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The ‘last mile’ has become an increasingly competitive place, as the food industry and disruptors continue to create solutions that make online shopping even more convenient. We know that the convenience and ease of online shopping is extremely appealing to shoppers.

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Ocado has released its 2018 results, referring to the year as “transformative.” Ocado Retail saw an increase in orders per week to 296,000, with highest orders per week of 340,000. Active customers increased by 11.8% from 645,000 to 721,000, although there was a small decrease (0.4%) in total basket price.

Ocado stated it expects retail revenue to grow by 10 to 15 per cent this year, but suggested that investment in supply chain developments, primarily distribution centres would impact profit. Tim Steiner, Chief Executive said, “Creating future value now will involve us continuing to scale the business, enhancing our platform, enabling our UK retail business to take advantage of all its opportunities for growth, and innovating for the future.”

Investment in UK distribution network

Distribution and administration costs for fulfilment and delivery operations (including head office costs) increased by 15.2% in 2018. With the new customer fulfilment centre (CFC) in Erith, London, opening mid-2018 and a significant capital expenditure investment in the Hatfield site, total costs for new CFCs in 2018 were £80.3million.

In December 2018 Ocado confirmed that its new customer fulfilment centre (CFC) in Erith was processing over 30,000 orders per week. This, combined with ongoing robotic picking tests at the Andover CFC, demonstrate Ocado is continuing to innovate and experiment with new technology to improve its offer.

Ocado Smart Platform

Ocado announced several partnerships over the last year, securing agreements to develop its Ocado Smart Platform with Sobeys in Canada, ICA in Sweden and a deal with Kroger in the USA.

Source: Ocado

One-hour service

Ocado also announced that it is preparing to launch “Zoom”, a one-hour delivery service with a smaller basket size than the usual Ocado order. Zoom has been compared to Amazon’s Prime Now delivery service and will be trialled in London in spring 2019.

Ahold Delhaize USA has partnered with start-up Deliv to provide customers with same-day delivery for online orders.

The new service will initially be available at checkout to Giant Foods and Martin’s shoppers who order from Peapod. The retailer hopes to expand the service to other banners in the US soon.

JJ Fleeman, president of Peapod Digital labs and chief e-commerce office of Ahold Delhaize USA, said the service will help to “conquer the last mile… [and to] scale same-day delivery to the benefit of millions of local brand shoppers by 2020”.

US: Giant opens an ecommerce fulfilment hub

The banner is also set to open a new online pickup centre under a new brand, Giant Direct Powered by Peapod. The 3,530 sq. m centre, located in Lancaster, Pennsylvania, will provide walk-up and drive-up collection for online orders. There will also be a room where customers can place orders from tablets as well as autonomous robots, which will offer support.

Giant Food stores’ ecommerce business was previously known as “Peapod by Giant”. The change and creation of a new facility reflects Ahold Delhaize’s new go-to-market strategy for its ecommerce operations. It also marks the first dark-store conversion, helping to widen the brand’s delivery reach.

Source: Ahold Delhaize

Netherlands: Albert Heijn grows lettuce on water

Meanwhile in the Netherlands, Albert Heijn has started selling six types of lettuce that have been grown on water. These include, Butter Lettuce, Red and Green Oak Leaf Lettuce, Frisee, Lollo Rossa and Batavia. According to the retailer, the “taste, nutritional values and shelf life of these lettuce varieties are comparable to those from the open ground”.

The retailer explained that the growing and transport of lettuce takes place within the Netherlands throughout the year. “Only in winter does a small percentage of lettuce come from Spain, for example, which saves a lot of transport costs and emissions”. Hydroponically grown plants therefore have a smaller sustainable footprint than traditionally grown plants.

Source: Albert Heijn

The move follows Albert Heijn’s earlier trial of a fixture which let shoppers harvest their own lettuce. The retailer worked with lettuce suppliers and Dutch company Hrbs to supply its store in Gelderlandplein, Amsterdam.

Australian retailer Coles is set to invest almost AU$1bn over six years on automated distribution centres, one in Brisbane and another in Sydney.
Coles has signed 20-year leases to build two 70,000 sq m distribution centres. The two new sites will house state of the art technology and will replace five of Coles’ existing sites which will close over the next five years.

The warehouses will focus on dry groceries, rather than fresh or chilled foods, and will take up half the size of the existing storage facilities, whilst generating increased flow of stock to stores. The site in New South Wales will distribute to more than 240 stores, and the Queensland site will distribute to more than 170 stores.

Wide-ranging benefits

Steven Cain, Managing Director of Coles said, “This will provide a safer working environment for our team members, lower supply chain costs, enhance our overall business competitiveness and make life easier for our customers by having the right offer in the right location.”

The construction of the sites will take five years to complete, but changes in technology will be a “game changer” according to Matt Swindells, the group’s Chief Supply Chain Officer.

Automation driving efficiencies

Coles has partnered with WITRON Logistik + Informatik, a German company specialising in logistics automation. The partnership is designed to improve on-shelf availability (OSA) as part of a programme of modernisation across the supply chain that will also reduce costs.

The improvements in technology and automation within the distribution centre will create an enhanced experience in store as products will be packed and delivered for unloading at specific shelf spaces within store. There will also be a change from standard pallets to pallets designed specifically for aisles. This change will generate further time savings when replenishing goods at shelf.

Responding to competition?

In April last year, key rival Woolworths invested in a similar project to boost productivity and drive cost savings. It shared more information in September about the site which is due to open in February this year.

Keep up to date with all the latest news on Coles on Supply Chain Analysis.

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