GROCERY INNOVATION
Reviewing trends, tips and technology to optimize planning. This series is for retailers who desire to align their inventory, reduce waste and gain consumer insight, applying new strategies and technology is the answer. Merchants who can fulfill customer needs at a local and personal level will quickly become profitable and gain a competitive advantage.
This series will be published Thursday’s and will review trends, tips and technology to optimize grocery planning. To sign up for series updates CLICK HERE»
2010 Grocery Outlook
Shopping trends in 2009 caused retailers to re-evaluate the way they sort, price, promote and mark down their products. Shoppers have become more cautious, not only with the price of products they choose, but also of the quality, sustainability and health value of those products.
Fluctuating patterns have dramatically shifted store demand and thrown off retail forecasts, increasing sales of necessity items, produce, bulk, frozen and ready-made meals. Restaurant dining has decreased—increasing the frequency of home-cooked meals.
Retailers are struggling to adapt their inventory assortments and allocation processes to the new shopper patterns of the recession. As retailers try new ways of positioning products and revamping their assortments for today’s conservative customers, they must also face the uncertainty of the marketplace.
This leaves retailers with many lingering questions:
- Have shoppers changed their buying habits forever?
- Will shoppers remain frugal?
- Will the demand for local products continue to shift distribution patterns?
- How will consumers balance the sometimes competing pressures of price, quality, sustainability and healthier food options?
These concerns continue to plague grocery store planners, buyers and category managers alike, leaving them with a chronic issue:
How can they keep up with this new ever-changing customer and how do stores plan and execute for the unknown?
The answer?
Stores must create a new approach to planning and executing, and invest in new strategies and technology for capturing and acting on this consistently changing shopper behavior.
Reacting to Local Shopper Behavior
Grocers and food retailers now need a new approach to forecasting, SKU rationalization, assortment planning and order planning. Retailers who can meet the specific needs of their customers at a local level will become much more successful.
Meeting those needs comes down to stocking the right mix of products and brands, and stocking those products appropriately. Some retailers have met the challenge of providing lower-priced products by creating quality store brands comparable to the popular brand-name versions. Take Target for example; Target has created a low-cost brand, “Up and Up,” to appeal to its bargain shoppers, but also offers “Archer Farms” as an upscale, but cost-effective, choice. Being able to offer a variety of price points and utilizing a high-quality in-house brand allows the retailer to increase margins, and compete with vendor sales. It also lets the consumer decide what is the best value to them.
Once retailers have created competitive strategies for products, they must begin tracking sales and inventory data that will measure the difference in sales and demand at each location. The traditional cookie-cutter approach to store stock levels cannot work in today’s fluid, competitive environment. Each store has unique demands that are continuing to change and will respond differently to the assortment of products. When retailers look at customer trends, they can begin to understand how much of each product to stock at each location, allowing them to tune their store offering, based on local demand and profitability.
Localization works on two levels. First, retailers can look at the unique behaviors of each store to determine each store’s selling patterns by day and to monitor trends for size, brand, quality, quantity, locality, season, etc. With this understanding, a retailer can plan to deliver the right amount of the products customers are buying at each location, allowing the retailer to achieve the highest turn rates and rationalize SKUs to reduce inventory to the appropriate levels, increasing availability, reducing over-stocks and stock-outs and ultimately increasing margin.
The second concept of localization comes from localizing distribution and utilizing vendors that produce products in a close vicinity of each store. This type of localization is most easily applied to fresh foods, as well as organic and natural products where customers prefer to support local farmers and local brands. This type of shopper is increasingly socially aware, and the demand for these products has made them become more affordable.
Strategic Moves
To place inventory in the most efficient and profitable way, merchants can define product objectives, like minimum credible display and service levels, which should be used to decide each inventory placement decision. This enables retailers to make sure every product is in their assortment for a reason.
Though fast-moving products create the most revenue, even slow-moving products need to have a strategy. It’s not just about ensuring availability; it’s also about choosing the right mix of products and ordering the right amount for each location. It is even more critical in grocery, as perishable products create wastage and erode profit, especially in a retail sector with already slim margins. In the past, retailers have not been able to drill down into individual item behavior on a store-by-store basis because of the complexity and time involved, but modern technologies are changing that.
Retailers who understand the needs of the market at a lower level of granularity and can react to current buying trends will be much more successful. As channels grow and become more complex, planners and strategists require technology with the ability and intelligence to turn real-time data into actionable knowledge.
Creating Customer Loyalty
The following article was posted in Retail Merchandiser Daily Dose. Mobile technology is bringing about a new wave of customer loyalty programs. With mobile and e-coupons – customers have visibility to your value instantly:
- Customers can easily learn of yours promotions
- Save discounts to their customer loyalty card
- Receive text messages about ongoing promotions
- And most importantly – engage with you
Plus – mobile and e-coupons reduce the cost of print and mailings – a majority of which get thrown away and overlooked. This new avenue is definitely worth exploring and will likely prove to be profitable for your business.
The days of paper coupons may be even shorter than we thought if supermarket chain A&P’s mobile phone text-coupon program is any indication of a new trend to save shoppers money.
Starting in March, the New Jersey-based company gave shoppers a new way to reap the benefits of having a loyalty Club Card by offering a coupon alert option that is sent directly to their cell phones. This mobile coupon benefit is the result of a partnership developed between A&P and Zavers, a mobile technology provider, last year.
The two began working together to build and implement a digital promotions platform for A&P, enabling the chain to offer mobile coupons. The texting option is just one component of that partnership.
A&P’s coupon texting option first requires consumers to visit its website and create an account, building even more Web traffic. Once a consumer has a Club Card account number, they can view coupons online, choose which ones they want to use, and save their options online. They then take their Club Card with them to an A&P location and save money by scanning their card when they checkout.
For the texting portion of the plan, when a new coupon is available, a text is sent to participating shoppers describing the coupon and providing a code for shoppers to respond to if they want the coupon added to their account. To redeem the coupon, again, shoppers only need to swipe their Club Card at the register.
“This program is an important addition to our loyalty club card programs, and provides our customers with another reason to shop at A&P,” said Lauren LaBruno, A&P’s senior director of public relations, community affairs and customer care. “From a marketing perspective, there is a generation of consumers that is increasingly turning to the Internet and to their mobile phones for product information and savings opportunities, and this program allows us to reach them the way they want to be reached.”
She continued to say that since launching mobile coupons in August 2009, A&P’s coupon redemption rates have gone as high as 45% and average double-digit percentage rates compared to 1% for paper coupons. “Consumers tell us how easy it is to sign up and get started on the program, they tell us they love the amount and breadth of coupons available, and that this program allows them to take advantage of manufacturer and private label savings without the hassle of paper coupons,” she added.
Smart Technology
Customer loyalty programs and localization practices take time and manpower in order to manage store need and customer behavior at such a granular level. But there is smart technology available to retailers who want the best insight into consumer behavior that can enable them to scale. These technologies can tell the retailer what the demand is at every level of their chain, and can automate order planning by learning and recommending execution of the right products at each store. This type of technology makes allocation and replenishment a simple task and proves a very profitable decision for progressive markets.
With smart inventory management tools, retailers can track real-time sales and demand data to learn from the behaviors of customers and create a more accurate forecast that can help them understand the changing patterns of shoppers.
For retailers who desire to align their inventory, reduce waste and gain consumer insight, applying new strategies and technology is the answer. Merchants who can fulfill customer needs at a local and personal level will quickly become profitable and gain a competitive advantage.
Learn more
Follow this series to learn more innovative practices for grocery. To sign up CLICK HERE»
Check out this article by Chris Allan in Natural Products Marketplace. To view CLICK HERE»
For resources on allocation, visit: http://quantumretail.com/solutions/allocation-replenishment/resources
Get back in the game
Are you ready to know exactly what your customers are asking for at every location and to have the ability to react as their wants change? If you are looking for a solution that can drive momentum for your business this year, check out the solutions offered by Quantum Retail.
Our customers see valuable results in 8 to 12 weeks and our implementation approach gives your team access to the system from early on, so you can manage changes to your processes with ease. Quantum Retail continues to help all of its clients drive positive business value more rapidly than anything seen in retail.
Get resources on how to adapt to today’s retail market HERE»
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5 reasons/benefits to combine Perishable and Non-perishable supply chain systems:
