Market Report: e-Grocery Infrastructure 2022

2022 e grocery infrastructure report, from central to micro fulfilment, in store and last mile technology

Positives

• Multiple publicly traded grocers increasing capex for online & digitalisation initiatives
• Non-legacy grocers very active buyers of material handling automation equipment
• Increased traction for e-grocery platforms and headless architecture is now preferred option
• Early mfc adopters continuing deployments
• The first multi grocer locker delivery network

Neutral

• Multiple material handling system integrators have hired snr automation people from grocers; e-grocery viewed as the next big trend after e-commerce
• Mfcs no longer viewed as a silver bullet, network approach from top warehouse automation vendors
• Multiple new vendors; legacy vendors have released products & services overlapping with e-grocery

Negatives

• Online grocery sales declining from pandemic highs; declines at different speeds and likely influenced by geopolitical events & surging inflation
• The partnering trend between mfc + e-grocery platform vendors has cooled/died
• New mfc customer deployments quiet since the 2021 e grocery infrastructure report

Grocery sector extremely complex

• Stiq acknowledges that the grocery sector is extremely complex with often short or immediate supply chains from farms to stores, often difficult to replicate
• Many pureplay online grocers have partnered with legacy grocers for ready made supply chains
• Online grocery sales remain at <10% as a proportion of all grocery sales in many countries, even strong online countries, such as the uk

Post pandemic impact, inflation

• Many publicly traded grocers have announced expanded capex on digital & online initiatives and stiqs view is inflation will not affect the sector in the short term
• However, there may be continued supply chain challenges for robotics and other automation equipment
• Pandemic effects are subsiding fast and it is difficult to estimate any permanent positive effects on sales
• Furthermore, post pandemic inflation caused by geopolitical events, qe, etc. Is currently impacting consumer behaviour

Clear differences in 2022 interviews

• Stiq noticed a number of clear differences from the 2021 report (download here for free)
• The main difference was the lack of new mfc deployments + a sense that legacy grocers (those with stores) are taking time to consider their approach to the online channel
• Part of this could also be that many grocers built up significant technical debt during the pandemic that they are now unravelling

Significant experimentation

• Grocers are experimenting significantly across online grocery technologies and modalities
• For example, the very first shared (multi legacy grocer) last mile solution was unveiled in paris in 2022

No silver bullet

• Overwhelmingly, stiqs impression of 50+ interviews and conversations with industry participants is that the sector remains in its infancy despite pr initiatives by early adopters and technology vendors
• Significant hiring from grocers including such warehouse automation teams hints that vendors have some expectation of larger projects to come
• Whilst legacy grocers have been relatively slow to buy equipment, pureplay grocers have accelerated automation deployments to gain and retain market share