Urban Fulfilment Centres

In the Grocery Guru's pilot episode, Andrew Grant and Darren A. Smith discuss Urban Fulfilment Centres and how it will affect the UK grocery industry. Find out what UFC’s are, and how they will impact the grocery industry. Tesco is first with Asda hot on their tail.

You Can Read the Full Urban Fulfilment Centres Episode Transcript Below:

Darren A. Smith:

Andrew, how are you doing?

Andrew Grant:

Good morning. I'm very good. A cup of tea. All ready for a few minutes' chat.

Darren A. Smith:

Cool. So, we're here with the Grocery Guru, the man that is Andrew Grant, and this is our weekly slot for about 10 to 15 minutes, let's see. We're going to ask him what the latest is going on in the world of grocery. We wanted to call him Andrew Gandalf, but he won't let us, so it's going to be Guru. So, Mr Grocery Guru, what's going on in the world of grocery at the moment?

Andrew Grant:

Well, a test for you Darren. If I said to you UFCs, what springs to mind? It's the latest happening thing.

Darren A. Smith:

Ultimate Fighting Champion.

Andrew Grant:

That's a good one. Not unidentified flying curry?

Darren A. Smith:

Oh okay. Yeah. I like that.

Andrew Grant:

That's what happens if you leave the microwave on too long. Any more guesses? The latest happening thing in the world of grocery that every national account manager needs to be aware of.

Darren A. Smith:

I'm on the spot now. Urban depot thing.

Andrew Grant:

Well, you missed the F and the C out, but you were close with urban. Right, urban fulfilment centres, the latest buzzword in the world of grocery, UFC.

Darren A. Smith:

UFC. Yeah.

Andrew Grant:

Everyone's probably heard the stats, it's been very well documented over the last few months. But as a result of lockdown, obviously, a lot of people decided they weren't going to go to supermarkets anymore, either because of the restrictions of going round those supermarkets or the fact that they were worried about catching the virus. So as a result online home delivery grocery has grown more in six months than it did in the previous, I think 10 years is the stat.

Andrew Grant:

We've got some of the retailers now up to 30% of their orders are online.

Darren A. Smith:

I didn't know that. So a third of their sales are online now?

Andrew Grant:

I seem to remember that stat. For goodness, don't hold me to it, I'm sure you will.

Darren A. Smith:

No. It sounds plausible.

Andrew Grant:

But they're basically certainly 10 years' worth of growth in six months. Now, obviously, anybody that knows anything about home deliveries, there's two basic models. You got the Ocado and the Amazon technical model, whereby they have huge, massive, great automated warehouses, cost gazillions in capital spend to get them up and running. Or you've got the route that Tesco pioneered, God, what, 15 years ago I think now, maybe longer than that, whereby you pick in store. So you use the quiet times in-store and you send somebody round as almost like a phantom shopper filling up a trolley with all the stuff. That's a very cheap route in, but it's labour-intensive and it's slow, and it's expensive from a cost per pick basis.

Andrew Grant:

So the Ocado system, once you've spent your gazillions, the cost per pick is actually very cheap, but you've got to spend the gazillions. The Tesco model, the Sainsbury's model, the Morrisons model, doesn't cost any capital investment but costs you quite a lot in terms of having one person picking the stuff for one store.

Darren A. Smith:

I've seen them in stores, like personal shoppers going round with trolleys like customers and they're doing the shopping for it. Yeah. Okay. Get it. Yeah.

Andrew Grant:

And think about it, if you like, how we've been duped for the last 50 years, because if I came along to you with a concept for a new consumer-facing business, and I said, "Darren,