Category Archives: Inventory management

Food Waste!

In a recent video report, Phil Lempert, “Supermarket Guru,” referenced a United Nations’ Food & Agriculture Organization statement indicating one-third of food gets spoiled or wasted.

That translates to approximately $1 trillion per year, or double the dollar volume of the grocery industry as a whole!

As you are most likely aware, to reduce food waste we have to control environmental conditions including temperature, moisture levels, and UV exposure all across the supply chain including on shoppers homes.

The Spoon reports that a group of researchers led by Giovanni Salvatore at ETH Zurich have developed a biocompatible microsensor that can be directly applied to food and is safe to eat. The sensor is made from a combination of edible materials such as magnesium and a compostable polymer made with corn and food starch.

But there is a problem – making them is currently very expensive, compared to pennies or even fractions of pennies for traditional RFID tags.

However, Salvatore predicts that these biodegradable sensors will be part of our everyday lives within 5 to 10 years.

Robots in the Aisles?

A recent video and report by Phil Lempert, founder of supermarketguru.com, shared information about “Tally,” a robot that will be working the aisles at Schnucks looking for items that are out of stock and checking on prices.

The robot is being tested at a store in the Richmond Heights area of St. Louis, the article says. A second will be tested at another store in the Kirkwood area. The tests are expected to last about six weeks.

Tally weighs about 30 pounds and stands at 38 inches tall and has sensors to avoid bumping into things like shoppers and carts. It scans the shelves and notifies the store personnel when quantities are running low.

A new component of the digital trend?

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.

Check-Out Free Stores?

A December 5th SupermarketNews article shared insights on the latest — and potentially most disruptive — development from Amazon: Amazon Go.

This new convenience store concept will offer consumers grocery essentials, convenience items and prepared foods-to-go without requiring them to check out.

The 1,800-square-foot test store, located in Seattle, is currently open to Amazon employees using the store in a beta test. It will open to the public early in 2017, the Seattle-based retailer said.

According to the article, these new stores will use proprietary technology allowing shoppers to take items from shelves and simply walk out with them to be billed later — “…a potentially big step toward meeting shopper demand for convenience while relieving Amazon the burden of costly  fulfillment as it pursues a greater impact on food retailing.”

“Our Just Walk Out technology automatically detects when products are taken from or returned to the shelves and keeps track of them in a virtual cart,” the company said in a release. “When you’re done shopping, you can just leave the store. Shortly after, we’ll charge your Amazon account and send you a receipt.”

Amazon Go — reportedly known inside the company as “Project X” — has been the topic of considerable speculation in recent months. Recent reports said the company was eyeing the potential to add as many as 2,000 such stores in the coming decade following a test period in major markets before 2018.

Wow! We didn’t see this one coming, but it is certainly a good example of customer-driven decision-making! And as some in the industry are wondering, might this be then next big “game changer?”

Supermarket Customer Experience & Expired Products

frozenA recent datecheckpro.com article referenced a challenge faced by supermarkets as they strive to attract and retain customers by providing a positive shopping experience and outstanding service.

The issue-at-hand is product expiration.

At the corporate level, author   says, “expired product costs generally remain hidden. As a result of date management execution challenges, expired products end up in the hands of customers or on the back of the shelf rather than on the P&L.”

Krawczyk goes on to suggest that the true cost of customer satisfaction, or dissatisfaction in this case remains unseen as well, and cites research from Date Check Pro, the industry’s leading expiration date management software, which indicates the average supermarket has over 1,500 expired items on the shelf within the center store alone!

The article also suggests that while product expiration issues are a preventable problem,  they plague many supermarkets because of:

  • People management – are the right people spot-checking and re-stocking?
  • Setting the wrong priorities – more urgent perational demands result sacrificing the important task of effective spot checking and restocking
  • Trends toward offering a wider selection of products

Given the competitive nature of the industry and the opportunity to positively impact the shopping experience, it would seem that supermarket chains would be best-served by proactively improving these processes on a continuous basis.

3 Supermarket Shopping Demands & the “War on Big Food”

With more and more consumers becoming informed about the health benefits of natural and organic food products, it is inevitable that grocers will need to increase their fresh produce selections and increase their marketing efforts around these departments, which are typically located in the perimeter areas within their stores.

According to a recent article published by KDM P.O.P. Solutions, three specific consumer demands will reshape the typical supermarket over the next several years:

  • Healthy and natural
  • Local and fresh
  • Organic and unprocessed

These consumer demands will continue to rise and this trend effects the whole grocery shopping experience, the article suggests, noting that 75% of consumers choose which retailer to do their shopping at based on the store’s produce department.

And according to Supermarket News, 43% of health conscious consumers choose a shopping destination based on their organic food selection, while 32% seek foods grown locally, and another 28% look for natural, fresh foods.

Shoppers are indeed skipping the middle aisles, where most all “Big Food” packaged brands are located, and heading toward the store’s perimeter, where fresh foods are found.

Steve Hughes, a former ConAgra executive who now runs natural food company Boulder Brands, believes so much change is afoot that we won’t recognize the typical grocery store in five years. “I’ve been doing this for 37 years,” he says, “and this is the most dynamic, disruptive, and transformational time that I’ve seen in my career.”

 

Supermarket Shelf Space Questions

sheflspaceMuch has been researched and written about supermarket shelf space decisions and the impact those decisions have on the shopping experience as well as profitability.

Can customers easily find what we want?

If so, will they consider the shopping experience to be better and become more loyal? If not, will they keep coming back to find it?

Yet according to numerous studies, many crucial shelf space questions are still difficult for many retailers and vendors to answer, other than just on the basis of gut instinct.

These important questions include:

  • How much is the store’s shelf space worth?
  • What products and brands would make the most profitable use of the space?
  • What products and assortments drive the greatest growth at the shelf?
  • How do I make sure that these are the products that customers want?
  • How do I make sure the customers can easily find what they want?

According to Simon Harper, experimental Computer Scientist, better data about product performance enables retailers to make better stocking decisions. Better stocking decisions, in turn, make it easier to build a strong relationship not only with vendors but also with consumers, as well. In other words, stocking the right products in the right places is a good way to engender consumer loyalty toward both the store and the brand.

According to a Federal Trade Commission (FTC) study the practice of slotting is ‘widespread’ in the retail industry. Some say businesses often earn more profit from agreeing to carry a vendor’s product than they do from actually selling the product to retail consumers. Others disagree, stating that fees serve to efficiently allocate scarce shelf space, and help balance risk of new product failure between vendors and retailers; they help vendors signal private information about potential success of new products; and they serve to widen retail distribution for vendors by mitigating retail competition.

And according to Gary Philbin, president and COO of Family Dollar parent Dollar Tree, Family Dollar has seen an improvement in its results due to the retailer’s strategy to be well-stocked on the first of each month when its target customers are more likely to have money to spend and on the weekends when busy shoppers have time to visit stores. Family Dollar has seen same-store sales rise for three quarters in a row.

Maybe you have some input to share on the study of supermarket shelf space?

Martin’s Supermarkets Adopts New Food Safety Compliance Solution

A recent EIN News article reported that Martin’s Supermarkets has started using Park City Group’s ReposiTrak® compliance management solution to manage regulatory and business documentation compliance within their supply chain.

“Martin’s Super Markets is the latest retailer to recognize the advantages of using ReposiTrak to reduce brand, regulatory and financial risk in their supply chain,” said Randall K. Fields, Chairman and CEO of Park City Group. “Their commitment to food safety and transparency for their customers makes us proud to have them utilize our system.”

Family-owned and managed since 1947, Martin’s operates 22 full-service supermarkets in Indiana and Michigan.

Increased Demand for Advanced Food Packaging

According to an article posted on fooddive.com, changes in food processing methods are impacting packaging needs.  Manufacturers rethinking operations to meet FSMA requirements may address issues of food safety by using more advanced packaging for their products.

The article listed several key issues, including:

  • Three factors driving this growth are demand for hygienic packaging, development of innovative packaging solutions, and consumer engagement.
  • Food safety, shelf life, use of fresh and/or natural ingredients, and smart packaging may come into play for manufacturers when making decisions about advanced packaging and materials.

 

The Future of Independent Supermarkets?

Independent operators will remain relevant because they have the flexibility and commitment to adapt and change, according to a recent SupermarketNews article.

The article was quoting remarks made by Peter J. Larkin, president and CEO of the National Grocers Association (NGA),  at NGA’s annual convention in Las Vegas.

Those in “the know” seemed to agree that Independents need to catch up on collecting information in order to remain competitive, so that they could “have an understanding of where consumers are shopping.”

Sounds like big data and tracking technology is here to stay as well!