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The Grocery Boom Why Amazon's Rise is Good for Manufacturing


The coronavirus pandemic had made the ability to order groceries online

The Grocery Boom Why Amazon's Rise is Good for Manufacturing


"The coronavirus pandemic had made the ability to order groceries online "
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The coronavirus pandemic had made the ability to order groceries online — and in-store — feel more indispensable last year, with the world of groceries being one of the few industries to had hit record sales thanks to incredible demand. Consumer still needed to buy food and drink, which the global pandemic had only heightened consumer love and desire for everything from bread and beer to cleaning products and toilet paper, with more and more of consumers having used online methods to order their household essentials.

One company who, even before the global pandemic struck, saw groceries being the their next market to move into was Amazon. The multinational technology giant had been looking for a slice of the action since 2007, but through the demand within the pandemic their focus was that lead to them witnessing worldwide expansion into online grocery deliveries — followed by a chain of physical stores in the US. Their growth not only benefitted them but other sectors such as manufacturing.

Amazon’s growth still to reach its prime

Between 2014 and 2019, Amazon’s food and grocery sales grew by almost 50 percent. In major cities across the US, Prime members were able to take advantage of Amazon Fresh, a service by where groceries can be ordered online and delivered the same or next day delivery. There was also Amazon Go, where customers were able shop in stores instead of online, however technology had allowed customers to experience a different journey, with no cashier checkouts and sensor fusion detecting when products are taken from shelves. To pay for the goods, customers were simply able exit the store and their account was charged accordingly.

The former’s success has led Jeff Bezos to branch out across the pond, with Amazon Fresh having launched in London and various locations in the UK. The latter’s success in its current 20 locations in has led the world’s richest man to expand his horizons further with more plans for physical grocery stores, where you can pick up everything from baked goods to household products.

Healthy competition

Amazon’s accelerated plans were to gain it a bigger share of the market, both online and in-store, which had certainly sparked a reaction. Instacart — who lost one of its biggest partners in the form of Whole Foods to Amazon — had teamedup with Walmart, the biggest food and beverage producer in the US, to compete with the power of Amazon.

Thanks to a surge in sales during the pandemic, the partnership between the two was eviden, with a same-day delivery service being offered in Los Angeles, San Francisco, San Diego, and Tulsa.

All the talk of rapid expansion plans was taken as good news for the manufacturing industry. But with the fast growth also came the caveat of keeping workspaces hazard-free, hygienic, and safe to use, especially when new factories were being built. Thats why the use of stainless steel electrical enclosures were a great option to provide the hygiene and safety required to get production lines going without disruption.

Not only does it help third-party supplies of manufacturing parts, but it also potentially create jobs in a climate where there are record levels of unemployment. Amazon is already one of the biggest employers in the US, and with further expansion meant a boost in heads within business.

The IHS Markit's manufacturing sector Purchasing Managers' Index jumped from July's 2020 reading of 50.9 to 53.6 for August 2020, which give a small indication that the grocery boom had played its part, but what was important to note that manufacturing labor productivity had decreased at a 15.5% annual rate in the second quarter of 2020, as output fell to 47% and hours worked dropped to 37.3%. These were the largest quarterly declines ever recorded. 

Progression was a good thing

Much like the criticism Amazon had faced for opening checkout-free stores, it can often be difficult to accept change, especially if it hinders one person but benefits the other. From a manufacturing point of view, Amazon’s gung-ho approach to digital and physical supermarkets was one to be relished.

A demand for warehouses was evident, especially since rival competitors announcing plans to use the increased profits from lockdown to compete with the Bezos empire. Manufacturing labor and parts had seen a rise in demand, and in the process, this created a better outlook for a sector that had suffered from a decreased output and stalled productivity.

 

Sources

https://www.statista.com/statistics/1039307/private-label-food-sales-amazon-category-us/

https://edition.cnn.com/2020/08/11/tech/walmart-instacart-partner-whole-foods/index.html

https://www.electrixinternational.com/us/stainless-steel-electrical-enclosures/

https://www.sharecast.com/news/international-economic/us-manufacturing-and-services-sector-pmis-jump-in-july--7616177.html#:~:text=IHS%20Markit's%20manufacturing%20sector%20Purchasing,increasing%20from%2050.0%20to%2054.8.

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