Category Archives: Grocery shopping trends

Can Digital Resources Solve Grocery’s Inventory v. Profitability Dilemma?

“The biggest challenges that grocery retailers face is excess inventory and profitability,” says Randy Evins, Senior Principal for Food, Drug & Convenience at SAP.

In a recent SupermarketNews article,  Evins explains that grocers face the dilemma of keeping their margins low by spending less while still delivering quality products. More labor requires higher costs, but without the additional attention to fresh foods, products will not be up to standards.

The solution: Grocery retailers should leverage digital resources and process improvement to more easily monitor, plan and execute their efforts.

“It’s critical that grocery free themselves from the constraints of doing everything manually.” Elvin says.

“Automation of simple tasks can help ensure manpower is used in more critical roles rather than routine monitoring and conditions management.”

The article goes on to present ways in which digital information can help supermarket management better-understand what products are most popular and what are consistently undersold, as well as which processes are the best candidates for streamlining. They would then be able to better manage some of the more challenging yet vital areas of the business, such as the fresh foods and perishable sections, which typically comprise up to 50 percent of sales and more than 60 percent of profits.

In addition to leveraging technology to improve operational efficiency, Elvins also stresses the importance of using data to better-understand customer preferences, and to drive the customer experience (CX).

“Stores must differentiate from online by taking advantage of consumer senses, drawing consumers into the store, and using experiences to convert the sale,” he writes.

In-store events like wine tastings, and providing local product representatives and vendors throughout the store to offer expert opinions, are often popular offerings that aren’t possible online, thus creating greater brand-and-store loyalty as well as a competitive edge over online retailers.

Supermarkets, FDA React to the Coast-to-Coast Demand for Healthy & Fresh Choices

According to a recent SupermarketNews article, supermarkets are offering healthier and smaller fresh snack options.

Chains on both coasts are reacting to consumer demand for the same level of quality and freshness in their snacks that they demand from other prepared foods.

For example, Roche Bros., a 20-store chain based in Wellesley, Massachusetts has responded to the increased interest in fresh, prepared snacks by offering “salad toppers,” which are displayed alongside prepackaged salads. The small containers, which sell for about $2.50 to $3, include varieties of shrimp, chicken, steak tips, hard-boiled eggs and other proteins that are designed for either combining with a salad or eating as standalone snacks.

“It allows people to get a quick bite of protein on the go, without spending a lot of money,” said Adam Laliberte, kitchen director.  “There’s definitely an increase in demand for little bites to eat.”

Similarly, KeHE Foods’ Monterrey, Calif., fresh foods division has rolled-out a new line of cheese-based fresh snacks to about 50 retailers, said Amber Mahin, director of marketing and merchandising.

“They have proven to be very popular,” said Mahin. “The trends we are seeing are fast, fresh and healthy. People are eating smaller meals and meals with less calories.”

It seems like the U.S. Food and Drug Administration (FDA) may be providing support to health-conscious consumers as well, as their final rule for the new menu labeling provision of the Affordable Care Act has been published. This new law will impact supermarket deli and bakery departments for chains of 20 or more stores operating under the same name. Labeling will be required for restaurant-type food such as:

  • Made-to-order sandwiches, ordered from a menu or menu board at a grocery store
  • Food items shoppers serve themselves from a salad or hot food bar at a grocery store
  • Grab-and-go items such as muffins at an in-store bakery

Artificial Intelligence Driving Faster Shopping Trips?

As you most likely are aware, Instacart provides shopping and home delivery in a variety of stores.

In an ongoing effort to generate more precise shopping trips — i.e., a faster way of shopping for its employees, who are shopping on behalf of customers — the San Francisco-based company has been testing various ways to determine how people might most efficiently shop for items on a list, ranging from:

  • an alphabetical list
  • a route-based approach
  • an artificial intelligence (AI) approach that uses data from the company’s most efficient shoppers to predict a sequence of picks that would be the most efficient

The article states that people are using AI to solve hard problems more and more… and the algorithms used for more traditional problem solving are not so different from those that can determine how a human would pick-up specified items in a store. In fact, Instacart is able to “guess” the next item a shopper will pick 60% of the time with the AI solution!

“It’s not 95%,” said Jeremy Stanley, VP of data science at Instacart. “But there’s room for variance and error. When we look at the overall sequence it mimics what the shopper does very closely, and usually only reverses a few items per trip.”

Might there be an application for using this AI approach for you and me to enhance our food shopping experience?

If so, how might retailers view this developing use of technology, considering it might make shoppers less susceptible to impulse buying because they will do less wandering through the aisles?

Amazon “Pick-up” Stores Free for Some

According to a recent SupermarketNews article, Amazon has released information about new “click-and-collect” sites in Seattle.

Called “AmazonFresh Pickup,” the new concept will provide a full selection of grocery and household items available for online ordering and pickup, free to its Prime members.

The prototype sites are currently open only to Amazon employees. While Amazon did not specify any time-frames or plans, the article quoted an analyst at Wolfe Research, who said he expected Amazon will open as many as 30 such outlets this year.

Trends Continue to Add Fuel to the Shopping Experience Fire!

In a recent article posted by Pan Oston, a customized retail fixture and display manufacturer, the following five supermarket trends were identified for 2017, adding more fuel to the “shopping experience” fire:

  1. Retailers Should Treat Their Stores Like a Home: Unique retail experiences are still very important to customers and reward retailers who provide them.
  2. Convenience Will Be Key: Push button product, services, payment and delivery will be come more and more prevalent.
  3. Brick-and-Mortar Stores Will Become More Integrated
  4. Niche Retailers Will Rise
  5. Brick And Mortar Drives Customer Experience: Driving the customer experience, brick-and-mortar stores will remain relevant in 2017.

Read the full article…

Service v Price in Supermarkets?

Various articles and reports are consistent: supermarket shoppers want more convenience and better service!

One SupermarketNews article reported how consumer demand for service impacted operations at Meijer and the curbside pickup option it launched in some stores in 2015. The article quotes Peter Whitsett, EVP of merchandising and marketing at Meijer, “…[data] has put a spotlight on the huge demand for convenience, and the challenge for the big retailer to wrestle it economically. As retailers we’ve done a reasonably good job of managing price for products, but what we’re learning to do is managing price for service.”

The piece goes on to explain that Meijer assumed curbside pick-up would primarily serve for fill-in trips, but the company soon realized they “were 180 degrees wrong. Customers said ‘do all my shopping for me.’”

Similarly, Euromonitor International, a world leader in strategic market research, published a white paper “The New Definition of Convenience in Retail,” which indicates that, “Thanks to time-pressed consumers, the need for convenience is paramount and retailers, in all channels, are deploying tactics to get consumers what they want as conveniently as possible.”

Of course, the convenience of online shopping and grocery delivery means different things to different people. For urbanites, many of whom opt to forgo car ownership, transportation to and from the supermarket might be the key issue. Yet for others, as noted above, time might be the driving force.

So, what does this mean for supermarkets?

First, as noted by Meijer’s Mr. Whitsett, supermarkets will need to go beyond managing price and find ways to streamline and improve the work processes for providing added services and convenience.

Secondly, online shopping is poised to become a bigger part of the overall grocery shopping equation going forward, and grocery providers must find ways to compete in this arena – against the likes of Amazon and Walmart, this will not be an easy task!

As noted in an article posted on fooddive.com, “Grocery retail value should be re-framed to emphasize non-price factors such as freshness, quality, customer service and the shopping experience. 2017 could become the year when retailers stop primarily selling products and instead start selling services, solutions, and quite possibly stellar shopping experiences.”

3 Trends Impacting Supermarkets

In a recent article published by ECRM, a support organization that provides business solutions to retailers by integrating process, vision and technology, three key trends were identified as having a significant impact on the grocery retail field:

“The U.S. food retailing business has never been more competitive, the article said. “A number of trends are putting pressure on food retailers of all stripes…”

The article went on to suggest that the food retail business is evolving and “the customer is king!” Data from a study done by Packaged Facts was also shared, identifying three key trends as “shaping” the food and beverage retail market:

  • The incursion of e-commerce onto the food retailing landscape
  • The evolution and expansion of contactless payment options
  • The rise of the smaller store formats

Read the full article…

“Quick” Customer Experience Analysis

As you most likely know, “Omnichannel” refers to a type of retail that integrates the different methods of shopping available to consumers (i.e., online, in-store, phone…).

While some say the concept is just a fancier way of describing cross-channel sales, others profess that “Omnichannel” goes further to encompass the continuity of the shopping or customer experience (CX).

To further illustrate this perspective, Todd Leach
VP, Client Insights at Service Management Group (SMG), an organization that focuses on customer and employee experience, writes that Omnichannel is changing consumer expectations and, in one of his blog posts, suggests that “speed” is high on the expectation list.

“Above all else, speed means seamless,” Leach says. “…and the idea of seamless is the root of an Omnichannel experience. Customer information must be available across multiple touch points throughout the customer journey to help make interactions with your brand both efficient and effective. Remembering a customer’s most-purchased items makes checkout a breeze…  a push notification lets them open your app when they come near a store… one-click check-out saves customers from having to give the same information over and over again. These small details make a huge difference in a smooth and efficient customer experience—and that translates to a favorable brand perception and a boost in customer loyalty.”

It seems the online and in-store experiences are merging to better serve customers. The question is, will this ongoing evolution and the associated impact on the customer experience also drive customer loyalty?

 

Employee Engagement Might Be the Key Differentiator for Lidl

Based on statistics published by smallbusiness.chron.com,  employee turnover averages 100 percent in the grocery industry. Cashiers, order fillers and stock clerks have the highest turnover rates, and the cost of replacing just one supermarket cashier is at least $3,637.

But more troubling than the cost, this turnover has a negative impact on the customer experience.

This perspective is consistent with information shared recently on fooddive.com, which states, “Never mind store designs, or prices, or any of the other issues potential competitors have been concerned about: While those issues are all important, so are the ways employees are treated… retaining employees helps to build a cohesive team and a solid shopping experience.

The article goes on to cite the rapid growth of German grocery chain Lidl, whose accelerated U.S. expansion is making many take notice. The grocery chain’s first 20 stores will open this summer in Virginia, North Carolina and South Carolina.

But along the lines of engaging employees, the chain has a plan to attract and retain the best talent by offering one of the most generous benefits and compensation packages in the industry. “The program is designed to ensure that Lidl U.S. employees are recognized and rewarded for their talents, feel valued for their contributions and are motivated to continue to grow their careers with us,” the article said.

Store associates will receive starting salaries of $12 per hour, plus benefits, according to a Lidl press release.  Possibly more important than the robust pay rate is the robust benefits plan, which includes medical, dental and vision insurance with flexible spending accounts, a 401(k) and retirement plan with employer contribution, life insurance, disability insurance, an employee assistance program, paid time off, time off for volunteering, commuter benefits and company sponsored social and fitness events.

Clearly Lidl leadership has a strong appreciation for its workforce and values the concept of employee engagement. If the correlation between employee engagement and customer satisfaction proves true, which we believe it will, it will be interesting to see what happens over the course of 2017, during which time Lidl plans to open 100 U.S. stores.

The Experience Economy?

Continuing with our previous post’s topic of the “shopping experience,” a recent SupermarketNews article referenced an emerging trend called the “Experience Economy.”

According to the article, for a growing number of consumers it is simply not enough to provide competitive pricing, selection, and convenience. Instead, the article suggests, individuals are now seeking “memories” when shopping, which can come in the form of in-store education, additional services, entertainment, or other offerings that engage shoppers.

To simplify the planning process, it is recommended that supermarkets focus on four “quadrants” to enhance the shopping experience:

Entertainment. Live engagement with shoppers — such as cooking and pairing demonstrations, as well as wine and beer samplings.

Education. Examples of this could include in-store cooking classes, “stories” behind the sourcing and production of products, and meal ideas.

Esthetic. (spelled with an “e”) In-store amenities such as restaurants, wine bars, and cafés.

Escapism. Tasting new cuisine and flavors can mentally whisk shoppers off to new locales or inspire them to experiment with new ingredients.

Read the full article…