“We have the traditional brick-and-mortar retailers as well as pure-play (meal delivery) and online retailers,” he said. “Consumers are expecting an omni-channel experience, and retailers have to move at an accelerated pace to keep pace with the change of consumer interests as well as with competition coming from places where you did not expect it. But this industry is resilient, and it continues to win.”

MARKET DISRUPTORS

One of the biggest issues shaping the food retail industry today is that consumers are changing the way they shop. Many are opting to “click and collect,” which means they order their groceries online and then pick them up at the store or have them delivered. Others are opting for meal or meal kit delivery, which also reduces the number of customers going to the store. As Baum noted, there are approximately 21 meal serving opportunities a week for food retailers.

“For every meal [retailers] lose on a per capita basis, they’re that much closer to the razor’s edge,” he said.

To adapt to this change, stores will have to employ new methods of attracting consumers, including adding products and services they may not have previously considered.

As Thom Blischock, CEO of The Dialogic Group, noted, by 2025, more stores will offer services, such as banking, pet grooming, and dry cleaning, as well as increased seating for in-store dining (“grocerants”).

“The entire store format will change,” Blischock said. “Right now, the center store is huge, but by 2025, that will shrink 55 percent. What will take its place is prepared food and seating, as well as ancillary services and a click-and-collect drive-through and a click-and-collect center. Food services and ancillary services will increase 200 percent each. That means refrigeration and lighting must be changed. You won’t just be designing a grocery store, you will be designing a grocery experience.”

As far as refrigeration is concerned, fresh sourcing will influence the design going forward. Right now, about 15 percent of produce is seasonal and sourced locally, but in the future, Blischock contends that 60 to 70 percent of product will be sourced locally. That means refrigeration systems will have to change.

“Displays will need to change because there will be a huge, huge, huge emphasis on freshness,” said Blischock. “For those in refrigeration, I want to give you a challenge: Give me one more day of freshness, and you will win in the market space.”

Blischock added that there will also be a lot of change in the backroom and temperature management going forward, as well as additional options in freshness measurement.

“I guarantee that within two years, we will have an app on our cellphones, which will allow us to go up to a watermelon, and it will tell us how fresh it is,” he said. “Someone will solve that problem. So, either you create freshness measurements, or the consumer is going to create them through technology.”

TOTAL PACKAGE

Food retailers will not only be looking for new refrigeration system designs, they will be looking at the whole building envelope, said Andre Patenaude, director of food retail, growth strategy, marketing, and business development at Emerson Commercial and Residential Solutions.

“No longer is it good enough to just maintain the refrigeration equipment,” he said. “It’s part of an ecosystem. We have to look at the ventilation, the HVAC, the heating requirements that include pizza ovens and lighting. Retailers are concerned about the quality of their fresh foods coming in, tracking temperatures from the farm to production to the store. It’s all about the total envelope now.”

Deciding which type of refrigeration architecture and refrigerant to use will also be a larger conversation going forward, as more options have become available. Patenaude noted that large stores (over 40,000 square feet) will typically be good candidates for centralized direct expansion (DX), CO² transcritical, or distributed systems. Smaller stores, which are becoming more of a trend due to the desire to move closer to the consumer, will have an array of options ranging from centralized DX systems to HFO blends to micro-distributed systems to self-contained propane units.

With all the choices available, it is not a simple decision anymore. Engineering managers or refrigeration contractors must decide on the architecture and refrigerant based on store goals, as well as energy usage, economics, and the environment. And end users are becoming more demanding in the types of systems they are looking for, said Patenaude, as evidenced by a recent Emerson survey of refrigeration engineers and end users.

According to survey responses, there are “six S’s” that end users are looking for when choosing refrigeration equipment:

• Simple — It needs to have fewer parts and be simple to install and maintain;
• Sustainable — It needs to meet refrigerant and energy regulations, and the capital expenditures and the operating expenditures can’t be out of line for the total cost of ownership;
• Stable — It needs to be reliable;
• Serviceable — It needs to be easy to train technicians to work on it and should have readily available parts at the wholesaler;
• Safe — It needs to be safe for employees, customers, and for technicians; and
• Smart — It needs to be better at leveraging IoT devices, so it is possible to develop data analytics and machine learning capabilities.

In a subsequent panel discussion, several retailers agreed that the six S’s were very important when choosing refrigeration equipment.

“We are still testing a wide range of refrigerants,” said Cara Bastoni, director of engineering at Target Corp. “Beyond the low GWP, which we’re committed to do, we’re looking at the upfront capital cost, the maintenance cost, the energy cost, the amount of downtime and liability, as well as the environmental footprint.”

Dustin Herner, energy manager for Weis Markets, agreed, noting that the six S’s definitely influence decisions when it comes to trying out a new refrigeration architecture.

“If it’s sustainable for the business, or we feel that we can learn from it to make the business more sustainable in the future, then that gets our attention,” he said. “We tried our first CO² store earlier this year, and we’re putting ourselves through the process now of making things simple and sustainable.”

Those who are interested in gaining more insights from the experts in both the refrigeration and food retailing industries should consider attending the 2019 Energy & Store Development Conference. Next year’s event is scheduled to take place at the Hilton Anatole Hotel in Dallas, from Sept. 8 to 11, 2019.

Publication date: 11/5/2018

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