On a recent visit to my local Sam’s Club, I noticed a big difference when leaving the store. Instead of new products piled high on the way out the door — placed there in the hopes of enticing one last sale — there was a long line of flatbed carts, each stacked with multiple orders. Next to the cart procession was an array of refrigerated cases, and again, each was loaded with pickup and delivery orders that were lined up like little soldiers.
I was impressed, but not surprised, by the changes at Sam’s Club. Over the last few months, I’ve been looking at how the pandemic is transforming how the refrigeration industry operates, and it’s evident that change is everywhere.
For contractors, work never slowed down in supermarkets, which were considered essential businesses and stayed open just about everywhere. Grocers leaned on their contractor partners to quickly help them do everything from installing sneeze guards at checkout stands and counters to replacing and/or upgrading HVAC filters in an effort to mitigate transmission of COVID-19. This type of work will likely continue going forward, as will the focus on rigorous cleaning of refrigerated cases and ensuring stores have the proper amount of outside air and ventilation.
Contractors are also expecting to be busier over the next year with remodels and retrofits, which many grocers put off doing during the pandemic. Given record sales earlier this year, many food retailers are now flush with cash and looking to replace equipment that was used hard as shoppers swarmed stores to stock their pantries.
But instead of just replacing existing equipment with the same type, grocers may be looking for greater flexibility, so they can more easily move refrigerated cases around in response to customer demand. Or like Sam’s Club, they may be interested in adding cases in new places for grocery pickup and/or delivery. Some grocery stores may want larger coolers in the back room as well for similar purposes.
Many are also expecting a boom in the cold storage business, which was already growing before the pandemic. One contractor recently told me that several major food retailers in his area are already planning to build large distribution facilities. He predicts that retail outlets will get smaller as they transition to warehouse-type situations, so orders can be processed more quickly for delivery or pickup.
In a recent article, Katrina Krites, marketing and business development manager, food retail, cold chain at Emerson, noted that it is likely that the industry will see continuous innovations in click-and-collect as many retailers experiment with various store formats. “In many cases, existing stores are not ideally or efficiently laid out to handle large amounts of online orders, and having employees on the sales floor picking to fulfill orders can disrupt the in-store shopper experience. To support this increasing demand, we may see more micro-fulfillment centers and dark stores dedicated exclusively to the fulfillment of online orders.”
And sure enough, “dark stores” have been in the news a lot lately. These stores are often former supermarkets that have been converted into warehouses that are designed specifically for fulfilling e-commerce orders. There is no retail space, as they are not open to the public, although some offer curbside pick-up service only. Several food retailers, including Whole Foods, Giant Eagle, and Stop & Shop, have opened dark stores and are apparently looking to expand these types of locations in response to consumer demand.
The Texas-based supermarket chain, H-E-B, has responded to the growing demand for online fulfillment by deploying a number of automated micro-fulfillment centers that will support the chain’s curbside pick-up and delivery business. These micro-fulfillment centers are usually smaller in size and are designed to bring the online fulfillment process closer to the customer.
For those who think innovations such as these will disappear in the near future, you may want to think again. A recent survey by Charleston|Orwig and Menu Matters showed that nearly 75 percent of consumers remain concerned about catching COVID-19 while grocery shopping, which is probably why 50 percent of polled consumers said they were using one or more options for grocery delivery or pick-up. Food retailers want to serve this need, which is why they are investing in a growing number of dark stores and/or micro-fulfillment centers. And they will be looking to their HVACR contractors to provide the expertise needed to open these types of facilities, which means business could be booming for quite some time.