By: Kerry Liu, CEO and co-founder, Rubikloud, Retail Customer Experience
For the past 10 years, consumers’ retail expectations have rapidly heightened. Today, shoppers expect the same flexibility and convenience from their local grocery store as they receive from their favorite Big Box apparel and electronics retailers, pushing grocers to provide an omnichannel experience that extends in-store shopping to online.
This option is proving to be popular with nearly 40 percent of U.S. consumers using at-home delivery services. While this process is convenient for shoppers, grocers are uncovering a disconnect between systems in their supply chain, causing what should be a seamless process to be a disappointing customer experience.
Here’s an example that might sound familiar. A customer orders groceries online at work noting an at-home delivery for 5 p.m. While the delivery arrived on time, it was missing nearly half of the order due to stock-outs, leaving the customer furious. This bad experience puts into question whether the service was even worth it, and worse, whether or not to shop at that grocer again. This example is becoming more of a reality with stock-outs, causing retailers to lose nearly half of intended purchases, a 4 percent loss in total sales, according to a Harvard Business Review study.
Traditional grocery stores and supply chain logistics are designed for regional sales where shoppers walk in with a handwritten grocery list of items. Traditional grocers base their pricing, promotion, replenishment and supply chain off that assumption. The current forecasting systems used by grocery stores today are manually intensive, infrastructure-heavy and maybe provide category-level forecasting down to the store level. Grocers that didn’t have store-level forecasting at the SKU level before certainly need it now, but that will only take them part of the distance they need to go. Now, grocers need to handle 200,000-plus SKUs and integrate with third-party delivery services to cover the last mile and fill the consumers’ demand for time-saving shopping tactics.
Knowing that the supply chain can be the source of so many challenges that impact margins and customer experience, here are five ways that grocers offering online shopping and delivery improve their supply chain:
•Recognize the opportunity and ensure that all levels of top management are aligned with the need for this level of business transformation because it’s complex. That said, it’s worth it. A well-developed and mature supply chain can bring real financial impact, including better margins and improved profitability.
•Develop a feedback loop between all the omnichannel delivery systems — including third-party delivery services — that captures all of the online and offline data. Trying to predict things like demand, replenishment, promotions, pricing and safety stock with only online historical data is like predicting the weather with data from inside a house.
•Implement an artificial intelligence solution that will link the supply chain gaps through predictive measurements. AI can predict shopping preferences, prices and also forecast changing foot traffic and the increasing quantities of people turning to online orders. This means last-mile delivery services can better source and retrieve ordered items and predict better substitutions. But it’s critical to start slow. Test the solution in one specific category, see how it performs and then roll it out more broadly once the results have been proven.
• Let go of legacy systems and allocating additional investment in cloud-based technologies that further bridge the gap between disparate systems, allowing for real-time inventory tracking and management. This investment alone will significantly improve inventory allocations, minimize stockouts and reduce food waste.
•Optimize change readiness and management processes so new technology can be implemented and adopted quickly and effectively.
As grocers race to simplify the way customers shop and implement an omnichannel customer experience, we are realizing this comes with extreme difficulty and requires key technology upgrades across multiple departments. AI and machine learning technology has the ability to fix many of the core issues affecting the grocery sector while minimizing risk, improving profitability and preventing food from being wasted. The end result? A positive customer experience.
The article is first published HERE on July 9, 2019.