Food Logistics serves the entire Printing Industry with targeted content for the large commercial print segment.
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A major disadvantage of this approach is the huge up-front investment required, and the consequent delay in getting the operation started. But, there are some significant advantages which is why more UK gro- cery operators are opting for this model. The main advantages include: store capacity in terms of physical room available to pick and pack orders; increased efficiencies with a higher volume of units picked per hour; improved stock quality as stock rotation can be managed more efficiently, which will have a positive impact on consumer satisfaction. It also means less pressure on existing stores as they don't have to cope with the additional activity associated with home deliveries; extend- ed operating hours as dark stores are not restricted by normal store opening times, allowing an operation to work 24/7 if required; more extensive product range availability as dark stores tend to be larger than their traditional grocery store counterparts. An additional advantage is centralized route planning where routing optimization software, such as that provided by Paragon Software Sys- tems, can be used to ensure maximum drops per vehicle. U.S. Grocery Home Delivery Challenges So there are a lot of challenges associated with online grocery deliv- ery, like the cost of building warehouses and the rising price of gas and transportation. But there are more than 115 million households in the U.S., so the ability to get even a small piece of the grocery business means billions of dollars for companies. To benefit from this, companies will have to figure out how to make deliveries affordable and avoid the obstacles around the delivery, such as harsh winter weather and the storage of food before it goes out, as well as the need to offer and meet promised delivery windows reliably. Overcoming challenges in the U.S. grocery home delivery mar- ket requires collaboration between the retailers and customers. Consumers need to be prepared to pay for this service. Plus, in the U.S. there is a driver shortage, so anything that can be done to support the driver, such as minimizing wasted mileage, on-site delays and repeat deliveries due to missed time windows is critical. Providing realistic delivery windows is also key for the acceptance of U.S. grocery home delivery. Consumers don't want to wait hours for their groceries. Technology to Help So what resources are available to help be successful in this mar- ket? A key element of successful grocery home shopping is the ability of the retailer to promise a 1 or 2 hour delivery time window. Whether using a store-based or Dark Store approach, you need to plan opti- mized delivery routes that take full account of promised time windows. Otherwise delivery costs can escalate (with inefficient routing) and, worse, customer service can suffer. The good news is that there are software suppliers who have worked with the UK's leading grocery chains and have the expertise to help U.S. operators achieve similar levels of success. Paragon Software Systems (www.paragonrouting.com) is one such company. As a leading provider of truck routing and scheduling optimization solutions, Paragon is no stranger to the changes and challenges faced by food retailers. Most of the UK's top food retailers rely on Paragon-generated routes and schedules for some part of their distribution business. Whether this be 'batch planning', which focuses on getting products from DC's into stores in a timely fashion for consumers and/or in-store pickers, through to the allocation of reliable one-hour time delivery slots for home delivery operators, Paragon has the expertise required to help distribution operators to run an optimized, cost-efficient and reliable transportation operation. UK Grocery Home Delivery Model Successes Why is the UK grocery home delivery model more widely accepted compared to U.S. home delivery? First off, the UK is denser in population. Critical mass of consum- ers is much more prevalent, not like in the U.S., which is much more spread out. Consequently, U.S.-based home delivery grocers often only deliver to small areas in order to be cost-effective and meet the service requirement. To expand beyond this and exploit the forecast growth opportunities, U.S. companies can take a close look at the UK market. UK opera- tors have tried different models, learned many lessons, but are now reaping the rewards as a result of offering good quality home delivery services. Bottom Line on the US Grocery Delivery Forefront There are a lot of challenges associated with home grocery delivery in the US, but the additional revenue potential of this largely untapped market is huge. Retailers will need to spend millions of dollars to enter the home delivery market including building new fulfillment centers or dark stores, creating mobile and online apps, and overhauling technology systems to enable home delivery of orders. However, Kantar Retail, an industry analyst group targeting online retail, forecasts that by 2020 online penetration of grocery sales will more than quadruple and represent nearly USD50 billion in sales. They predict that U.S. online grocery shopping is about to explode, and it's not a matter of "if," but "WHEN." Are you ready? William Salter is President and CEO of Paragon Software Systems, Inc, and Managing Director of its parent company Paragon Software Systems plc, a leading provider of routing and scheduling optimization software solutions. S P E C I A L E D I T I O N CELEBRATE PRODUCE INNOVATION. CELEBRATE EDUCATION. CELEBRATE INDUSTRY CONNECTIONS. Join buyers and sellers in an incomparable fresh foods marketing and learning forum at United Fresh 2014 in Chicago. Co-located with FMI Connect 2014, attendees will see more than 900 trade show exhibitors; supermarket, restaurant and produce business leaders and the largest gathering anywhere of new tools and technologies in food safety, packaging and distribution for the fresh supply chain. REGISTER TODAY www.unitedfresh.org · 202-303-3400 CELEBRATE CHICAGO STYLE! 34 A P R I L 2014 ❯❯ FO O D LO G I S T I C S W W W . F O O D L O G I S T I C S . C O M FLOG_32-34_0414 CS Grocery Home Delivery.indd 34 4/3/14 5:24 PM