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Bloomberg
In an industrial park outside Cologne, German grocer Rewe Group is fighting back against Amazon.com Inc. with what it describes as the most technologically sophisticated online-shopping facility in Europe.
The closely held retailer’s building, the size of 2 1/2 soccer fields, holds 20,000 items from drinks to diapers, twice as many as a typical supermarket. Products are stored in half a dozen distinct cooling zones. Orders are assembled with the help of a towering labyrinth of carriages, elevators and conveyors synchronised by the company’s algorithms, before they’re loaded on trucks and shipped out across a roughly 1,000-square-mile region from the Dutch border to Dusseldorf.
All that tech — which contrasts with Amazon’s largely human-operated grocery warehouses — is needed because of the country’s strict laws on handling fresh food.
For example, ground meat must be stored at no more than 2 degrees Celsius, apples and grapes at no more than 7 degrees and bananas and avocados at no more than 14 degrees.
The complexity of those rules is one reason why online grocery sales have yet to take off in Germany. Now Rewe sees an opportunity to beat Amazon and other online retailers, like the UK’s Ocado Group Plc, at their own game.
“We need six different cooling zones, while Ocado in England can make do with three, making the complexity of our supply chain brutal,†said Wolf-Axel Schulze, who runs the project.
Contrasting Approach
Rewe’s approach contrasts with the strategy of the fast-growing German-based discounters Aldi and Lidl, which use lean assortments and logistics to maximise efficiency and slash prices. Their market power has pressured prices
at mainstream supermarkets, squeezing profit margins and helping to keep Amazon at bay. The US giant offers its Fresh service in only three German cities: Berlin, Hamburg and Munich.
Ocado runs its own UK online grocery and licenses out its warehouse technology, which deploys a robot grid that it calls an engineering breakthrough. Its deal with Kroger Co. means that technology may soon automate warehouses and speed delivery at the US’s largest supermarket chain.
Rewe says it takes an even more high-tech approach at its Cologne site. Its system automatically handles fresh produce and cold cuts sold by weight, rather than requiring human intervention.
The 80 million-euro ($90 million) facility “plays Tetris†when getting goods into place for delivery, making sure everything fits while complying with the food-handling rules, said Andreas Palmen, who oversees the site.
Boxed goods are automatically sent from high storage racks via roller conveyors designed by Austria’s Knapp AG. The receiving, picking, packing and shipping areas all need
to have the same temperature zones as the storage sections, complicating the task of assembling a typical 50-to-150-euro order.
Despite its high-tech image, Amazon takes a far less automated approach to the warehouses for its Fresh grocery service.