From Costly to Cost-Effective: How Cold Storage Tech Helps Grocers Make More Money
May 8, 2023
Over the last several years, many things about our daily lives have changed, including how we shop for groceries. Shoppers now more regularly add online grocery orders into their shopping routines, with e-grocery lists often replacing traditional ones. With over 50% of U.S. consumers now grocery shopping online at least once a week, it’s clear that grocery e-commerce is here to stay – and only getting bigger. But with all this growth also comes a unique set of challenges. While 84% of grocery retailers expect online grocery orders to continue to increase, 89% of retailers say they are very concerned about their store’s abilities to keep food fresh and/or frozen during curbside pickup and delivery operations. The need for smarter, more-efficient management of equipment and products that keep cold items cold is more important than ever.
Luckily, alongside these industry changes, there have been several technological advancements that can support this shift in grocery shopping habits. Retailers have been starting to incorporate technologies such as temperature-controlled lockers, cooled totes, and other devices for keeping customers’ online orders cool or frozen. These innovations in cold chain fulfillment technology are now enabling grocery stores — from small operations to national chains — to not only adapt to the new realities of this fast-moving and highly competitive new marketplace, but to even save money in the process.
The Evolution of Cold Chain Fulfillment
Let’s explore how cold chain fulfillment technology has grown to be an essential part of modern grocery retail operations.
What is Cold Chain Fulfillment?
For grocery retailers, cold chain fulfillment is an unbroken cold chain that keeps food at an even, appropriate temperature throughout manufacturing to distribution to the store for perishable foods like steak, eggs, vegetables, prepared meals or ice cream. Cold chain logistics require effective technologies and shipping processes that guarantee consumers receive groceries that are fresh, flavorful and high-quality.
With the rise of grocery shopping e-commerce, the cold chain now extends to curbside holding areas, grocery distribution centers, and grocery delivery to the customer.
Related Read: The State of Online Grocery Shopping 2022
Cold-Storage Technology: 3 Common Challenges + Cost-Saving Innovations
We’re at an exciting time of innovation in the area of cold chain fulfillment. As cold-storage technology continues to evolve to meet grocery retail needs, grocers will be able to not only meet demand – but expand their operations and earnings in new and unexpected ways.
Challenge 1: Picking Orders with Various Temp Requirements
Fulfilling online orders for curbside delivery or store-based delivery creates a unique challenge for grocery retailers. Within a single order, grocers may have to combine items with three very different temperatures: ambient, refrigerated and frozen. Market research has shown that around 50% of online grocery orders can be stored and delivered at ambient temperature, such as canned goods, baking supplies and paper products. The remaining 20% of orders require storage at lower temperatures — 33% needing refrigeration, and 16% needing to be kept frozen. Helping grocery retailers meet this demand are a new wave of smart, cold-storage innovations.
To keep food fresh and unspoiled, grocers depend on these newer technologies that can adjust to varying temperatures, also known as tri-temp technology. Equipment with tri-temp capabilities helps grocers to maximize efficiency, reduce waste and most especially, save money. For instance, when automation is used instead of a manual order picking process for perishable foods, the lead times of the product fulfillment are reduced dramatically – allowing retailers to fill more orders and generate more profit.
Challenge 2: Fulfilling More Online Orders in Same-Size Space
Pre-pandemic, grocery stores were more easily able to fulfill their online orders and curbside pickup orders within the same store footprint. But with the huge increase in curbside and delivery orders over the past several years, meeting those demands has created new, space-oriented challenges for retailers – and the need for more flexibility. Some of that flexibility can be built into store designs themselves, with stores allocating more room at the front of the store for holding online orders.
Innovations such as actively cooled totes, chilled food storage lockers, and specialized carts for safely transporting perishable foods allow grocers to expand their capabilities for cold storage in their current footprint. Some grocers are even able to expand operations to external micro fulfillment centers with new innovations that are designed to help scale their online offerings. By cutting excess costs and enabling operational agility around cold chain fulfillment, these forward-looking grocery retailers are positioning their businesses to save more money through technology-enabled efficiencies – and to generate more sales of perishable goods.
Challenge 3: Storing Online Orders Safely for Curbside Pickup
As online grocery orders surged during the pandemic, concerns about food staying cool or frozen during curbside or home delivery became top of mind for both grocers and consumers. In a recent survey, 23% of online shoppers said that their frozen foods arrived thawed more than 20% of the time. That translates into a financial hit for consumers and grocers alike. In 2018, it was estimated that grocers lost an average of $70 million per year to food spoilage. Over the last few years, new, innovative refrigeration technologies have allowed grocers to combat food safety issues brought on by e-commerce – without incurring massive remodel and food spoilage costs, or needing to build large and expensive refrigeration systems that take up valuable space.
How Grocers Can Embrace CCF Tech to Make More Money
In business, success is often determined by a company’s willingness to meet challenges with flexibility and new ideas. For grocers, that translates into being able to find new ways to combat cold chain fulfillment issues with innovative technology. Incorporating modern cold-storage tech into their grocery delivery operations helps grocers win on multiple fronts. Consumers will be more open to ordering more of their groceries online. And because grocers now have a more reliable way to safely pick, stage and deliver cold and frozen food – waste is reduced and more orders are able to be fulfilled.
In this new marketplace, grocery stores have to do everything they can to keep costs low. But by incorporating the latest technologies in cold chain management, grocers can save thousands in waste and generate even more in profits from increased online orders.
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