Industry Talk

Regular Industry Development Updates, Opinions and Talking Points relating to Manufacturing, the Supply Chain and Logistics.

The supply chain lessons of the modern grocer

The business of feeding the world is not easy. Although the grocery store commands the bulk of our retail spending — representing over a third of annual spend in some cases — the margins for grocers are tight.                      

Grocers face the dual challenge of providing a necessary product which is often a commodity. So, it must ensure it can drive traffic and continue to capture revenue, while managing razor-thin margins.

This demands more connectivity. As grocers become more connected, and not simply at the store level, new avenues for revenue, cost control and customer experience opportunities will present themselves.

  • Connect to the network for greater clarity throughout the supply chain. Grocers of all kinds are looking to gain greater and more detailed insights into their supply chains. Where is product coming from? What are the steps each product takes to get to its final destination? What are the details of the suppliers that are part of the network? Locally sourced, organic and sustainably made food is no longer just a trend — it is now the norm. Consumers want to know their food’s journey from farm to fork, and they are willing to pay a premium for it. By using technologies like IoT and radio frequency ID, grocers will be able to better tag and track products at every point across the supply chain.
  • Greater in-store connectivity means better inventory management. Store space is precious, and every square foot needs to be optimized to ensure profits. Store shelf allocation is an enigma that has haunted grocers since the dawn of time. What is the right mix? How can grocers ensure store shelves are always stocked? What product is misplaced? What inventory is in the store room? Once the physical stores add connectivity at the store shelf level, the back storage room and even at the logistics points, grocers will start having a much more complete view of what is happening within their four walls. Connected store shelves with connected inventory promises no more empty shelves. Companies like Panasonic are looking to tie in their store shelves, backroom storage and even loading docks to paint a real-time view of inventory within the four walls of their stores.
  • Not simply inventory management, but better customer experiences. Once grocers have a better handle on their inventory and their store, they can be savvier about how to use that store and the space within. Can you make the bakery larger? What about putting in a bar for local brews? What about a cooking station? With greater store connectivity, coupled with connected consumers, grocers can analyze and react to what is happening within their stores and make near-real-time changes to better meet customer expectations. Grocers are already using greater connectivity to employ such simple cost-savings as turning off lights in aisles when they are customer-free.
  • Smarter products, smarter usage and the long tail of insights. Connectivity does not have to end at the cash register. What about pulling more information from connected products as they are being used and consumed in the home? Grocers, as well as their suppliers, yearn for greater insights into exactly how their products are actually being used. Yes, it is important to gather point-of-sale data of what is being sold, but how are those products then actually being used? That is the key to providing the complete picture. As more home consumer products are connected — LG and Samsung refrigerators, Meater and its smart thermometer, GeniCan and the smart trash can, or even the Hapilabs smart fork — our kitchens are getting on the grid. Grocers can now aspire to get greater insights into how their products are being used, not simply that they were purchased.

Consumers will always look to grocers to provide the essentials for our daily lives. As more grocers look to enhance the way they serve us, as well as better manage their businesses, connectivity is one of those aspects that will play an important role. Think outside the grocery bag: How can greater connectivity drive deeper into the consumer supply chain and further back into the supplier network? With so much competitive pressure coming from other grocers and startup food delivery services, now is the time to look to the supply chain for greater insights and better customer connections.