Micro-Fulfillment: Retail’s 'New Normal'

Retail is an incredibly resilient industry, having endured decades of economic disruption, yet continuing to come out the other side stronger than before. Thus far, COVID-19 has been retail’s most unprecedented difficulty of this decade, with social distancing guidelines forcing doors to close and operations to shift drastically. While retailers have reopened their doors to customers, they're not opening to the same consumer that they closed to. A “new normal” is going to arise as operations address displaced inventory due to changes in demand, along with a new customer base that remains wary of visiting public places. With these changes in mind, it's time for retailers to start thinking “small” with micro-fulfillment.

Key Objectives Shift

Retailers will see a shift in key objectives as they work to reach customers in new ways. For example, demand for options such as buy online, pick up in-store (BOPIS) and curbside pickup have increased exponentially, and retailers need to be prepared for this demand to remain at a peak level. Moreover, retailers should consider automating product handling, reducing space in-store and creating dual purpose spaces. While these objectives may seem daunting, the good news is that they can be attained via micro-fulfillment strategies.

Brick-and-Mortar Evolution

In order to meet the above new objectives, retail stores are going to develop a new look. In this potential new experience, previous brick-and-mortar stores would be transformed into micro-fulfillment centers and dark stores, but with the added capability of fulfilling orders for pickup. This would maximize the amount and type of orders that can be fulfilled in one location. For example, in any given brick-and-mortar store, one portion would be designated for dark store inventory. This inventory would be picked and used to fulfill orders which customers can pick up via no-contact kiosks. In turn, another portion of the store would be designated for micro-fulfillment inventory, which can be picked to fulfill e-commerce orders, using the back of the store.

This new store blueprint also unveils opportunities for automation in-store. Without the worry of disrupting in-store shoppers, robots and co-bots can be used to pick orders, allowing for more efficient fulfillment, less space and a reduction of labor costs.

This image represents the dark store blueprint, which shows distanced kiosk pickup and personal shopping pods at the front of the store. It also shows the movement of inventory in the back of the store, as associates and robots replenish products.

This image represents the micro-fulfillment blueprint, which mirrors the kiosks and personal shopping, while showcasing additional capabilities for e-commerce fulfillment via back-of-store receiving and dispatch.

Key Benefits

There are several benefits of implementing this new look for physical retail stores. One of the more prevalent benefits is that this new store experience allows for customers and associates to continue following social distancing guidelines. While many states are relaxing their regulations, many customers still express discomfort with being in public spaces, specifically shopping malls and retail stores. Additionally, this customer experience addresses the previously mentioned key objectives, such as offering a dual-purpose space, reducing overall footprint, and enabling BOPIS capabilities.

An operational shift of this size can seem overwhelming at first glance, but it ultimately allows for a more disruption-resistant future for the retail industry. With this “new normal,” retailers can offer their customers a one-of-a-kind shopping experience with more convenient options and faster delivery times. Retail is going to experience a “new normal” regardless, and those that can adapt to this “new normal” will thrive.

Moving Forward

As a retailer, ever-changing customer demands shape the way in which you provide access to your products. A micro-fulfillment strategy will identify inventory closer to demand, making it easier and faster to not only fulfill but meet the expectations of the “new normal” shopper experience. Retailers that embrace these changes will give themselves a competitive advantage over others that remain status quo and maintain the capacity to pivot in these challenging times.

Mike Kasperski, senior vice president and automation group leader, leads enVista’s Facility Design practice and brings more than 30 years of experience in the material handling industry, including system design and implementation.