MONTREAL, Que. – Final mile delivery providers will need to adjust to lasting changes to how stores are used, stemming from the Covid-19 pandemic.
Brody Buhler, global managing director, post and parcel with Accenture, warned during a Movin’ On session June 3 that as brick-and-mortar stores are converted to fulfillment centers, efficient delivery systems will be paramount.
Retailers have already invested to allow options like click-and-pick (curbside pickup) and local delivery, and will want to maintain those options going forward, Buhler said.
“The investments have already been made,” he said. “This transformation of using stores as fulfillment centers will continue into the future and be a dominant new feature of the new normal.”
Covid-19 has also accelerated the use of e-commerce, another trend that Buhler said is here to stay. One in six purchases are now made online, up from one in 20 before the pandemic, and a whole new set of traditional consumers have now converted out of necessity. They’re not likely to turn back once traditional retail options return, Buhler pointed out.
E-commerce is also being driven by the economic fallout from Covid-19. While more than 33 million Americans are newly unemployed and in France, 50% of residents are currently supported by the state, there is still money to be spent online. That’s because options such as travel, entertainment and dining out have disappeared leaving more money to be spent online.
As consumers stay closer to home, local commerce is becoming more important.
“Companies working to enable local commerce will likely be the big winners going forward,” Buhler predicted.
Studying parts of the world where the Covid-19 pandemic has stabilized has revealed that buying habits employed during the lockdown remained long after the breakout stabilized. “Consumers are going to change their behaviors back to normal slowly,” said Buhler. “The consumers you thought you knew, you don’t know. Everything has changed.”
Last mile delivery companies are seeing a shift in volumes – less mail, more parcels, less B2B, more B2C. The traditional delivery models of shipping from a distribution center to a delivery depot and then to the customer will no longer work, Buhler said, since the shipment will often be from the store to the consumer within a five-kilometer radius.
More flexible, scalable automation and sorting systems will be needed, which can be quickly installed in existing spaces. Analytics will need to be better used to increase throughput capacity and efficiency.
These changing habits also have environmental implications, with more delivery vehicles added to the roads, especially in urban centers. It’s estimated that there will be 36% more delivery vehicles on the world’s roads by 2025, while at the same time major cities are banning fossil fuel-reliant vehicles.
Charles Brewer, chief operating officer of Canada Post, said his company is exploring new delivery methods such as cargo bikes in major cities. He also noted Covid-19 has required the corporation to fast track investments in e-commerce capabilities.
“The implications for Canada Post are, all those projects we had planned for the next five to 10 years with robotics and automation, now need to be done by Monday,” Brewer said. “Our universe has changed incredibly.”
While challenged to adjust to quickly changing retail habits resulting from the Covid-19 pandemic, last mile delivery providers have never been better appreciated, Brewer noted.
“The level of appreciation for what our employees have gone through has been absolutely overwhelming,” Brewer said. “Delivery has never been more important.”
Movin’ On, hosted by Michelin, is a global conference on sustainability traditionally held in Montreal, Que., each June. This year’s conference was held June 3-4 online due to travel and crowd restrictions resulting from the Covid-19 pandemic.