Grocery is an age-old industry, but that doesn’t mean grocery operations need to stay stuck in the past.
As of late, grocery retailers have found themselves facing fluctuating foot traffic, inconsistent supply chains, and rising customer expectations—all while experiencing a labor shortage.
Manual, labor-reliant ways of working have amplified those challenges, resulting in lagging retail execution and missed sales opportunities. As grocers look to serve their customers and maintain market share, it’s time to consider what processes are due for an upgrade.
1. Inventory management
Out-of-stocks of fast-moving consumer goods (FMCG) cost grocery retailers $82 billion in missed sales in 2021. When the failure of a specific process represents 7.4% of sales not realized, there’s an ongoing issue.
Most grocery retailers still rely on employees manually patrolling the aisles to notate or scan shelves and check overall product stock levels. From there, if items are missing, an employee still needs to find, gather, and restock the missing product so that it can get into the hands of awaiting customers.
Without the resources and headcount to complete these tasks efficiently and effectively, however, grocery and supermarket shelves are sitting empty, resulting in missed sales and dissatisfied customers. A study of more than 600 retail outlets found that 43% of customers will walk out because of stock-outs – going to another store or retailer when they’re unable to find what they’re looking for.
Understanding shopper preferences and consumer trends, planning future orders, and field merchandising and planogram compliance (more on that next) suffers when grocers are unable to know what’s on their shelves and restock what’s missing in a timely manner.
2. Field merchandising and planogram compliance
Field merchandisers help ensure that the shelves of a retail store are correctly stocked with products according to display sets. This includes reporting any inventory issues or shortages to help maintain planned in-store displays and a pleasant in-store customer experience.
Right now, this is primarily conducted manually with store employees checking stock levels by hand or third-party field teams visiting retail locations and going section-by-section to check whether shelves match the planogram on behalf of CPG brands. When you consider both the ongoing labor shortage across retail and the costs of non-compliance, this is an area where grocers can’t afford to be inefficient.
Field merchandising is a thoughtful process that aims to convert shoppers to purchasers.
Gaps in identifying – and correcting – compliance issues lead to gaps in the customer experience and ultimately, gaps in sales.
Failing to maintain planogram compliance is costly for grocers of every size, with some studies estimating a loss of 1-3% of annual sales. For organizations with annual sales as high as $10 billion, that’s $300 million in lost annual sales.
3. Online grocery order fulfillment
In 2022, 61% of shoppers stated that stock availability for their online grocery orders is now lower than at the onset of the pandemic. Another 45% of shoppers had to do extra shopping to replace missing items or poor swaps from their online orders – with no guarantee that that would happen with the same retailer where they’d placed the online order.
With the proliferation of purchasing channels, most retailers face a disconnect between what’s shown as available for order online and what’s available in-store for timely fulfillment and pick-up. Considered alongside with the aforementioned manual stock checks and data entry methods that continue to pervade store-level operations, it’s clear why it’s harder to create a single source of truth for grocery retail operations.
Whether it’s in-store pickers or third-party professional shoppers handling online order fulfillment, time and money is lost looking for products that should have never been available to purchase, while customers are left frustrated by a poor experience and missing or incorrect items.
How tech can help streamline grocery store operations
The operational struggles grocers are encountering make two things apparent:
- Reliance on outdated processes that are highly dependent on employee resources will continue to hamper store operations (and ultimately, customer experience and sales) amidst an ongoing labor shortage and a fragmented retail landscape.
- The lack of accurate, real-time operational visibility and shelf data (driven in part by the continued reliance on manual processes and data entry) only compounds these operational challenges across retail locations.
Investing in retail execution technology that helps automate these processes and provides real-time shelf visibility and structured product data is the key to upgrading grocery store operations.
At Microblink, we refer to this as “digitizing the shelf,” and we predict it will only gain prominence in the coming months.
What is digitizing the shelf?
Unlike the digital shelf concept in eCommerce (i.e., the online environment a product appears in, or the online counterpart to a shelf in a physical store), when we talk about digitizing the shelf, we’re referring to digitizing the physical store shelves with cutting-edge computer vision.
With AI-powered product recognition, it’s possible to capture and identify products on store shelves in real-time from existing mobile devices. This doesn’t require scanning barcodes or employees/field teams manually going from aisle to aisle and shelf to shelf to determine what’s in stock and what’s not. Grocery product recognition enables a steady stream of accurate, real-time, structured shelf data that can be used to improve auditing and task efficiency, identify and correct compliance issues, and gather more complete data to help with store merchandising and field sales.
In tangible terms, it means no longer having to manually check, notate, and enter information on shelf sets and product placement. It also means a greater ability to view and leverage shelf data across a region or retail organization.
By combining mobile computer vision and cutting-edge ML models that have been trained on grocery shelf images across categories, this shelf scanning technology adds operational transparency to help improve store operations.
With faster, more complete data about the product, category, price, shelf position, and more, retailers can optimize store operations to ensure the right products on the right shelves at the right time. This ultimately translates into happier customers (easily able to purchase the products they’re looking for) and increased sales.
Grocery is ramping up for the future of retail execution
Digitizing the shelf with supermarket product recognition can help retailers and grocery operators make more data-driven decisions around inventory and workforce management and the overall in-store customer experience.
Fortunately, this isn’t the only technological upgrade the industry is investing in, and there’s significant momentum pushing grocery operators towards a digitally-transformed future. Download our recent guide on retail execution technology to get up to speed on 5 key emerging technologies.