Product Managers Prepare For Cold Storage

The market for cold storage is getting ready to heat up
The market for cold storage is getting ready to heat up
Image Credit: vistavision

If you are like most people, you have started to get used to being able to log on to your computer and order up just about anything. What’s even better, is that what you have ordered seems to show up very quickly. What a lot of us don’t spend much time thinking about is where all of this stuff is coming from. Sure, we’ve all see those pictures of the immense Amazon warehouses where books, TVs, and shoes are quickly picked and packed. However, what about ice cream? For that matter what about milk? There are certain items that we like to order that have to stay cold or even frozen before we buy them. Where do they get stored?

Where To Keep Things Cold?

Product managers are getting ready to make a big bet on the hot market for cold storage. Product managers are preparing to spend $500 million to build 10 to 15 refrigerated warehouses across the U.S. over the next three to five years, with the average facility spanning roughly 300,000 square feet. Right now a 302,400-square-foot warehouse located in Texas is being built. Product managers will need to get companies to finance the venture and others to work on the design of the sites and other aspects of the project.

The industrial real-estate business has been booming in recent years, driven by a surge in e-commerce shopping that has pushed both retailers and logistics companies to seek new spaces close to population centers for rapid delivery to stores and homes. Product managers have realized that the refrigerated arena marks a real opportunity because many cold-storage facilities are aging and traditionally have been built near product production sites rather than close to cities where the products are delivered to. Product managers believe that compared to the rest of retail, any grocery is still under-penetrated from an e-commerce perspective.

Demand for local, fresh food is a very durable trend that necessitates facilities being located within that four-hour drive of growing metro areas, and product managers think that those metros that are growing fastest are undersupplied, so they hope to deliver additional cold storage to those areas. The pandemic-era surge in online grocery shopping and home deliveries fueled strong demand for food storage, with the two refrigerated market leaders Lineage Logistics and Americold Realty Trust are either building or aiming to break ground on millions of square feet of space over the next year. In order to handle meat, produce and other perishables product managers at Lineage have rapidly expanded its footprint in recent years, increasing its current storage capacity to 2.5 billion cubic feet currently from about 2.1 billion last year.

Next Steps In Cold Storage

Product managers at other specialist technology companies are starting to build highly automated sites known as micro-fulfillment centers, in smaller spaces in cities. In New York City product managers at Fabric have opened a 39,000-square-foot facility that uses the company’s robotics. Slowing online sales after the pandemic waned have cast doubt on the staying power of pandemic e-commerce trends.

Product managers are starting to target established supermarket chains and logistics operators as tenants for their cold storage facilities. These types of customers won’t operate the warehouses, as Americold and Lineage do, but will lease them to tenants. The product managers are talking with potential tenants for their first facility and working to bring in one to three occupants per site. The reason that product managers have become excited about cold storage units is because these leases are very sticky. Their tenants tend to get into these buildings, and they don’t leave because of all of the infrastructure and the investment that it takes for them to get setup in these buildings.

The product manager’s ultimate goal is to give retailers and third-party logistics companies a more modern, high-tech offering that will make their operations more efficient. Development for the new cold storage facilities will start in the southeastern U.S., then move up to the Northeast and over to the West Coast near key distribution hubs.

What All Of This Means For You

Product managers are always on the outlook for new product ideas. The arrival of the pandemic created a surge in online ordering by consumers. They ordered just about everything that they could. What this meant is that ordering of food products and other items that needed to be kept cold also increased. The problem that retailers ran into was that the distance between where the cold items were being stored and where their customers were located was too great. A new solution was needed.

What product managers believe is that cold product retailers need more cold storage facilities. Product managers are going to build new facilities to meet the evolving needs of retailers. The goal is to create new cold storage facilities that are closer to where customers are located. Product managers believe that some of the fastest growing metro markets are underserved. The goal is to be able to get goods from a cold storage facility to a customer in under four hours. Micro-fulfillment centers are being built in large cities in order to meet the increasing demand for cold goods. Product managers are starting to target established supermarket chains and logistics operators as tenants for their cold storage facilities. Once they start to rent a cold storage facility, they generally tend to stay for a long time. The product manager’s goal is to create modern efficient ways to deliver cold goods.

In order to be a successful product manager, we need to be able to find new product opportunities. The increase in customer demands for home delivery of cold groceries has identified a weakness in the market – there is no local place to store all of the cold goods. Product managers believe that by building new cold storage facilities close to large metro areas they can provide grocery retailers with the cold storage space that they need. Next time that you order groceries online, let’s see if the cold products are still cold when they arrive!

– Dr. Jim Anderson Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: How can product managers get existing grocery stores to rent their new cold storage facilities?

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What We’ll Be Talking About Next Time

The goal of every product manager is to create a popular product that our customers want to purchase. However, there is a bit of a problem with this plan. If our product becomes too popular, there will be other companies that start to make copies of our products. They may try to place their products in front of our customers by getting retailers to carry their products. This can cause all sorts of problems for product managers. How should we handle situations like this?