage to be managed directly at a customer’s residence could help stores and fulfillment centers more efficiently manage their own cold-storage capacity.
- Sustainability Again at the Fore
Sustainability took a back seat to survival-in-the-moment as the COVID-19 pandemic unfolded in 2020. But as February’s devastating winter storms, California’s largest-ever wildfire season and a record-breaking Atlantic hurricane season illustrated, climate change’s threats to public safety and economies are as urgent as ever—and so is the need for responsible resource management.
In October, FMI–The Food Industry Association and the Environmental Protection Agency (EPA) recognized (virtually) the recipients of the 2020 EPA GreenChill Awards, recognizing food retailers’ work to reduce refrigerant emissions and employ best environmental practices. For the 26 retailers participating in the GreenChill program (representing 61 banners), store refrigerant use is down about 30% from 2007, FMI notes. If every supermarket met GreenChill participants’ average emissions rate, the industry would save more than $160 million in refrigerant replacement costs, according to FMI.
How to achieve greater efficiency in the cold chain? Again, with better data, for one. Knowing much sooner that a unit needs maintenance—or being aware exactly when online orders are likely to surge ahead of an expected weather event—can help retailers avoid costly, energy-wasting literal and figurative cold-storage breakdowns.
Accountability will be in focus in 2021 and beyond, Daly and Bell say. FMI’s 2020 The Food Retailing Industry Speaks report finds 72% of food retailers now have quantifiable goals for energy use reduction. Whether a given retailer does or does not have such targets, regulatory and public pressure on supermarkets to address sustainability is likely only to increase, Daly of Ratio Institute notes. Getting out in front of the conversation by demonstrating a commitment to meeting specific sustainability targets is valuable not only from a cost-savings but also a branding perspective.
“You can have sustainability and a return on investment,” says Bell of Viking. Further, “Everyone from the end consumer to institutional investors to the companies themselves are really driving the sustainability train, and going up and down the supply chain,” he adds. “You look at Walmart—Walmart in particular looks at several different levels of emissions and waste areas, and they have the power to push into their supply chain and say, ‘You guys are going to make improvements, or you’re not going to work with us.’ ”
“Given the quickly evolving business environment, few operators have yet adapted their energy-management strategies to account for changing business models,” Daly says. “But with every passing day, both the need and opportunity in a new energy optimization approach grows.”