There is nothing new about grocery stores trying to regain
market share after capitulating quality, service, and price for slotting fees.
What is new is just about every food trade magazine and food consulting company
is singing the same song; don’t let your grocery store look more like
yesterday’s food marketing messaging.
Does your grocery store deli look like 1995, 2005, or 2015? So, if you are behind the curve.
Grocery stores need to sell what customer want not what
legacy food manufactures pay them to put on the shelves, in the way of slotting
fees, according to Steven
Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions®. Since you have heard that all before, we thought
bring you some insights from Sarah Montgomery is a
senior director in Upshop’s
new solutions consulting division.
You will see just how familiar her song sounds. Here is
what she recently published:
“When
a shopper thinks of fresh, they might think of just produce. But grocers know
that fresh is so much more than fruits and vegetables. The fresh
perimeter comprises nearly half of all retail sales—and it’s an absolutely
critical experience to nail. As consumer trends shift and so does the economy,
fresh is constantly redefined. No matter what a retail food business model
looks like for a grocer, the ‘fresh impression’ is foundational to shopper
loyalty and long-term differentiation versus Walmart and Amazon.
Fresh
is next—and it must be best
Models
of work and living have changed dramatically for grocery shoppers
since the onset of the pandemic. Shoppers are looking for convenient,
reasonably priced alternatives to dining out. As economic conditions worsen,
prepared foods are taking on restaurant competition. In a retail foodservice report
from FMI,
shoppers surveyed said they wanted creative, prepared meals at supermarkets
with restaurant-style amenities available for delivery and pickup. As consumers
continue to see grocery as offering better value meals than restaurants,
grocers are investing to seize their unfair share in prepared foods.
Whether
it’s Wegmans investing in their
very own cheese caves, Cardenas showing excellence in Hispanic-centric prepared
foods, or SpartanNash promoting
prepared bakery and deli items for shoppers seeking convenience and indulgence, major grocers are
stepping up fresh prepared to meet this rapidly-growing shopper demand.
With
great revenue potential comes great operational responsibility
While
prepared foods are a great well to tap into for retailers, the function creates
many challenges for store operations. Some common roadblocks:
·
Bad data: This
especially affects sales, as well as recipe and item data in prepared foods.
Grocers need to manage these massive data sets to execute on prepared food
strategies such as predicting sales for items. This can become
particularly challenging when grocers reuse PLUs, use one PLU/SKU to manage multiple
items, stores mislabel product, predicting and incorporating e-commerce demand,
etc.
·
Hidden shrink: When the retailer is unclear exactly how much of an ingredient is being
used to prepare a recipe, associates experience a lack of inventory visibility
and can ultimately experience high hidden shrink losses when tools are not
available to automate incrementing and decrementing inventory. Having an
inconsistent inventory also leads to poor ordering decisions and the vicious
hidden shrink and excessively stocked back room cycles continue.
·
Change management: Prepared foods done in house by grocers requires a
tremendous amount of discipline and training to execute on. There are many
complexities handling kitchen equipment, cooking techniques, working early hours,
finding skilled labor and so on that it can become difficult to find the labor
and/or retrain your current labor force to execute
·
Missed sales opportunities: Shoppers are asking for help, but associates are
flooded with other tasks and using far too many point systems and tools. Even
the CEO knows that their stores cannot deliver the best deli if the same
associate on duty handles two jobs at the same time…sales and
service. Grocers are looking for solutions that reduce the amount of time in
the kitchen or back room and increase the time associates can spend on the
floor helping customers
Three
dimensions to fresh success in grocery
The
challenges are plenty, and the stakes are high: stepping up to consumer
expectations is going to take some work for retailers. Shoppers want prepared
foods on-demand—40% of online sales are now being generated by fresh food
departments— They want fresh foods and meals personalized: 66% of consumers say they
would like the option to customize their food orders; and 80% of Gen Z and 74%
of millennials say they prefer customizable options.
Thankfully, grocers are gearing up for prepared fresh. A 2022 FMI study found more than 80%
of regional and national grocers are increasing the space they allocate to
fresh-prepared products. When asked their best chance at fighting competition
in prepared categories, 66% listed grab-and-go.
A
successful fresh retailer wins with:
1.
Fresh on-demand
2.
Fresh personalized
3.
Fresh prepared
Fresh
on-demand
Challenges: Fresh “on-demand”
comes with challenges. Retailers often find it difficult
to support the same fresh assortment online as they do in-store.
There are significant operational challenges when it comes to keeping items
warm, or syncing up the timing for when a food item needs to be made and when
it needs to be ready for shopper curbside pickup.
Online
fulfillment also may involve soon-expiring food, and when the inevitable item
substitution conundrum hits, shoppers get upset. Store associates picking
ecommerce orders are slowed down standing in line for deli or made-to-order
items to be completed…and those same items are hard to keep warm and fresh from
store to car or home.
Opportunity: Retailers should be
unifying online and in-store inventory to supply shoppers the
optimal fresh assortment they want for their online orders. Fresh
“on-demand" means fulfilling online orders in stages to perfect freshness
and maximize labor efficiencies and mitigating food waste through cross-store
expiration date management.
In
order to deliver effectively with available store team members, ecommerce
fulfillment must further connect with fresh operation processes like production
planning and made-to-order; making it easy for the teams to manage complex
production steps while ensure there is an accurate forecast to help
grocers better meet shopper demand for higher-value prepared items.
Fresh
personalized
Challenges: Fresh “personalized” brings
its own difficulties to the aisle. Given major increases in food preferences,
retailers need to key into a variety of prepared foods to fit each shopper’s
taste. This includes regional specificity and tailoring, as well as a store
assortment that matches up with local community needs.
Opportunity: A retailer succeeding at
fresh “personalized” embraces the power of forecasting. Total store inventory
integrity built through AI-driven forecasting will provide stores with
real-time accuracy and the ability to withstand the halo effect,
cannibalization, seasonality, and promotions. This type of inventory
intelligence ensures that even the tricky make-to-sell and break-to-sell arenas
are managed with total confidence. Trustworthy forecasting handles demand for a
single item broken down into multiple SKUs/products and works with flexible
configurations like minimums, safety stock, display order, batch sizes,
rounding rules, case sizes, day parts, and waste thresholds.
Leading
retailers are taking “personalized” to heart; investing in platforms unify
fresh operations and total store inventory: ensuring that prepared foods and
the rest of the store are connected and consistent.
Fresh
prepared
Challenges: Roadblocks to fresh
“prepared” center on forecasting difficulty, and the challenges this brings up
for the associates managing prepared food production and distribution. Deli and
prepared food area employees are often bogged down by “kitchen math” when
producing recipes, which accelerates shrink potential, decreases ingredient
inventory accuracy, and cuts into time associates could be interacting with shoppers.
Grocers that manage multiple bakery modes across the chain like frozen and thaw
or from scratch also struggle with detached point systems that don’t sync up
recipe inventory across models.
Opportunities: Grocers that nail fresh “prepared” success embrace
technology tools that lessen the burden of the associate and increase total
efficiencies. AI-driven forecasting and computer-generated ordering majorly
reduce human error and build trust in a single inventory. This provides
associates with ingredient and recipe visibility, allows flexibility across
differing models and methods, and totally eliminates “kitchen math.” With an
easy-to-use inventory management system, associates are free to interact with
shoppers and elevate the in-store experience, while still producing
high-quality products. Provide your associates with streamlined tasks and
shoppers with the freshest possible store by connecting fresh operations
end-to-end, synchronizing data, and watching fresh success flourish.
Are you ready for some fresh ideations? Do your food
marketing ideas look more like yesterday than tomorrow? Interested in learning
how our Grocerant Guru®
can edify your retail food brand while creating a platform for consumer convenient
meal participation, differentiation, and individualization? Email us at: Steve@FoodserviceSolutions.us or visit: us on our social media sites by
clicking one of the following links: Facebook, LinkedIn, or Twitter
