Retail supply chain and space planning predictions for 2018 from Relex Solutions.
Ecommerce will become more prevalent: Despite the challenging nature of online grocery retail, it is expected that traditional grocery retailers will continue to expand their online operations, with two out of five UK shoppers currently shopping online for their grocery purchases every month and the market set to grow by 53.8% by 2022 (IGD). As the number of sales and fulfillment channels increase, making retail operations more complicated, it will be imperative for traditional grocery retailers to find ways to reduce costs, especially in areas of labour and waste. They must be able to accurately factor in the impact of promotions and price changes while finding the right balance in shelf-life between targeted availability and forecasted waste.
Increased focus on fresh foods and convenience: More UK consumers are moving towards purchasing healthier foods and retailers must take into consideration their changing tastes, as they move away from high sugar content, packaged, frozen and manufactured foods towards healthier, fresher and free from options. A challenge for grocers is to figure out how to sell fresh food online in the growing ecommerce landscape, avoid high supply chain costs and reduce wastage for perishable goods. In a competitive retail environment, having the product the customer wants, where and when they want it, is increasingly key to meeting consumer expectations and bottom line growth.
Retail supply chains will become more space aware: Instead of using the outdated model of basing in-store space planning on weekly averages, retail supply chains will continue to realise the benefits of optimising shelf space by matching daily demand forecasts with both suppliers’ and DC delivery replenishment cycles. The resulting benefits can include direct-to-shelf deliveries and reduced backroom storage space. Retailers will also see how store space optimisation can bring significant cost savings and drive increased efficiencies to their stores.
Weather forecasting and planning will become top of mind: Weather forecasting and supply chain technology have become increasingly sophisticated and with such unpredictable weather in the UK, retailer’s forecasting and planning must incorporate weather data. They must ensure they can accurately forecast stock-level and planning in near real-time and be able manage the exceptions to guarantee that when a heatwave or thunder storm hits, that shelves are optimally stocked – and at an individual store and product level.
Dynamic pricing is the future: To date, retailers have been slow to adopt dynamic pricing due to the high initial price point and potential negative customer reactions to regularly changing prices. As dynamic pricing lends itself well to products that already experience price fluctuations on a regular basis, increased take up is likely to be seen within green grocery, as customers are already used to varying price points for fresh produce. Understanding product demand will remain vital and by utilising forecasting technology, retailers will be in a better position to identify levels of demand during the day, and on an hourly basis and the impact of pricing at individual store level.