More About The Future Of Grocery Shopping And The Need For Automation – Forbes
In my previous article, we considered how little has changed over the years in food shopping. From the times of ancient Roman until very recently, buying groceries simply meant going to the nearest market and handpicking what you needed. However, the past few years have seen several new trends and experiences develop, including e-commerce, urbanization, food safety tracking, and local sourcing, which has brought on some significant changes.
The disruptions of this past year have only accelerated these changes, and that’s what we’ll briefly explore in this article — what grocers and food & beverage manufacturers are experiencing and how they are preparing themselves for continued change.
It’s Not Just The Shopping That’s Changing, It’s the Supply Chain, Too
The grocery supply chain is being affected across its entire ecosystem — the elements that grow, process, package, distribute, and sell food. And this is why companies at all stages of the ecosystem are looking to better position themselves for the future.
For example, as consumer buying habits continue to shift more toward organic and locally sourced suppliers, grocers will need to make themselves an integral part of the local economy. Not only for practical reasons of gaining efficiencies through firsthand knowledge of the processes, but so they can promote themselves to attract more consumers.
Companies at the distribution stage are considering more closely their position in the supply chain and what advantages might be gained. Getting more involved in the e-commerce space offers the potential of bypassing stores in some cases and fulfilling orders directly to consumers.
In general, grocers currently only have visibility into the final steps of the grocery ecosystem. Grocers now are looking to stretch themselves further upstream to better manage volatility in supply and match that with forecasted demand.
Consumers are seeking increased visibility, too. They want to know where their purchases came from, who could have potentially contacted them, and what the dates are for each step. Track and trace no longer is an advanced feature in the future — it’s a standard capability.
Making Strategic Decisions
It’s difficult to describe e-commerce as new or even a trend at this point. True, retailers in other markets such as apparel and general merchandise are much further than grocers and food producers. But companies at all points of the food supply chain find themselves at something of an inflection point. For instance, nearly a year into the COVID-19 pandemic, many grocers are still operating with supply chains designed primarily (sometimes exclusively) for sales at brick and mortar stores. That was livable when online accounted for 1% to 3% of sales. But as the online sales shot to 10% (and are quickly heading to the 15% to 25% range), grocers will need to restructure their supply chain networks. Taking a lesson from apparel and general merchandise retailers, the earlier adopters will be the ones most likely to see success.
But it really comes down to the numbers and the need to achieve a certain level of profitability. Because of the hyper-competitive world of food sales, the margins on in-store grocery sales are very thin, even supported by a supply chain designed for those sales. Attempting to fulfill online orders with that same supply chain makes those margins disappear altogether. Clearly the status quo is not a sustainable long-term strategy.
Current short-term strategies are not terribly appealing, either. For example, to meet the demand for online orders, deliver companies such as InstaCart and Shipt have quickly dominated e-commerce sales for grocery stores. Their shoppers compete in aisles, which creates tension and frustration with traditional grocery shoppers. And they are creating tension and frustration with the grocers themselves — the delivery companies own the consumer data, which prevents grocers from monetizing their own consumers by tying e-commerce purchases to specific users.
Anything that creates a barrier between food producers and retailers and their customers is not good. Companies need strong customer feedback loops in place to gauge the expectations around service levels. They need order data to plan out and schedule order delivery windows. This will in turn create a better customer experience and will create efficiencies in the supply chain.
Automation Has Become The Linchpin
Automation can provide retailers with the flexibility to identify and adjust for swift shifts in customer traffic and buying patterns, both in-store and online and keep fulfillment processes running in spite of disruptions. And the automation can come many forms: It may be a software upgrade to align data throughout your supply chain. It may be replacing an existing subsystem. It may be a new, fully automated warehouse. But it can make profit possible.
Disruptions are inevitable. After a somewhat stable history in how consumers shop for their groceries, grocers and food producers are now experiencing just how quickly change can come. Automation itself is no guarantee to solve disruption. But it is the best way to help them prepare for it.
Published at Wed, 24 Feb 2021 15:06:00 +0000