For the last several years, food shippers and distributors have moved toward a general trend of faster response and more customized distribution capabilities. This has impacted distribution all along the cold chain from the supplier to the retailer. Issues contributing to this sea change include:
- Demand for fresh food offers as well as fresh produce availability all twelve months of the year
- Convenience for dual-income households and millennials, who cook less and shop online more for fresh food, meal kits and frozen, convenient offerings
- Mass customization resulting in increasing SKU requirements
- Consumer expectation of quick response with faster deliveries requiring cold storage to be located in urban areas closer to the consumer
- Increasing trend to purchase online and BOPIS (Buy Online, Pick up in Store) grocery purchases
The onset of the pandemic has only accelerated this change. According to FMI, “last year shoppers reported online grocery spend represented 10.5% of all grocery spending, according to Trends. That figure rose to 14.5% in February of 2020 and surged to 27.9% in the March/April period.” In its June 23rd report, FMI also reports on the components of this online grocery spend, “….. there was somewhat of a reversal in shopper hesitation about buying perishables online. Back in February Trends data showed, for example, fresh produce ranked 15th and fresh meats 19th in a list of 26 categories often bought online. “However, by mid-April, the situation had changed dramatically,” the report said. “Fresh produce moved into the top 10, with 12% saying they had just purchased fresh produce online for the very first time. Similar proportions said the same about fresh meat, refrigerated dairy and frozen foods, each seeing many first-time online buyers.”
These increases may have a disparate impact on frozen foods as consumers increasingly are choosing frozen food. According to Nielsen data, the demand for frozen foods in brick and mortar shops grew 24% over the week ending June 20. As a result, not only is the online and grocery spend being impacted, but cold chain impacts are also in play. While these percentages are likely to decrease somewhat as the economy returns to a greater level of normality, the overall trend in place prior to the pandemic has been undeniably accelerated.
Because of these trends and quickly evolving customer demands, cold chain participants are placing increasing value on both fast response and flexibility of response. Cold chains must be ready to adapt to these new expectations. Issues ranging from availability of cold storage in an already tight market along with additional Inventory investment, new understanding of demand signals, increased visibility across the organization and supply chain partners are all issues that must be addressed.