The Milkman Model is Back
Grocery delivery is experiencing a significant revival, presenting new challenges and opportunities for food retailers, according to JLL expert Leslie Lanne
Lost in our current focus on the novelty of getting groceries delivered is the fact that it’s not new. In fact, the future of grocery delivery mirrors the past — but also presents new challenges.
What's the same in grocery delivery
In the 1950s and 60s, a sizeable chunk of American households had a milkman. In 1963, for example, 29.7% of households had milk delivered, according to a survey by the U.S. Department of Agriculture. Home delivery was so widespread that milkmen even appeared regularly in pop culture, including a 1950 film called “The Milkman” featuring Jimmy Durante as an eccentric dairy delivery man. But by the mid-1970s, less than 7% of families had a milkman, and by 2005, only 0.4% did.
However, by the late 2000s, as e-commerce started growing, online grocery delivery services became popular. The increasing accessibility and adoption of meal kit delivery services has led to the success of businesses like Plated, Home Chef and Freshly. And with them, although in a different form, the milkman model is back.
Expectations of faster and faster delivery times are rising, especially among retailers' coveted young, urban demographic.
Consider Maryland-based South Mountain Creamery. In 2001, it had 13 customers subscribing to its home delivery service. By 2014, it was delivering to 8,500 customers across five states. Of course, home milk deliveries are only the tip of the iceberg. Now, butchers will take your orders online and deliver direct, and farm-to-table grocery delivery harkens back to a time that predates the milkman, where sustainable ingredients all came from one place.
Similar but different options for consumers
As much as the future resembles the past, there’s a significant obstacle retailers face when trying to adapt to consumer demand for quick grocery delivery. Expectations of faster and faster delivery times are rising, especially among retailers' coveted young, urban demographic. The industrial infrastructure built for yesteryear isn’t cutting it, nor does it account for the percentage of the population that now lives in dense, traffic-congested metro areas. Preparing for the new age of the milkman requires embedding newer, smaller distribution centers in the urban core that directly service the specific requirements for grocery delivery.
In urban areas where there is nowhere to go but up, multistory warehouses are key. These changes, over time, will ensure ease in the supply chain and harmony amongst all of its interconnected parts.
Leslie Lanne is a Managing Director for JLL in the Northeast region. She can be reached at leslie.lanne@am.jll.com.
