Albertsons embraces micro-fulfillment to power e-commerce

To support e-commerce growth, Albertsons Cos. has expanded its partnership with automation specialist Takeoff Technologies to deploy micro-fulfillment centers (MFCs) to fill online grocery orders.

Currently, Albertsons has two Takeoff-powered MFCs at Safeway supermarkets in South San Francisco and San Jose, Calif., which went into operation in the fourth quarter of 2019.

“We have been working with Takeoff on a series of pilots in our network, and we plan to expand beyond the two that we already have launched,” said Chris Rupp, chief customer and digital officer at Albertsons Cos. “We have a series of new locations we’ll launch over 2020 and 2021 that will help us deliver more groceries, faster, to customers in some of our highly concentrated areas of business.”

The new MFCs could include stand-alone facilities, not attached to a functioning store, according to Rupp.

“Our intent is to have a freestanding facility in this bunch,” she said. “I’m considering this entire group of facilities to be a series of pilots where we try different approaches to fulfillment to find out which is the best at providing the most efficient service for customers. For example, you can set up a MFC where it’s primarily customers in the local trade area of one store, or you can also set up a hub-and-spoke model where one MFC is serving many different stores. Another approach would be to set up a dark store as a MFC. We are going to be trying all of those different approaches and potentially some others.”

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According to Albertsons, the MFCs typically occupy a footprint of 10,0000 to 15,000 square feet and, if on-site at a store, are situated adjacent to the sales floor. The facilities carry about 15,000 to 18,000 of the local market’s top-selling products and serve an area covered by the nearest five to 10 stores.

“We are continually looking at ways to become more efficient,” said Susan Morris, executive vice president and chief operations officer at Albertsons Cos. “What we do is we find a store that’s central to a group of stores that provide e-commerce services and look to create efficiencies. As an example, if I can take the backroom of a store or punch a hole through the wall and expand into a facility next door, I need about 15,000 square feet, and we can deploy a micro-fulfillment center, where you can put your highest-velocity items through an automated picking system. So instead of having our team members have to go up and down the aisles to shop — and, by the way, compete with a brick-and-mortar customer — they could do that heavy load in the backroom.”

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The shift of the e-commerce load to the MFC allows store associates to focus on customer service in Albertsons’ bread-and-butter business — its fresh departments, Morris noted.

“We can take advantage of the turns that you get in fresh, which is very important,” she said. “The machine is picking your bath tissue, your towels, your soda pop, and the employee can be on the sales floor, making sure that we’re getting you that one-and-a-half-inch thick ribeye that you wanted, or that custom cake with ‘happy birthday’ written on it. So we think it’s a nice end-to-end solution.”