Ex-Marsh Stores Rebranded as Needler’s Fresh Market

By Jim Dudlicek - 08/30/2017

Fourteen former Marsh supermarket locations in Indiana and Ohio are being rebannered at Needler’s Fresh Market by their new owner.

The stores are among 15 to be purchased in June out of Marsh’s bankruptcy by supermarket company Generative Growth II LLC, an entity of Fresh Encounter, for about $8 million.

Generative Growth II is owned by third-generation Ohio grocers Michael Needler Jr. and his sister, Julie N. Anderson.

FAMILY TIES

“Needler’s Fresh Market truly represents who we are as a family and as an operator,” said Needler, CEO of Fresh Encounter Inc. and partner in Generative Growth. “My sister, Julie, and I have grown up in the grocery business and look forward to bringing our genuine family values to the former Marsh stores. I know customers will begin to experience the pride we feel serving our friends and neighbors every day.”

The former Marsh stores receiving the new branding are located in New Palestine, Marion, Indianapolis (two), Columbus, Hartford City, Elwood, Tipton, Pendleton, Richmond and Greensburg, Ind., and Troy, Middleton and Eaton, Ohio. The 15th acquired store, located in Van Wert, Ohio, will adopt the already established Chief Supermarket brand.

FRESH AND LOCAL

The new exterior and interior store branding will be completed by the end of October. Customers will begin to see the new branding appear on advertising Sept. 15.

“Customers can expect a clean, fresh look with our marketing and communication,” said Anderson, VP of marketing and partner in Generative Growth II.

Needler’s Fresh Market will place added concentration on sourcing local fresh produce, and providing high-quality store-made products in the bakery and deli.

“It’s a real privilege to serve these communities, and Needlers have been doing it in Indiana and Ohio for nearly 100 years,” Needler said.

Indianapolis-based Marsh filed for Chapter 11 bankruptcy protection in May after closing 19 stores. A subsidiary of Kroger bought 11 stores for $16 million in the bankruptcy sale.

Findlay, Ohio-based Generative Growth owns 25 supermarkets in Ohio, Indiana and Kentucky. Its locations are managed by Fresh Encounter Inc., also based in Findlay, a supermarket management company founded in 1995 by Needler and the late Susan Cheek Needler. The company currently manages 59 retail locations.

5 Reasons Lidl, Aldi Will Win the Grocery Game

By Tracy Huser and Jim Andretta - 08/30/2017

Despite the buzz surrounding Amazon’s acquisition of Whole Foods, there are even larger changes in store for the world of grocery: German retailers Aldi and Lidl are now staking their claim in the United States. Some will know Aldi in its current low-cost U.S. incarnation, operated by Aldi Süd, or for Trader Joe’s, operated by sister division Aldi Nord, which has won customers through its quirky branding and high quality, affordable products.

While the U.S. grocery sector is already quite saturated, the industry has largely been dominated by indistinguishable middle-tier supermarkets, who carry mostly identical brand-name items. Unlike other retail industries (clothing, for example), the U.S. hasn’t seen discounters begin to take market share just yet, and this is definitely of interest to Aldi and Lidl. The former plans to remodel its existing 1,700 stores and build an additional 1,300 in the next five years. Lidl is following suit by opening 100 stores in the coming year.

So why are Aldi and Lidl poised to win the grocery war? What about these two German discounters’ strategies and the changing customer landscape will set them up for success in the long run against industry titans like Amazon and Walmart? And more importantly, what can we learn from the broader changes occurring in the sector? Here's what we at Vivaldi think.

1. LOW PRICES, HIGH QUALITY

The price of an average basket at Aldi and Lidl is 5.25 percent and 9.1 percent lower than at Walmart, respectively, yet both brands offer a range of organic, gluten free and other high-quality options. While mid-tier grocers have traditionally catered to the middle class, the quality promised by Aldi and Lidl, along with the price savings they can offer, serve all customers better than the established US grocers currently can. In the UK, 31 percent of Aldi and Lidl shoppers are from upper or middle income, and this demographic in the US may also choose to do their shopping with the new German discounters.

2. THE PERCEIVED VALUE OF BRAND-NAME PRODUCTS IS DIMINISHING

Consumers are spending less each year on branded possessions in order to maximize their available income on experiences, and retailers are taking note: by going generic and thereby avoiding the “brand tax,” they can pass those savings onto consumers.

So, what does this mean for shoppers at Aldi and Lidl? Aldi and Lidl’s models rely heavily on selling private label goods, purchased through third-party suppliers at quantity discounted levels and repackaged under house brands. As the value of branded goods diminishes, generic brands and the discounters that sell them thrive. If Aldi and Lidl can effectively communicate their price advantage over Walmart while maintaining the high-quality people expect from places like Amazon, they stand to win a much larger share of American customers.

A selection of Lidl's private-label products in a circular

3. HOUSE BRANDS

It’s no secret that much of Trader Joe’s success can be attributed to its private brands: More than 80 percent of what’s carried in its stores are private label, compared to under 20 percent for other supermarkets.

As the rivalry heats up, Aldi and Lidl will continue to improve their ever-expanding array of house brands in order to derive all the network effects of being the sole provider of each individual product. As evidenced by the success of Canada’s Pirate Joe’s, having high-quality private label products is a major pull.

In the U.S., the discounters may have an uphill battle to fight with regard to public perception of house brands, but that hasn’t impeded Aldi or Lidl’s success launching products in Europe, where Aldi’s highly awarded $8 Rosé was rated among the very best in the world.

4. LESSONS FROM SUCCESSFUL LAUNCHES IN THE UK

Both chains have seen their market share grow at breakneck speed in the UK, more than doubling the growth rate of their nearest competitors and quickly usurping established British supermarket players.

Sainsbury, Tesco, Asda and other UK grocers have all seen markedly declined growth since Aldi and Lidl have stepped into their home turf. Lidl, in particular, has shown great flexibility in altering its business model to fit regional tastes, and will be offering more than double the SKUs in the U.S. that it offers in its European locations.

Cost is still king in the grocery sector, and Aldi and Lidl’s offering of high-quality products at rock bottom prices will serve Americans as well as it has Brits. While Walmart will likely adapt to defend against the new threat it faces from the German discounters, the rest of the sector will have to follow suit or face extinction.

5. THE POST-RECESSION AMERICAN RETAIL LANDSCAPE

The past few years have seen massive changes in the retail sector, with 2017 bringing even more store closures than at the height of the 2008 recession. This can partly be explained by the rise of online shopping, which is growing rapidly (at a rate of 30 percent for grocery).

While this year alone may see upwards of 8,600 retail store closures in the U.S., discounters are prospering. By offering the type of perks Aldi or Lidl can through samples and special discounts (e.g., Lidl’s “surprises” campaign), the German chains can maintain their relevance amidst changing times.

While the German discounters will need to be cognizant of the dangers of overbuilding as they expand along the East Coast and across the U.S., they will have internalized the lessons from the demise of Sears as much as they have Tesco’s Fresh & Easy.

While much of recent attention remains on Amazon, don’t count Aldi and Lidl out: interesting things are sure to come. As U.S. consumers begin to realize the benefits of shopping at both German discounters, the established players will need to adapt their strategies to compete. As the price war between major supermarkets heats up, consumers will surely win.

Provides Insights and Solutions for Increasing Frequency of Family Meals

ARLINGTON, Va., Aug. 31, 2017 /PRNewswire/ -- As the nation readies for National Family Meals Month ™ this September, the Food Marketing Institute (FMI) Foundation today releases The Power of Family Meals, an authoritative, in-depth white paper on the evolving and complex topic of family meals in the United States.  The paper includes a review of numerous consumer research reports along with an examination of independent studies published over the past decade and provides potential solutions for cultivating a greater cultural environment for dining together at home.

"For years, we have witnessed a constant trickle of studies that have shown the changing dynamics of family mealtime behavior and the barriers that exist to sharing meals at home," said Sue Borra, RD, executive director of the FMI Foundation.  "We thought it was time to look at the comprehensive body of consumer and scientific research to assess the societal challenges of family meals.  More importantly, we sought to provide strategies to elevate family meals; thePower of Family Meals report does both."

The Hartman Group, a recognized thought leader on consumers, food and beverage cultures and trends, produced the 10-page assessment, which is replete with facts and figures addressing the following key themes:

• Family meals are beneficial.  Numerous studies have found that eating with others, particularly family, is associated with healthier dietary outcomes for children and adults. 
• Family meals usually fail to happen.  Daily behaviors suggest that parents eat home-cooked dinners with their child or spouse only half the time (3.5 times out of 7 possible dinners each week).
• Barriers to family meals.   The primary obstacle for missed family meals is differing schedules reported by 55% of adults living with children, 47% of adults living together without children).
• America's changing families.  Today's eaters live in dramatically different household structures and habits from the traditional family that once revolved around married life and children.

Most importantly, the report concludes with solutions to elevate family meals, most notably, a recommended strategy to align eaters, appetites and food.  This includes many potential tactics such as:

• Honoring the Dinner Hour – to preserve the sanctity of dinnertime among Americans with intractable schedules even if it means reserving options for narrower windows of time.
• Shifting Dayparts – to modify the timing of social eating to breakfast considering that it might be easier for busy families to connect before the day starts when busy evening schedules persist.
• Making a Family of Friends – to encourage young adults living alone to connect with each other for home-cooked dinners.

To help American families achieve the goal of one more meal at home each week, the FMI Foundation has developed a website, www.NationalFamilyMealsMonth.org. In addition to consumer tips, the website also includes links to numerous partners – primarily food retailers and manufacturers –committed to helping consumers achieve their increased family meals goal.  In short, families can find support from their favorite local food retailer and food brands.

BRIEF

Ford, Domino's pilot driverless vehicles for pizza delivery

AUTHOR

Dan O'Shea

PUBLISHED

Aug. 30, 2017

Dive Brief:

• Domino's Pizza and Ford Motor Co. have teamed up to test self-driving vehicles by delivering pizza in Ann Arbor, MI. The two companies also hope to gauge customer reaction to the technology, according to a press release from Ford.
• The testing will occur over the next several weeks, with randomly-selected Domino’s customers having the opportunity to receive their delivery orders from a Ford Fusion Hybrid Autonomous Research Vehicle, which will be manually-driven by a Ford safety engineer and staffed with researchers.
• Customers who agree to participate will be able to use an upgraded version of the online "Domino’s Tracker" feature to track the delivery vehicle via GPS. They will also receive text messages as the self-driving vehicle approaches that will guide them on how to retrieve their pizza, using a unique code to unlock a specially-designed Domino’s Heatwave Compartment inside the vehicle.

Domino’s has been aggressive in exploring potential new delivery schemes. Last year in New Zealand, the company delivered its first pizza via drone and its interest in assessing self-driving vehicles can be viewed as another step in its willingness to explore other delivery options, likely with an eye toward saving money on labor and improving efficiency. Though Domino's pizza is a different kind of product than many retailers would look to deliver with a driverless vehicle, its experience testing the technology will be closely watched by retailers.

Ford, meanwhile, is currently scheduled to start producing driverless vehicles in 2021, with many of the initial applications to be commercial ones, such as food and package delivery. The company made those comments a little over a year ago and you could argue that not much has happened since, but a lot has to happen to make autonomous delivery vehicles a common sight on the road.

One of the most important things that needs to happen doesn't have to do with the performance of the technology itself, but rather customer acceptance of it. Any company adopting a new customer-facing technology had better find out first how customers feel about using it. For Ford and Domino's, that means getting some sense of customers' willingness to embrace a new way of receiving packages and other deliveries. 

It's the same sort of process that companies eyeing drone delivery packages need to pursue. Do customers want delivery drones landing in their front yards? Do they want driverless vehicles pulling up to their curb, and idling while the customer comes out to retrieve their pizza from the special compartment?

Ford and Domino’s have been working together for a while on this project, completing preliminary testing of the self-driving delivery process at Mcity, a simulated urban environment on the University of Michigan’s campus. Now, it's time to find out what real consumers think.

It may be last, but it's not really a mile at all ... yet

Right now, e-commerce's "last mile" is somewhere between six and nine miles, according to a new study. One expert believes it will continue to shrink.

By Mitch Mac Donald

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Perhaps it's a minor point, but in businesses like logistics, it's the small details that sometimes matter most.

Consider the currently-in-vogue term "the last mile." It refers, of course, to the final leg of a product's journey through the supply chain—meaning delivery to the customer—rather than a literal distance. As for why it's getting so much attention, it's all about the need for speed in the new world of order fulfillment. Suppliers' ability to meet customer demands for rapid delivery of orders is highly dependent on that last mile of the supply chain. Nowadays, it's not too much to say that the last mile is where sales are lost or won.

While this is true in many industry verticals, nowhere is the pressure more acute than in retail—and e-commerce, in particular. The time when customers were satisfied to have online orders delivered in two to three days is past. The consumers of 2017 expect next-day delivery. It's probably not much of a stretch to say the consumers of 2018 and beyond will expect same-day service, particularly in urban areas.

That's where so-called "last-mile distribution centers" come in. Sometimes called "last touch" centers, these DCs are generally the final point of distribution for goods before they arrive on customers' doorsteps, according to a report released this summer by real estate and logistics services giant CBRE. And they're fast becoming a thing in metro areas: "Last-mile distribution facilities for e-commerce are popping up in close proximity to the population centers of major U.S. cities, creating a foundation for rapid-delivery service that didn't exist on this scale as recently as a few years ago," the report says.

As for what the researchers mean by "close proximity," we're talking under 10 miles. To be precise, CBRE's analysis of the locations of newer last-mile distribution facilities (those opened within the past two years) in the 15 largest U.S. population centers showed that they are positioned, on average, between six and nine miles from the center of the population areas they serve.

Among other findings, CBRE's study revealed a correlation between population concentration and the length of the "last mile." "Denser cities tend to have shorter average distances, such as the six-mile average in San Francisco and the 6.3-mile average in Philadelphia," the researchers wrote in their report. "Meanwhile, cities that are more spread out have longer averages, such as 7.5 miles in Houston, 8.5 miles in Phoenix, and nine miles in Southern California's Inland Empire."

The report left no doubt as to what's driving the trend. "The close proximity of the last-mile facilities to huge populations of customers facilitates online shoppers' growing expectations of nearly instantaneous delivery of their orders," it noted. "Earlier this decade, goods ordered online often were delivered to customers from much larger facilities much farther away, sometimes in other states."

Also notable is the speed with which this scenario has played out. "These close-in fulfillment centers have proliferated within the past two years, underscoring the need for retailers to have large batches of inventory within 10 miles of most of their customers so they can fulfill orders as rapidly as possible," said David Egan, CBRE's global head of industrial and logistics research, in a press release. "This is an entirely new link in most supply chains that delivers on the promise of fast, super-high-performance delivery."

Indications are, the trend has yet to run its course. "Development of last-mile strategies still is in the early stages, so the average distances in many metros [are] likely to shrink a bit more in the coming years," Egan said in the release. If his prediction pans out, "the last mile" may not be a figurative expression much longer.

Walmart and Amazon Continue Their Sparring Match

Posted by Chris Cunnane on

 August 30, 2017

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The rivalry continues between Amazon and Walmart. Just a few months ago, I wrote about the impact of Amazon’s acquisition of Whole Foods, and how Walmart and the market in general would react. And while the rivalry has been growing over the last few years, that purchase seemed to stoke a fire under both companies, and things are only heating up.

While Amazon has a dominant position in the e-commerce space, Walmart is the brick and mortar king. With its low prices and seemingly endless product assortment, Walmart has dominated brick and mortar retail. In response, Amazon has been slowly mounting a brick and mortar presence by going back to its roots – book stores. With the opening of its latest brick and mortar book stores, Amazon has reached double digit physical stores. Obviously this is not going to make a dent in the Walmart dominance, but Amazon is moving into other brick and mortar areas. Most notably is the Whole Foods acquisition. But what makes the acquisition most intriguing is Amazon’s decision to slash prices at Whole Foods. Amazon is also using the brick and mortar presence to expand the Amazon locker program. As my colleague Clint Reiser wrote in last week’s logistics news round-up:

“Amazon plans to immediately make many of Whole Foods items more affordable. From a logistics perspective, Whole Foods brands will be made available through Amazon.com and the Prime Now same-day delivery service.  Also, Amazon lockers are planned to be installed in select Whole Foods stores, allowing Amazon.com items to be shipped to Whole Foods locations and allowing Amazon.com returns to be processed from Whole Foods locations.”

Walmart is not about to turn a blind eye. Instead, the company is expanding its home delivery program with a partnership with Uber. The expansion is in the Dallas-Fort Worth area, where Walmart’s personal shoppers will pack groceries into cold pack bags for Uber drivers to deliver. The cost per order will be $9.95, with a portion going to Uber. This is also in response to Aldi’s decision to partner with Instacart on home deliveries. With Amazon moving in on deliveries for Whole Foods, Instacart is looking for all the business it can get.

Steve Banker had an interesting article earlier this week about how Jeff Bezos’ drone prediction was far too optimistic. As overly optimistic as it may have been, it certainly hasn’t stopped Amazon from filing numerous patents for drone deliveries. One of the more interesting patents was for a floating fulfillment center back in January. The basic premise is that Amazon will have a blimp or airship of some sort hovering at an altitude of around 45,000 feet, stocked with lots of products. When an order is placed, a drone will fly down from the floating fulfillment center and deliver the item within 10 minutes.

Well, Walmart is striking back. The company has applied for a patent for its own floating warehouse that could make deliveries via drones. The floating warehouse would fly at heights between 500 and 1,000 feet, and would contain multiple “launching bays” for drones. The airship itself could be operated either by a remote pilot or autonomously. While the core argument for these floating distribution centers is to reduce the cost of online orders, especially last-mile deliveries, current regulations make these patents more of a pipe dream. However, it is interesting to see Walmart respond with its own version of fulfillment from above.

The final piece in the increasing rivalry is private label brands. Walmart has always embraced private label brands, which are manufactured by one company to be specifically sold by a retailer. Walmart has made a name for itself by offering name brands for less, but also offering private label brands for even less. Amazon is jumping on the bandwagon, and has expanded its private label collection. Over the last eight years, Amazon has gone from 0 to around 20 private label brands. And in 2016, Amazon brought in $2.5 billion in private label sales. This is certainly an area that will be worth watching, especially with the prominence of the Whole Foods private label brand.

So if it seemed like the Whole Foods acquisition was the pinnacle of the Amazon – Walmart rivalry, I think we are just seeing the beginning. Walmart has been pushing back with the purchase of online retailers Jet and Bonobos, and Amazon is pushing ahead with its brick and mortar presence and price cuts. The big question cannot be answered until the FAA potentially revises drone regulations. Both Amazon and Walmart seem to be “all in” for drone deliveries, and the public will have to wait and watch this one play out.

Ocado introduces app for Amazon Alexa

30 August 2017 | by The Retail Bulletin

The Ocado app’s functions will enable customers to add a product to an existing order or basket, find out which products are currently in season and how to include them in recipes, and check an existing order or basket to see if a product has already been added.

They will also be able to keep track of an order by asking “where’s my order?” and confirm the time until an existing order can be amended.

Customers will be able to download the app from this week via their Amazon accounts.

To understand customers’ product preferences, the Ocado technology ecommerce team has built the AI-based Ocado Conversational Service which is able to suggest both appropriate and previously bought items that customers can add to their baskets.

Lawrence Hene, marketing and commercial director at Ocado, said: “Grocery shopping should be quick, easy and convenient. Using voice technology, we’ve made it even easier by developing our new app that will enable our customers to add to their Ocado baskets without lifting a finger.

“Consumer demand for increasingly convenient ways to shop is growing rapidly and we’re excited to be the first supermarket in the UK to offer this technology, making customers’ lives ever easier. Alexa will add any item to your Ocado basket simply by asking her to do so. It’s as easy as that.”

Amazon is actually the weakest of the big U.S. retailers, Moody’s says

Published: Aug 30, 2017 1:16 p.m. ET

The e-tail titan is wrongly perceived to be dominant, in part because online sales still account for just 10% of overall U.S. retail

Getty Images

By

CIARALINNANE

CORPORATE NEWS EDITOR

Amazon.com Inc., far from dominating the retail sector, is actually the weakest of the big U.S. players based on operating results, Moody’s Investors Service said Wednesday.

The e-commerce giant is the subject of a number of myths regarding its size and clout that mask the reality of its position compared with rivals like Wal-Mart Stores Inc. WMT, +0.10% and Costco Wholesale Corp. COST, +0.53% , according to Charlie O’Shea, Moody’s vice president and lead retail analyst.

Amazon’s stock AMZN, +1.47% has outperformed rivals, but it’s mostly based on the company’s growth story, and particularly the success of its cloud business, Amazon Web Services, O’Shea wrote in a new report.

“That potential is overshadowing the superior real-time operating performance of Amazon’s key retail competitors,” O’Shea wrote. “The emphasis on stock performance is, in our view, forcing brick-and-mortar competitors toward managing more irrationally for short-term performance just when they’re confronting secular change.”

He cited as an example Staples Inc.’s SPLS, +0.05% decision to sell itself to private-equity firm Sycamore Partners as a way to boost shareholder value.

The perception that Amazon is poised to take over the grocery business via its acquisition of Whole Foods, which closed this week, is another myth, said O’Shea.

“Online sales still account for only about 10% of overall U.S. retail sales, with a much lower percentage in the grocery segment, leaving the big brick-and-mortar retailers, led by Walmart, still really formidable competitors in the industry,” he wrote.

Estimates for the Amazon Prime membership base are also wildly inflated, O’Shea said, with some pundits betting the figure is as high as 85 million. Amazon itself has never provided a number, other than to say it is in the tens of millions.

Would You Get Groceries From Amazon?

Moody’s calculations, which are based on demographic information, suggest Prime membership is closer to 50 million, which compares with Costco’s total membership of 86.7 million as of the end of its fiscal year in August 2016, and its paid membership of 47.6 million.

Amazon is also far from controlling U.S. food sales, which come to about $800 billion a year. Wal-Mart Stores Inc. WMT, +0.10% alone sells more than $200 billion in food, or over 25% of the total, according to O’Shea.

Kroger Co. KR, +0.83% sells about $130 billion in food, while Safeway parent Albertson’s sells food worth about $60 billion annually and Costco sells about $50 billion.

“We believe it’s a big stretch to say Amazon will dominate the U.S. food retail business in the next two years,” O’Shea said. “Even with Whole Foods in its basket, its food sales still amount to less than $20 billion annually.”

The perception that as soon as Amazon enters a product category, it immediately wins is also flawed, said the analyst. While Amazon is clearly disruptive, it does not dominate any category in which it operates. In consumer electronics, for example, Amazon has about a third of the share of Best Buy Co. Inc. BBY, -1.05%

“When it announced that it would enter services, we think it received way more attention than it deserved,” said O’Shea. “Best Buy has Geek Squad embedded with its customers, and 20,000 employees will be difficult to tackle, especially when considering the added advantage of the store base to support this effort.”

Amazon is unlikely to become a player in appliances with the addition of the Kenmore brand, despite the excitement that news of its cooperation with Sears Holdings Inc. SHLD, -2.36% initially raised. “We think this is largely a non-event and looks like any other third-party relationship,” said the report. “If anything, we think that struggling Sears has entered this agreement to help with its sagging public-relations image.”

Amazon shares have surged 28% in 2017, while the S&P 500 SPX, +0.51% has gained 9%.

Diverse Partners Play Key Roles in Food Cold Chain

For a temperature-controlled supply chain to remain unbroken and uninterrupted, U.S. food shippers have long relied chiefly upon traditional transportation partners for guidance and execution.

 

 By Patrick Burnson, Executive Editor · August 28, 2017

 

For a temperature-controlled supply chain to remain unbroken and uninterrupted, U.S. food shippers have long relied chiefly upon traditional transportation partners for guidance and execution. However, surging domestic demand has raised the ante, bringing the celebrated food cold chain enterprise of Amazon and Whole Foods into the picture.
Virtually every food company that comprises the cold chain from suppliers to manufacturers to cold chain logistics providers to food retailers—is now operating in a complex, fast-changing system, observes Bill Luttrell, senior locations strategist for the site selection consultancy Werner Enterprises. The result: food businesses are affected by a new set of factors from their supply chains.
“For most companies, owning or leasing manufacturing, warehousing, transportation and retail facilities represents the largest fixed-cost element of food businesses,” Luttrell says. “Despite this financial and competitive importance, too few companies in this space have a strategy to continually assess and optimize their supply chain networks to ensure they’re meeting their food distribution needs.”
Luttrell adds that food companies don’t usually design logistics networks; they inherit them as a result of earlier mergers or acquisitions, or simply evolve them piecemeal as operations expand.
“Cold chain logistics managers must analyze the entire network to maximize competitiveness,” Luttrell insists. “This includes not only the proposed manufacturing and warehouse distribution location. Food shippers should also examine supplier locations, distributor locations, and retail locations.”
And as the Amazon/Whole Foods deal highlights, linking digital and physical infrastructure is a growing trend. “This kind of super infrastructure will be more important to site selection in the future. Additionally, analysis should not be limited to just forward logistics, but should also include reverse logistics analysis such as product returns and back-hauling,” says Luttrell.

Enhanced infrastructure

Walter Kemmsies, managing director, economist and chief strategist of JLL’s Port, Airport and Global Infrastructure (PAGI) group, insists that much of the nation’s existing infrastructure is adequate to meet the new demands placed on domestic food logistics.
“We’ve seen many examples of private investment being used to solve new cold chain challenges without the help of any public monies or taxes,” says Kemmsies. “In many cases, all shippers are asking the government to do is to get out of the way.”
He points to Logistics Park Kansas City, a 1,500-acre business park capable of handling 17 million square feet of warehousing with as much as 3 million square feet of cold chain facilities. Furthermore, cold chain food shippers can have direct access to a 433-acre intermodal center operated by the Burlington Northern-Santa Fe railroad. In fact, Amazon now operates a 822,104-square-foot warehouse at the Kansas City complex along with other prominent food shippers, including Del Monte, Wal-mart and Tyson.
“PortFresh Logistics recently built a 100,000-square-foot cold storage facility dedicated to perishable cargoes at the Port of Savannah,” says Kemmsies, “and there are a number of much smaller U.S. ports attracting private investment for cold chain food shipping. This is a trend we may expect to gain traction.”
According to Paul Weitzel, vice president of Inmar Willard Bishop Analytics, a technology and retail consulting company, the advent of e-commerce makes site selection a more complex consideration for logistics managers working in the cold chain.
“The entire food supply chain is reliant on finding the right distribution locations, retail locations and remote pick-up points,” says Weitzel. “Multiple fulfillment and inventory models such as home delivery, curbside and remote pickup will continue and make this a more urgent part of the plan.”
Furthermore, says Weitzel, food logistics planning will become increasingly important as a significant amount of volume shifts to e-commerce. While the last mile is expensive, the demand for home deliveries is growing, and one-hour, two-hour and four-hour routes will have a significant impact on location, fleet size and the need for route optimization, he says.
“The food companies on the front-end of site selection planning are locating supply hubs to accommodate e-commerce growth over the next decade,” says Weitzel. “Part of this vision includes the support of B2B locations as well. Meanwhile, logistics managers should plan on playing a commissary role or at minimum, support local commissary and fresh deliveries.”

Cold storage & transport

Transportation and logistics in the food supply chain—especially perishables—requires a commitment on the part of third-party logistics (3PL) and cold storage providers to continually invest in their own operations to meet cold chain shipper’s needs.
One example of innovative developments took place recently in Clearfield, Utah, where Americold expanded its site by adding 6.5 million cubic feet of temperature-controlled warehouse space to its existing facility. Together with its Salt Lake City facility, this expansion significantly extends Americold’s reach within the Greater Salt Lake City Metro Area to more than 50% of total available capacity—triple to that of its nearest local competitor.
“The new building should be operational in time for our peak volumes during the fourth quarter of 2017,” says Fred Boehler, president and CEO of Americold. The new building will feature ammonia-free, self-contained, refrigeration units with no engine room requirement. The system offers significant energy efficiency gains, zero water usage, is air cooled and will include a 34°F dock and adjustable temperature zones to -20°F.
While storage providers gear up with the latest technology inside the four walls, food transportation is an industry that has fully adapted to the cold chain and can be considered the most resilient, particularly since a large majority of food products have a better tolerance to temporary variations of transport temperatures, notes Dr. Jean-Paul Rodrigue, a logistics professor at Hofstra University in New York. He adds that it’s the cold chain distribution center that represents the most efficient link.
“These facilities usually have several storages areas with different temperature settings to handled regular grocery goods at ambient temperature, produces, dairy, meat and frozen products,” Rodrigue says. “As a result, small errors can be compounded without the concern of irreversible damage.”
Meanwhile, Amazon’s acquisition of Whole Foods is just the first step in a transformational journey for cold chain shippers, says Inmar executive Weitzel. “It signals their commitment to figure out how to make online grocery shopping work. Amazon and Walmart will eventually be the two “bigs,” and many mid-tier grocery chains will have to adjust or fight for their survival.”
Furthermore, as Amazon becomes a major force in the food space, we should expect more direct buying opportunities and more direct shipments to existing facilities, as well as new forward-positioned food supply facilities. “This will dilute volume now going to self-distributing retail warehouses and food wholesalers,” adds Weitzel.