CALEDONIA — Grocery distributor and retailer SpartanNash Co. today celebrated the grand opening of its first micro-fulfillment center, which the company expects to more effectively serve a growing number of online customers.
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The Byron Center-based SpartanNash (Nasdaq: SPTN) cut the ribbon on its 55,000-square-foot facility, located at 5199 68th St. SE in Caledonia, near an Amazon.com Inc. distribution center. The two companies have partnered in recent years on grocery delivery services.
SpartanNash expects the facility to house 16,000 of its most popular products that are available for purchase online through the company’s Fast Lane program that launched in 2017.
Orders placed via Fast Lane’s online interface will be picked and packed at the fulfillment center and sent out to one of 24 SpartanNash stores throughout West Michigan. When fully operational, the facility and its staff of around 40 employees will be equipped to support 1,000 orders per day.
The COVID-19 pandemic pushed many shoppers to pick-up and delivery models, accelerating an already growing trend in the grocery industry. SpartanNash saw a 32-percent rise in Fast Lane transactions since January 2020 while unique customers increased by 45 percent.
“I would say it probably fast tracked (the fulfillment center project) a little bit because it gave us the confidence — this was a really growing area for us — to develop our expertise in it,” SpartanNash CEO Tony Sarsam told MiBiz. “With the more explosive growth we saw, it gave us a platform to accelerate this project.”
Sarsam was named CEO in September 2020, beginning his tenure roughly six months into the pandemic. He said he expects post-pandemic grocery shopping to remain heavily reliant on pick-up and delivery.
“The future will involve more people who are buying online and using either the delivery at home or click-and-collect model,” he said. “Do I think it completely supplants in-person shopping? Probably not. But I think it's key to growing. I think this will be among the stickiest habits that we get out of the pandemic.”
The fulfillment center’s close proximity to the Amazon facility is fairly coincidental.
SpartanNash has partnered with Amazon since 2016 to supply the online retail giant with products for its grocery service. Last year, the two entered into a commercial deal that gave Amazon the option of acquiring up to 5.4 million shares of common stock, making it the largest shareholder in SpartanNash, as MiBiz previously reported. Amazon has until 2027 to purchase those shares.
Sarsam said the location’s proximity to Amazon was not a deciding factor.
“The Amazon growth has been terrific,” Sarsam said. “We’ve had a relationship with them now for a couple of years. We signed a more thorough contract with them almost a year ago and we continue to grow with them as they continue to grow.”