Retail Leader - May/June 2018 - 17

Target and Safeway are
among the major retailers
encouraging customers to
use home delivery.

does all its own deliveries and Van Gilder
concedes profitability
is a challenge due to
the last mile expense.
"We love the benefit of
owning the customer
experience all the way
to the end."

THE SCALABILITY CHALLENGE
As click and collect and home delivery demand grows, physical
stores and the supply chains that support them are asked to perform functions for which they were never intended. This reality
is not lost on supply chain executives who understand shipping
merchandise from a distribution center to a store, filling store
shelves and then picking orders from shelves increases product
touches, which adds costs and magnifies operational weaknesses.
"E-commerce has revealed that out of stocks are worse than
imagined," said Scott DeGraeve, COO of Locai Solutions and
a former Peapod executive, citing the prevalence of product
substitution as an indicator.
Nevertheless, retailers eager to get into the omnichannel
grocery game have rushed to crowd-sourced solutions providers
such as Instacart, Shipt and Postmates. Reliance on third parties
to pick orders for delivery or click and collect from
physical stores emerged as an expedient solution
for many retailers. It offered a way to shift the last
mile expense burden to shoppers, but the long-term
viability of relying on stores as fulfillment centers is
suspect, according to some.
"Click and collect using store inventory at some
point becomes unscalable," said Andy Lockhart,
Vice President of Integrated System Sales with
TGW, a provider of material handling equipment

used in automated distribution centers.
Among the top operational challenges
associated reliance on store inventory to
fulfill digital orders are store crowding, order
accuracy, out of stocks, product substitutions and allocating dedicated store space
for order storage, according to Lockhart.
He believes the more scalable solution, is to
decentralize fulfillment by leveraging dark
stores, a common practice in European
markets where grocery e-commerce has a
higher penetration rate. Another option is
fulfillment centers purpose built to handle
digital grocery orders. Such a decentralized
approach results in better pick rates, consistent substitution protocols and improved
cold chain compliance, according Lockhart.
Sharing a similar view is Lee Hnetinka, CEO of Darkstore, a
San Francisco-based company that claims to operate the nation's
largest third party fulfillment center network enabling one hour
and same day deliveries.
"Our urban fulfillment model is not that much different than
Amazon. We are simply forward stocking product to get it closer
to the end consumer," Hnetinka said.
Darkstore operates 82 locations nationwide ranging in size
from 20,000 square feet to 150,000 square feet capable of offering same day deliveries in 40 cities.

FULFILLMENT ANYWHERE
Home delivery may be popular, but it is costly and it becomes
even more costly when no one is home or unattended packages
are stolen. Here again Amazon has emerged as a first mover to
address a challenge with the supply
chain. The company offers a service
called Amazon Key In Car that allows
Prime members who own General
Motors or Volvo vehicles equipped
with cloud-connected technologies
to select their vehicle as the preferred
delivery methods upon checkout.
Don't drive a GM or Volvo? No
problem. A start up called Phrame
makes a nifty license plate holder that
From Publix in the southeast to Raley's on the
west coast, retailers' in-store communications
alert shoppers they can skip the trip.

MAY/JUNE 2018 Retail Leader.com

17


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Table of Contents for the Digital Edition of Retail Leader - May/June 2018

Contents
Retail Leader - May/June 2018 - Cover1
Retail Leader - May/June 2018 - Cover2
Retail Leader - May/June 2018 - 3
Retail Leader - May/June 2018 - Contents
Retail Leader - May/June 2018 - 5
Retail Leader - May/June 2018 - 6
Retail Leader - May/June 2018 - 7
Retail Leader - May/June 2018 - 8
Retail Leader - May/June 2018 - 9
Retail Leader - May/June 2018 - 10
Retail Leader - May/June 2018 - 11
Retail Leader - May/June 2018 - 12
Retail Leader - May/June 2018 - 13
Retail Leader - May/June 2018 - 14
Retail Leader - May/June 2018 - 15
Retail Leader - May/June 2018 - 16
Retail Leader - May/June 2018 - 17
Retail Leader - May/June 2018 - 18
Retail Leader - May/June 2018 - S1
Retail Leader - May/June 2018 - S2
Retail Leader - May/June 2018 - S3
Retail Leader - May/June 2018 - S4
Retail Leader - May/June 2018 - S5
Retail Leader - May/June 2018 - S6
Retail Leader - May/June 2018 - S7
Retail Leader - May/June 2018 - S8
Retail Leader - May/June 2018 - 19
Retail Leader - May/June 2018 - 20
Retail Leader - May/June 2018 - 21
Retail Leader - May/June 2018 - 22
Retail Leader - May/June 2018 - 23
Retail Leader - May/June 2018 - 24
Retail Leader - May/June 2018 - 25
Retail Leader - May/June 2018 - 26
Retail Leader - May/June 2018 - 27
Retail Leader - May/June 2018 - 28
Retail Leader - May/June 2018 - 29
Retail Leader - May/June 2018 - 30
Retail Leader - May/June 2018 - 31
Retail Leader - May/June 2018 - 32
Retail Leader - May/June 2018 - 33
Retail Leader - May/June 2018 - 34
Retail Leader - May/June 2018 - 35
Retail Leader - May/June 2018 - 36
Retail Leader - May/June 2018 - 37
Retail Leader - May/June 2018 - 38
Retail Leader - May/June 2018 - 39
Retail Leader - May/June 2018 - 40
Retail Leader - May/June 2018 - 41
Retail Leader - May/June 2018 - 42
Retail Leader - May/June 2018 - Cover3
Retail Leader - May/June 2018 - Cover4
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