How Coles and Woolworths could become 'big vending machines' after coronavirus

Yahoo News Australia's Life After Lockdown series investigates what life will be like after coronavirus restrictions.

Retailers, including the likes of Coles and Woolworths, will need to operate like large vending machines after coronavirus restrictions ease because customers will not want to linger inside stores, a business consultant claims.

Brittain Ladd, chief marketing officer of US consultancy firm Pulse Integration, addressed the future of worldwide retailers and grocery chains post-COVID-19 in an article published online last month.

Even before the deadly pandemic, customers have been yearning for increased speed and a simplified shopping experience, Mr Ladd said.

A stock image of a product isles in a Woolworths supermarket. Source: AAP
Coles and Woolworths will need to operate like large vending machines, an expert has claimed. Source: AAP

“Specifically, I believe that the future of retail isn’t shopping, it is retrieving and receiving the products desired, especially groceries, as fast and easy as possible.”

To do this, the business consultant said all retailers should install micro-fulfilment centres. Mr Ladd helped Amazon design stores that incorporated micro-fulfilment centres (MFC).

A MFC leverages robotics and shuttles to automatically fulfil online grocery orders or assemble Click and Collect orders for pick up at a store, he explained.

They perform similarly to vending machines.

“Grocery stores and other retailers, will operate more like large vending machines in the coming years as fulfilment becomes automated inside the store,” Mr Ladd initially said in a 2015 article.

“Contrary to what retail experts claim, customers will not want to linger inside a store any longer than necessary,” he said.

“Consumers will migrate from shopping inside a store to instead buying online and picking up at a store, or buying online for home delivery. Speed to the customer and frictionless checkout is the future of retail.”

A depiction of what a Coles fulfilment centre will look like. Source: Coles
Coles announced on Thursday it has secured sites for two high-tech Customer Fulfilment Centres. Source: Coles

Mr Ladd said coronavirus has had a severe impact on retailers - and it will be long-term.

With health experts predicting COVID-19 could become a seasonal illness, the retail industry will need to become an “ecosystem of stores, online ordering, fulfilment, last mile delivery and supply chains that can execute flawlessly under any conditions,” he said.

Due to panic buying, Woolworths reported food sales of $11.1 billion for the 13 weeks to April 5, which is a comparable growth rate of 10.3 per cent.

The result falls short of Coles, which reported an unprecedented 13.1 per cent sales growth and $8.23 billion in third quarter supermarket revenue.

Coles to open two fulfilment centres

Coles announced on Thursday it has secured sites for two high-tech Customer Fulfilment Centres.

The supermarket chain teamed up with UK-based Ocado Group plc last year “to provide customers with greater range and improved product availability while significantly increasing capacity to service online customers,” Coles said in a media statement.

Coles has now signed agreements for two sites - one in NSW and another in Victoria - to house the CFCs, which will be ready in 2023.

A video depiction of what the CFCs will look like shows what appear to be robotic machines gathering items from a series of buckets filled with different products.

The baskets are then taken to a staff member who can be seen in footage packing the separate orders.

A staff member packs pre-ordered shopping bags in a fulfilment centre. Source: Coles
A staff member organises shoppers' orders at a fulfilment centre. Source: Coles

“Ocado has been a world leader in online fulfilment for more than a decade, and through our exclusive Australian partnership we will use their proven technology to offer customers more products than ever before, delivered at a time to suit them, while building capacity to service the growing demand for online food and grocery shopping,” Coles Group CEO Steven Cain said.

In the meantime, a Coles spokesperson told Yahoo News Australia the chain has “taken significant steps to ensure the safety and health of our team members and customers.”

“We understand that given the current restrictions it can be challenging for some of our customers to visit our stores, or complete their shopping as they normally would. The current social distancing measures in place will allow us to continue to safely serve as many customers in the community as possible.”

A general view of a Woolworths in Sydney. Source: AAP
Last month, Woolworths announced it is doubling its online capacity. Source: AAP

Woolies stores ‘more important than ever’

When asked if they believe Woolworths could adapt a vending machine-like approach, a spokesperson told Yahoo News Australia the grocery chain instead “believes a sense of community connection in our stores is more important than ever.”

“People are at the heart of our business and absolutely key to delivering the shopping experience our customers want.

“We’ve greatly appreciated our customers' understanding as we’ve introduced social distancing and elevated hygiene measures to uphold public safety,” the spokesperson said.

Last month, Woolworths announced it is doubling its online capacity to meet current and future online demand.

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