Two thousand years of human history have taught us that any disruption will result in a "New Normal "that will be accepted as "Normal" over time. But how do we define this "New Normal" in an arena of economic uncertainty? The pandemic has forever changed how we work, shop and learn, resulting in the emergence and convergence of technologies, shopping behavior and retail formats. Today consumers are highly stressed, demanding, and price-sensitive, and grocery retailers face rising costs, labor shortages, and supply chain disruptions. Smartphones have been weaponized with access to information resulting in higher levels of accountability fueled by the emergence and convergence of technologies.
The Assumptions Post-Pandemic – Fact Versus Fiction
- Fiction - The explosion of E-commerce was expected to continue post-pandemic as consumers embraced the convenience of online shopping.
- Fact - Escalating layoffs at Amazon, Shopify and leading E-commerce providers forced retailers and their trading partners to question the future.
- Fiction – Consumers will continue to embrace online shopping from the convenience of their homes post-pandemic.
- Fact - Consumers today are more demanding, price-conscious and value driven and will shop around for the best value.
- Fiction – E-commerce is profitable for retailers
- Fact – E-commerce is often expensive and inefficient as retailers try to manage disparate inventory systems and replenishment protocols.
Grocery Supply Chain Challenges
Supply chain challenges and disruptions are still top of mind. Grocery Retailers today understand that delighting customers means eliminating Out of Stocks because consumers who cannot find what they want when they want it may be lost forever. Ensuring a consistent and rewarding experience across challenges. Also, despite the significant progress made in collaborating and cooperating across the supply chain. Many grocery retailers still struggle to connect business information with complete transparency, and high turnover means that experience and knowledge exits with the employee.
Key drivers of Supply Chain Disruptions in Grocery are driven by the following;
- Increasing SKU Counts
- Out of Stocks and reduced inventory Turns and customer satisfaction
- Complexities of E-Commerce and managing disparate inventories
- Lack of Supply Chain Visibility and Transparency
- Increased Costs (Labor Shortages, Rising Costs & Inflation) - Razor thin Margins
- Consolidation, New Entrants and Big Box Competitors
So how do Grocery Retailers continue to deliver exceptional value with 1-2% profit margins?
Understanding Consumer Behavior when Consumers don't Behave
The Food Industry Association's (FMI) l "Power of Foodservice" report highlighted that dollar and unit sales for deli-prepared food would continue to grow with consumers embracing the cost of quality and convenience. There is a renewed focus on the perimeter of the store as over 70% of shoppers in the USA base their decision on the quality of fresh produce, meat and prepared foods. The center of the store is still essential, but ongoing shortages conditioned shoppers to abandon preferred brands that were out of stock towards Private Labels or competing brands. Health and wellness are still top of mind as consumers embrace healthier food choices and lifestyles.
The Grocery industry continues to face increased challenges in hiring and retaining enough personnel to maintain high customer service. Nicole Dehoratius, a Professor of Operations management at the University of Chicago Booth School of Business, stated that the grocery industry needs to combat the perception that retail jobs are not bona fide career opportunities resulting in short tenures of employment and turnover. Increased costs and labor shortages are placing renewed pressure n retailers to develop and deploy more efficient processes across their value chain with increased transparency and collaboration.
The increased demand for automation and skilled labor will continue to be fueled by high turnover and the need for retailers to retain and leverage knowledge and insights across the organization. Consumers will continue to evolve and adjust to economic realities in tandem with Grocery retailers and their suppliers as they are all looking for value, convenience, and service.
The New Normal
Retailers and suppliers will continue to work collaboratively to identify and deploy efficiencies across their value chain to avoid passing the cost to customers. Delighting customers today will be dictated by the strength of the supply chain, as consumers today are highly stressed and unforgiving. Inflation, labor shortages and increased costs will continue as retailers are forced to do more with less.
The growth in Private Label shows no signs of slowing down as consumers embraced the value and quality, resulting in many retailers expanding their private label offerings. The increase in demand for Private Label placed pressure on retailers and suppliers to meet escalating demands. Economic uncertainty will continue to drive demand volatility and ongoing challenges with out-of-stocks (OOS).
Grocers are taking control of their supply chains by investing in people, processes and technologies, resulting in more effective communication, collaboration and cooperation. Accurate connected and accessible data on a continuous base is longer an option but rather the catalyst for success. Delighting shoppers today demands a consistent and exceptional experience across all channels with no room for error.
Traverse Systems is committed to helping the Grocery industry realize significant operational efficiencies with our complete suite of solutions and capabilities. We are not just another supplier or software developer; we are your trusted partner and advisor in creating resilient supply chains with a proven track record of delighting customers with service. We are proud of our track record in enabling transparency, visibility, and efficiencies to avoid disruptions. Take your promotions up a level and contact us to learn more about our solutions.
Retailers will continue to evolve in tandem with their consumers are they strive to deliver value, service and innovation. Consumers today are stressed, demanding, price-conscious and value-driven as they navigate economic uncertainties.
Traverse Systems is committed to helping our customers emerge triumphant in a tsunami of change. We believe resilient retailers will be collaborative, cooperative, transparent, fully visible and anchored to accurate connected information and processes.
- Traverse Platform (Vendor Performance) https://www.traversesystems.com/platform
- Rivet (Business Process Management Solution) https://rivet.traversesystems.com/
- Vision (Supply Chain Visibility). https://www.vision.traversesystems.com/
Richard Wilhjelm currently serves as VP of Sales & Business Marketing for Traverse Systems, a platform for automating bidirectional visibility in enterprise supply chains. He is responsible for strengthening executive-level relationships with customers and key prospects. Richard has over 30 years of sales and marketing experience in the supply chain software industry.
- Richard's Email: Richard.Wilhjelm@traversesystems.com
- LinkedIn: https://www.linkedin.com/in/richardwilhjelm/
Please click on the link for more information https://www.traversesystems.com/contact.html