Nearly three-quarters of food retail executives in a new survey said greater operational efficiency is their best defense against the threat of Amazon’s disruption of the grocery industry.
The survey, conducted by Relex Solutions, polled supply chain and merchandising executives from the top grocery retailers in North America. Asked to describe their company’s reaction to the threat of Amazon in grocery, 73% cited an increased focus on operational efficiency, while 59% said they would focus on their own strengths and make no big changes. Two percent said they were “helpless because of Amazon’s massive resources.”
Other key findings of the survey include:
- 91% of companies that offer an online shopping channel are picking online orders in-store for fulfillment.
- 69% of companies operating both brick-and-mortar and online channels do not produce separate forecasts by channel.
- 69% would like their forecasting systems to better predict promotional uplift.
- 53% are interested in automated replenishment of ingredients consistent with growing demand for to-go food and meal kits.
- 50% are interested in their store replenishment planning becoming more space-aware through considering planograms.
Four out of five of the companies participating in the survey said that fresh products are “very important” to their businesses. The annual value of spoilage for these companies was $70 million on average and up to several hundred million dollars for the largest companies.
A report based on survey results, titled Growing and Sustaining Competitive Advantage in Grocery Retail, said retailers should be focused on modernizing processes and technology to increase the accuracy of forecasts and lower the cost of fresh food waste.
“Our experience is that grocery retailers typically attain spoilage reductions of 10% to 30% by implementing forecast-based automatic store replenishment,” Johanna Smaros, co-founder of Relex, said in a statement. “It’s surprising that one in five of the responding companies still haven’t started implementing any kind of replenishment automation in their stores and less than one-third have managed to implement forecast-based automated store replenishment extensively, so there’s a lot of money still on the table.”
Relex Solutions and WGB are hosting a webinar on May 23 at 11:30 am EDT to review the results and what grocery retailers can do in order to grow and sustain a competitive advantage in today’s dynamic market.