The Daily Dilemma
A look at the future of daily fresh-food deliveries, and what’s in their way.
To reach its target, Core-Mark has invested $100 million in its infrastructure over the past five years, including tri-temp trailers, cool docks at distribution centers, geo-temperature tracking and human capital, including more team members focused on fresh.
Because Core-Mark does not own any assembly plants, it works with commissary partners close to its distribution centers around the country. Its roster of fresh products—including sandwiches, wraps, salads, fruit, parfaits, juices and bakery goods—has grown to approximately 3,000 items.
“Five years ago, it was zero,” says Hobson. “For Core-Mark, there’s no category percent increase greater than fresh over the last three years. It’s remarkable, but it had to be because we spent over $100 million to make it happen.”
Of course, sourcing product and getting it to the distributors’ delivery centers is just one step, and Hobson concedes that retailers’ wishes for multi-day deliveries is the larger hurdle to mount.
“It’s like the cart before the horse,” he says. “You can’t build this great product with two days’ life when you come there once a week.”
And herein lies the problem: It’s largely too expensive for the distributor—or the retailer, depending on who ends up with the cost—to run a daily fresh program. Core-Mark has decided to solve the riddle of more regular fresh deliveries by approaching another puzzle: direct-store delivery (DSD).
To spur greater economies of scale, Core-Mark wants retailers to turn over their DSD-delivered product to the company. It has software that can evaluate a given retailer’s supply chain to see what can be moved over to Core-Mark. The more products Core-Mark has to deliver to a given store, the more often it can affordably stop there, making regular trips with those highly perishable items more feasible.
“All that merchandise will pay for these additional deliveries without putting the burden of all that additional cost on fresh product,” Hobson says.
While the number of delivery trucks congesting their parking lots daily is no doubt a thorn in many retailers’ sides, the strategy has been a difficult one for operators to buy into, especially independents. But there have been successes, says Hobson: Dairy has traditionally been a DSD product, but over the past five years Core-Mark has gone from zero retailers buying dairy products through it to 7,500 stores.
With a major investment in infrastructure, a network of commissary partners around the country and a focus on absorbing traditional DSD products, the distributor is staking its future on the hope that c-stores truly embrace freshness.
But Hobson understands it’s a lofty goal. “I’ve been in this industry my whole life; there’s never a silver bullet,” he says. “It’s always a long, drawn-out process for things to take shape.”
Serving the industry as both an assembler and a distributor, Naperville, Ill.-based Eby-Brown plays a unique role in the evolution of the fresh supply chain.
In 1994, it acquired a distribution center outside Columbus, Ohio, that also housed a commissary. For some time, the distributor made sandwiches for a specific client, but soon realized that the “logistical economics of fresh sandwich delivery was not there, strictly based on the volume,” says Ron Coppel, senior vice president of national accounts. So it began exploring modified atmosphere packaging, or MAP.
MAP is used to prolong shelf life by removing as much of the oxygen in the package as possible and adding a mix of nitrogen and carbon dioxide, which slows the aging process.
“This is the best of both worlds insofar that it is a fresh, never-frozen sandwich, but using the MAP technology extends the shelf life to really make it a fresh sandwich in a convenience store that a consumer would really like,” says Coppel. “It worked into the distribution model of our customers.”
In 2006, Eby-Brown opened up its MAP products, packaged under the Wakefield brand, to all of its customers. Since then the company has upgraded its packaging to a less factory-made feel, using a cardboard wedge and paper sub wrapper.
The company introduced the new packaging in 2011 and experienced a 30% increase in same-store sales.
With a 100% tri-temp fleet and a fresh-food reach from Minneapolis to Atlanta thanks to MAP, Eby-Brown is now focusing on foodservice category management with a three-level foodservice program aimed at evaluating whether its retail clients are optimizing their programs. As such, Eby-Brown advises on products as well as category management tools, and assists when retailers want to upgrade their foodservice program.