Competition in the grocery industry has taken a turn over the past month or so. Traditionally the major players have mainly competed on price but as margins are cut more and more, they have looked towards service differentiation to gain a competitive advantage. The focus is now on which grocer can get goods in the hands of customers fastest. Tesco announced same-day clickand- collect at the beginning of September and Sainsbury’s promised one-hour delivery in London to rival Amazon Fresh just a few months later.
This focus on speed means the pressure is on for grocers to use technology giving them the power to really understand their inventory.
This is especially true when it comes to perishable goods. However, according to a recent survey by KIBO, only 14% of retailers said they have complete visibility, accuracy and trust of their inventory. On some occasions, even retailers that claim they understand stock levels and offer click and collect are putting on a façade. Instead goods are shipped from a central warehouse to a store when they are already in stock. This wastes time, money and above all, increases the waiting time for the consumer.
This is worrying as failure to fulfil consumers’ needs is likely to result in them walking away. KIBO’s research suggests that over half of UK shoppers (54%) are willing to go to a competitor if their preferred method of delivery isn’t available. Not only this, but they are demanding, with a third of Brits expecting goods to be delivered in under two days.
The focus on short delivery times means that in many cases local stores need to serve as distribution hubs, but this adds another layer of complexity. Retailers need sophisticated order management systems to know what stock is available when, and where, and find the most efficient route to the customer. This insight allows grocers to distribute goods based on customer demand coupled with the cost and speed of fulfilment.
Consumers are more demanding than ever and some grocers are starting to realise there is an opportunity to meet these needs. It is the ones that are forward thinking and are investing in new technology to provide a better service that will succeed. Grocers that stand still and fail to innovate will be left behind.