Consumer behavior continues to shift as the comfort level with online shopping continues; and consumables is no exception. In March of 2020, a survey conducted by Accenture, found that about one third of American shoppers were buying more frozen food than normal.
Primary reasons for the increase:
- Consumer expectation has heightened for same day, next day delivery of all delivered products.
- Increase in demand for cold storage closer to where people live to ensure delivery of fresh/frozen foods.
- The pandemic accelerated cold storage demand even more to accommodate online grocery shopping and in-home dining.
- Online shopping has allowed smaller brands to offer their products to new and wider markets.
- Movement toward natural ingredients and the phasing out of ozone-depleting substances.
The chart below shows a dramatic increase in the cold storage market over the next several years.
The global cold storage market size was estimated at USD 107.18 billion in 2020 and is expected to reach USD 119.98 billion in 2021. This market is expected to grow at a compound annual growth rate of 13.5% from 2021 to 2028 to reach USD 291.3 billion by 2028.
It’s not impossible to enter the cold storage market or expand what you already have. US Foods did exactly that, albeit expensive, when real estate was not available for a ground-up cold storage building. Adding to that, in a time when available warehouse space is at a premium and hard to find, leveraging what you already have is a viable option.
With cold storage demand rising for the foreseeable future and consumer expectations escalating, now may be the right time to begin your entry strategy. All indicators point to a strong market and continued demand. Whether you start small with a walk-in freezer, cooler or clean room, convert a section of your facility to cold storage, or decide to fully convert to a temperature-controlled environment; the demand seems to be heading in the right direction.
A primary piece of the equation is clear and present: cold storage demand. Other considerations for market entry are:
- What type of systems and equipment will be required to ensure rapid preparation for shipping?
- Is equipment material type an issue? (Roll-formed vs structural steel)
- Will receiving frozen products require different equipment?
- How does cold temperature impact workers and moving mechanical equipment?
- What is available to help maintain constant product temperatures and cleanliness?
- What are best practices for temperature control and food safety?
Whatever your appetite is for entering the “HOT” cold storage market, an experienced team of experts can guide you through the process to determine the best entry strategy and the solutions required to get you fully operational, safely. DAK Solutions works with companies to understand your business goals and then provides a turnkey solution that meets the unique requirements of a modern cold storage facility and prepares you for today’s business and tomorrows growth.
DAK Solutions is a Chicago-based material handling systems integrator with expertise in providing warehouse and storage optimization, high-volume throughput order processing systems and modern automated warehouse solutions.
Contact us to discuss your next project.