This video was made possible by CuriosityStream. Sign up for the CuriosityStream/Nebula bundle deal to watch the extended cut of this video with everything we cut for time at CuriosityStream.com/Wendover. Supermarkets are a marvel obscured by banality. Nearly everyone in the developed world usesthem regularly, so we have no basis of comparison—we just don’t know a world without supermarkets. We don’t know how it was a century ago,when grocery stores took the form of small storefronts, found every few blocks throughout towns and cities. You’d hand the clerk a list indicating youwanted, among other things, apples. They’d then gather you apples—assumingthey were in season and in stock. Nowadays, however, you are confronted by anaisle rivaling the size of those historic grocery stores, displaying a tantalizing,sprawling selection of Honeycrips, Fujis, Granny Smiths, Galas, Braeburns, and more—allthe varieties, always in stock, all year long. They sit next to pineapples from Costa Rica,avocados from Mexico, and mangos from Brazil. Further on, there’s beef from an entirelydifferent hemisphere, and fish that was alive in an ocean thousands of miles away just daysago. A century ago, you could certainly buy a jarof peanut butter, but now, you can buy regular peanut butter, or chunky peanut butter, orsmooth peanut butter, or organic peanut butter—and it doesn’t stop there. You can get the chunky Jif brand, or the chunkySmucker’s brand, or the Skippy brand, the store brand, or one of so many more.
You have dozens upon dozens of choices ofpeanut butter, dozens of choices of other nut butter, dozens of choices of other sandwichspreads, and all of that is just one part of one aisle. Put together, the stability and variety ofchoice in modern supermarkets is incredible. In big cities and small towns alike, Americansupermarkets offer an average of some 30,000 different product choices which stay in-stockabout 92% of the time. While the concept of the modern supermarketfirst appeared in the US, it's since proliferated across the entire developed world. The fact that this has become not only normal,but expected globally is the greatest indicator of the robustness of the modern global supplychain, but that’s not to say that it’s easy. For consumers, it’s simple—we can geteverything we want, anytime, from a single store—but the complexity behind that istruly stunning. This is a typical American supermarket—aCity Market brand store in Glenwood Springs, Colorado. While this brand is small, it’s part ofthe larger King Soopers brand, which itself is part of Kroger’s—the largest Americansupermarket company. The entire American supermarket landscapeis incredibly consolidated, with the top four companies holding 45% of the market, whichcertainly has massively negative consequences, but this market concentration has led to thehuge scale and complexity of our current food supply chain. Even independent grocers now tend to relyon gigantic cooperatives to amass buying power and supply their shelves, so industry-wide,scale and complexity is the norm.
Now, supermarkets like this are involved witha perpetual balancing act. Keeping items in stock is of paramount financial concern—research into the matter has found that on the third instance of a desired itembeing out of stock, consumers will go to an alternate store 70% of the time. Being located just five minutes from a Walmart,this store can’t afford to go out of stock of a single item, push a customer to a competitor,and lose out on thousands of dollars in annual sales because they decide they like Walmartmore. Therefore, the task is to keep everythingin stock as much as possible, while having as little extra product as possible. So, the way this Glenwood Springs City Market,along with essentially any grocery store, keeps those 30,000 products continuously onits shelves is simple, at least on the surface. You see, every item in a supermarket is labeledwith a barcode—usually that code is standardized industry-wide, except with some white-labelproducts. When products arrive at the store, they arechecked in to its inventory management software. From there, it’s simple math—as productsare checked out and paid for, they’re subtracted from the inventory count, and as that countgets low, the store knows it’s time to reorder. It’s a straightforward concept—exceptwhen you actually implement it in the real world. There’s more than one way a product canleave a store—it can get stolen, go bad, get damaged, or more.
That means there’s always a slight disparitybetween how many items there are on paper, and in reality. Inventory management software can accountfor some of that, assuming employees feed it accurate data, but stores also conducta manual count every month or two to determine the actual disparity. This is most important for financial reportingreasons—the retailer can’t know how profitable it actually is until it knows how much productit lost—but it can also be used to tell the inventory management software how muchit’s typically off, and correct for that in the future to make sure re-orders happenon time. Then, there are other factors. For example, if a supermarket runs a saleon a given item, that product will likely sell more, so inventory management softwareneeds to account for that in its ordering process to make sure that it correspondentlyramps inventory up. Then, incoming unseasonably warm weather couldmean that barbecue charcoal sales, for example, are about to increase, while hot chocolatesales will decrease, so more complex inventory management software can account for externalfactors like these and make ordering decisions based upon them. Now, some products are simple to keep in stock. Oreos, for example, have a long shelf liveand come from a massive manufacturer with multiple production facilities spread outacross the world. There’s plenty of slack and flexibilityin that system. That’s not the case with all foods. Take, for example, grapes. Table grapes are quite difficult to keep instock. If there’s a sudden surge in demand forgrapes, you can’t just order more from the factory—their global inventory levels areessentially decided years before as growers decide whether to add or subtract vines fromtheir vineyards. What’s more, grapes are highly seasonal.
They don’t ripen off the vine, so they haveto be picked exactly when they’re best for eating—effectively meaning growers havea one or two week window to get a given vineyard harvested. Of course, grapes are found in grocery storesfor far more than two weeks a year—in fact they’re almost always available. What makes that possible is a massive productioncycle spanning across the entire western hemisphere. Now, the easy part of the year for the GlenwoodSprings City Market to get its grapes is late summer. That’s because California’s central valley,where the vast majority of the country’s grapes are grown, has its natural harvestseason between mid-August and late-September. That’s extended earlier into July by “ultra-earlyseason” varieties of grapes, such as Sharada UA, and then later into November by late-season varieties such as the “autumn king.” Therefore, there’s about a four-month window when the entire country’s grape supply is largely fulfilled by California. Once that ends, though, things get trickier,but the industry has learned to take advantage of global climate patterns. Peru, thanks to its fairly equatorial climate,begins its harvest just when California’s ends, early-December, and saturates the marketuntil mid-February, when Chile, with its more seasonal climate, takes over. They essentially act as the southern-hemisphereequivalent of California, also using early and late season varieties to stretch theirmassive harvest all the way until May.
Next, California’s Imperial and Coachellavalleys, as well as various locations in Mexico, fire-up their harvests. These areas have year-round warm weather thatallows for a year-round growing season, but time their vineyards specifically to lineup with this gap in the market until mid-July, when California’s more seasonal CentralValley begins its harvest—starting the cycle once again. While the overall path a given food producttakes varies dramatically, the one constant is that every item that ends up on the GlenwoodSprings City Market’s shelves comes via here—the distribution center. Now, how distribution centers work on thesurface level is fairly standard—they bring in pallets of a single product, break themdown to the box level, and create pallets with smaller quantities of everything a storeneeds. How each distribution center accomplishesthat, however, differs. Kroger’s Aurora facility, operated by acompany called Windigo Logistics, uses a fairly high degree of automation. Trucks arrive from all across North America,delivering pallets worth of product from Kroger’s different vendors. For example, a truck might arrive from Nabisco’splant in Chicago carrying pallets worth of Oreos. These pallets are immediately placed on aninduction conveyor belt, where a scanner determines what they actually are. With that information, the warehousing softwaredetermines whether it thinks it will need more Oreos in its system in the next threedays, or later.
If the answer’s later, the pallets justmake a quick stop at a pallet exchanger machine, which swaps each onto a fresh storage pallet,before the conveyor belts take them to an automated longer-term storage system in aseparate part of the warehouse. If one pallet worth of Oreos is needed sooner,though, it will go to a de-palletizing machine, which breaks them down to the box level, eachof which carries dozens of units of the actual product. Those boxes are injected into a network ofconveyor belt, which takes them to a machine that places each onto an individual tray. That tray is then automatically stored somewherein a cavernous hall of shelving—essentially, a massive vending machine. Sometime in the next three days, some KingSoopers or City Market store will place a re-order, indicating that they need Oreos,and so the warehousing software will automatically remove some trays of Oreos from the shelvingand place them on another conveyor belt, which will take them to a smaller automated shelvingsystem closer to the palletizing area, which acts as interim storage, keeping items nomore than a few hours. Then, when it comes time to build an actualpallet worth of product for a given store, the trays are removed from the shelving ina specific order. You see, the system knows the compositionof the shelves of each of their stores, so it knows what order to build a pallet in. They’ll put items for one side of a storeaisle at the bottom of a pallet, items for the middle of that aisle in the middle, anditems for the other end at the top. That way, the stockers in the store can breakdown a pallet, and put things immediately on the shelves in the most efficient manner.
At the distribution center, this palletizingprocess is still completely automated, and in the end, the system will deliver completedpallets to the humans responsible for loading outbound trucks. Finally, once that’s all completed, a truckwill take the three-hour journey west to Glenwood Springs’ City Market, where an overnightcrew restocks the shelves with fresh product. Now, even as automation is making significantinroads, plenty of grocery distribution centers still use a far more manual approach. That process is essentially the same—palletsare taken in, stored, and outbound pallets are built with smaller quantities of eachproduct—but each step is just completed by humans instead of machines. However, both the automated and manual processesare not perfect. Specifically, they present an issue for what’sreferred to as “slow moving inventory.” You see, grocery distribution centers aretraditionally configured to work by the pallet load—it just isn’t efficient to take ina smaller amount—but sometimes, products just aren’t that popular. However, unpopular products are actually crucialto the business strategies of modern supermarkets.
The reason why they might have dozens upondozens of types of salsas is that some niche brand on the bottom shelf is probably at leastone person’s favorite. The City Market in Glenwood Springs mightcarry that salsa, but the Walmart or Target might not. Even if that one consumer can get everythingelse they need at one of the competitors, they’re going to keep coming back to theCity Market because they know they can get that one, niche product that they love. Supermarkets view niche, slow-moving productsas key differentiators, and key to customer retention, so they’re certainly willingto sell these products even at a loss. In fact, Walmart experimented with reducingits product variety by 11%, but quickly reversed course as it became clear that this ultimatelyhad a negative impact on their bottom line—even if it simplified their distribution logistics.
Reviewed by Kashif
on
August 23, 2021
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