Tag Archives: supermarket inventory management

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 Listening to Customers in 2015

According to several Supermarket News articles, a number of food retailers are involving their customers in product decisions this year.

For example, 40% of respondents to a December 2014 SN survey said they plan to give better-for-you beverages more prominence on the shelf based on shopper feedback; they will also feature lower-calorie beverages in health and wellness displays (35%), and include healthier beverage options as part of meal deals (29%).

Along similar lines, a more recent SN article reports that Winn-Dixie in Jacksonville, Florida has launched a consumer contest to determine the next flavor of its Chek private label carbonated soft drink. Contestants must select an original flavor name, up to three ingredients and the inspiration for their flavor. The grand-prize winner will get a 2015 Mini Cooper car and a one-year supply of Chek soda, and runners-up will each get a 2015 Scooter and one-year supply of Chek.

Finally, in support of just over one million people who brew their own ales and lagers at home, Whole Food Market’s Coddingtown store in Santa Rosa, Calif., is a fully stocked brewing supply store. Not only does it sell brewing equipment, but also bulk grains, yeast and other ingredients. It also hosts home brewer how-to classes. Other Whole Foods stores have similar offerings as well, according to the January 12th SN article.

Looks like customer service and loyalty, as well as the shopping experience have moved up on the priority list!

Maybe you have some examples to share?

Comment…

Supermarkets Dealing With a Sea Change in Soft Drinks

According to Beverage digest, carbonated soft drink volume declined 3% in 2013.  This follows a 1.2% decline in 2012 and a 1% decline in 2011.

This decline happened in spite of huge budgets set aside for marketing, advertising and promotion expenses.  Both Pepsi™ and Coke™ have spent significant funds to try to stem the tide.  Pepsi announced that they are going to spend $600MM more and Coke is supporting its brands with an increase of $1Billion in the budget for marketing, selling, advertising and promotion. 

Replacing both regular and diet brands of soda are water, tea, and energy drinks.

What does this sea change (let’s face it, these declines are a sea change!) mean for supermarkets and convenience stores when stopping in to pick up a six pack of Coke or Pepsi was a regular event for many shoppers?

Do they stop in as often for water or energy drinks?

Do stores get the regular “go with” items that used to come along with the soda?

Private Label Sales Growth for Some Supermarkets?

In a recent post we commented on the fact that overall,  growth in private label sales has slowed and that the overall market for  private label is stagnant.  

But we know  that some retailers are having lots more success than others and that while  some retailers are slowing, others are having great success.  

Let’s take a look at Kroger and their private
label brand Simply Truth and Simply Truth Organic, which were launched in
2012.
  In a recent Food Business News article, it was reported that Kroger expects  this private label brand to surpass $1 Billion in annual sales by the end of 2014!  It would then follow that in Kroger stores, we should expect to see  more shelf space allocated to this group of private label products, and with this  kind of success, we know success is possible.  

For those retailers that are not experiencing the success of private
label, why not?
  Economic conditions are  likely never going to be any better for private label than they have over the  past few years.  

What’s “Up” With Private Label?

A recent article on foodnavigator.com makes one wonder about the future of private label.  Currently, market penetration for private
label in the USA is about 18% and across the board has been relatively
stagnant.

One would think that with the  economic difficulties of the last five years, private label products might be  growing across the board.

But as is  often true, averages are deceiving.  More
information is needed.  For companies  like Trader Joe’s and Aldi’s, private label is the game… and they are  winning!  Also, Costco and Whole Foods  receive high marks from shoppers, especially in the relationship between  buyer’s satisfaction with private label and loyalty.

In terms of which  retailers’ store brands appear to have the greatest positive effect on loyalty  to the store, Whole Foods Market got the highest score with 60% of buyers  saying they are more likely to visit Whole Foods Market based on private-label  products. Costco came in second,” says foodproductdesign.com.  

OK,  those are the winners. 

But  if the average is about 18% and stagnant, what does that mean?  The law of averages tells us that other  supermarkets have to be losing share to bring the average down or holding it steady.  So, obviously, private label isn’t a boon for  every operator.  But for those who do it  well…  

Supermarket Out-of-Stocks: Who’s Keeping Score?

Yesterday (Super Bowl Sunday), I had to go to the store to pick up a few last minute items for the week. 

I was looking for Party Wings (I had bought 6 packages on Saturday and now needed 2 more).  Unfortunately, they were out of stock.  I asked someone in the meat department and he brought me over to the empty case.  He then said, “Oh, I guess we’re out of those.”

It got me to thinking.  When the store plans next year for their Super Bowl promotions and inventory,  they will probably know that they ran out of stock of Party Wings, but will they know when (the time) they ran out?  Will they know that it was at 9:38am or 12:40pm or 4:00pm?

How will they estimate the $ value of sales that they lost because they were out of stock?  How much more could they have sold?

As for me, I was forced to call another store to see whether they had any Party Wings left…and I went there.

Food Shopping Choice: Healthy v. Costly

All retailers would be well served by promoting an experience for customers where they feel good about more than just the taste of the food, says a recent Supermarket News article.

Using Sobey’s “Better Food” campaign as an example, author Jenna Talesca explains, “It’s not just about helping shoppers find nutritious foods, although that’s a big part of it. The campaign also aims to lead shoppers to high-quality foods, fresh foods, sustainable foods and value-added foods. There’s also an educational component to help customers put together better meals.” 

Shoppers seem to be partial to this approach, as evidenced by the surge of healthy-food retailers such as Whole Foods Market and A Market, along with healthy-choice restaurants such as the up-and-coming Chipotle and their famous “Scarecrow’s” quest for better food.

While higher-nutrition foods are not always more expensive, the question is, would you be willing to pay more for healthier choices at the supermarket that might result in “better” meals and that might bring about a “feel better” shopping experience?