Competition,
Challenges,
Complexities:
A Shifting Grocery Landscape
The grocery landscape is changing:
What was once a protected landscape is threatened by competition and challenges.
of the grocery sector’s economic profit disappeared between 2012 and 2017.
More than
50%
Consumers are shopping across many channels.
More people are buying online
The layouts and inventories of physical stores are evolving.
Source: McKinsey Corporate Performance Analysis Tool.
The omnichannel threat from
Amazon and other aggressive new players
Shrinking margins
Gaps in supply satisfaction
of food sales now take place at traditional grocery stores, down from 90% 30 years ago.
ABOUT
44%
Source: Inmar Analytics
ONLY
7%
of retailers surveyed believe they have the skill sets to succeed in digital compared to 22% of manufacturers.
Source: Nielsen and FMI’s “The Digitally Engaged Food Shopper Study”, 2019
Amazon continues
to encroach, planning for a new mainstream supermarket in addition to its Whole Foods ownership and working on automated checkout technologies.
some of the lowest in the retail industry.
Grocers’ margins can be as low as
2.5%
Source: Forbes
for grocery retailing range from
EBITDA margins
4% 8%
to
of net sales
EBIT is between
2% 5%
Source: Foley Retail Consulting
and
how fresh spoilage is eating up margins
of grocers say fresh products are very important to their business
60%
say that they are losing over 1.5% of annual revenue expired/spoiled fresh products
2/3
BUT
Sources: “U.S. Grocery Supply Chain” research, RELEX Solutions and EnsembleIQ, November 2019
grocers say they are satisfied with their demand forecasting system and about 8 in 10 have plans to develop or improve it.
Only about
6 10
in
Source: “U.S. Grocery Supply Chain” research, RELEX Solutions and EnsembleIQ, November 2019
grocers are satisfied with their automatic store replenishment system.
Only
6 10
in
of grocers are satisfied with their distribution center inventory management system
46%
Pursuing Profits through Technologies
Grocers are working to keep their stake in the food retail landscape by prioritizing activities across key areas of their business:
Improving operational efficiencies
of food retailers say that increasing their focus on operational efficiency will help them better react to the Amazon threat.
Utilizing technologies
more — and better
say that technology is more essential than ever before.
Moving swiftly to think and
54%
46%
Data Makes It Happen
Grocers can manage these priorities by making operations data-driven, autonomous and adaptive
Efficiency
Most grocers have automatic store/distribution center replenishment, but there are opportunities to improve efficiency and accuracy
say they plan to upgrade or look at new auto-replenishment solutions
say they want to drive orders through all levels of supply chain based on store inventory needs
Technology
85%
49%
want their forecast system to automatically consider weekday-related variations in demand at the store and product level
would like their distribution center inventory management systems to automatically consider the effect of planned changes in replenishment schedules or assortments on the DC’s forecast
2/3
57%
of grocers want their demand forecasting systems to automatically consider relevant factors like price change, promotion types, in-store display, etc.
74%
want their DC inventory management system to automatically consider batch-level expiration dates and forecasted spoilage for fresh products
48%
of grocers want their space and assortment planning system to recommend localized store-specific assortments
54%
want those systems to automatically produce localized planograms based on store-specific data or forecasts
52%
Half of grocers
say they want store-level recommendations on how much space to allocate to different product categories
Swift Adaption
to Change
act differently
52%
48%
A majority of grocers are looking at new technologies and systems that improve operational efficiency, customer satisfaction and their own margins, by preventing loss and optimizing assortment.
of grocers say they are increasing urgency and budgets for new initiatives
say they are looking at increasing technology budgets
Click here to get more of grocers’ insights into their industry’s supply chain challenges and opportunities
www.relexsolutions.com | Contact Us
Delivering cutting-edge retail optimization software built for an age when change is the only constant, RELEX Solutions help retailers adapt to every future, faster.
Their cloud-native Living Retail Platform delivers pragmatic AI across all of retail’s core planning processes, providing radical supply chain visibility that lets grocers optimize their forecasting, replenishment, space, allocation, workforce, pricing and promotion strategies within a unified platform.
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