Latest News

  •  TVH continues sponsorship of FLTA 2021 Awards
  • Current shortage of intermediate bulk containers in the marketplace
  • CHEP Europe achieves top Corporate Social Responsibility rating from EcoVadis
  • Brexit packaging regulations ‘here to stay’ – TIMCON
  • Kalmar and Maritime Transport extend cooperation with new order for straddle carriers
  • Home
  • News
  • Materials Handling
  • Health & Safety
  • Notice Board
  • Multimedia
    • Audio
    • Book Review
    • T.V.
    • Video
  • Contact Us
  • About Us
  • follow
    • Facebook
    • Twitter
    • Google+
    • Pinterest
    • RSS Feed
    • Linked
    • Youtube

5 Steps to Move from Traditional Grocery Retail to Omni-Channel

Nov 12, 2017 Warehousing Ireland Logistics, News Comments Off on 5 Steps to Move from Traditional Grocery Retail to Omni-Channel


By Mikko Kärkkäinen, CEO at RELEX Solutions

Just a few short years ago, many senior grocery retail executives were looking at the world of eCommerce and saying, “It’s not for us.” But how times have changed. Consumers are increasingly participating in online grocery shopping. Indeed, UK online grocery sales are predicted to reach £11.1 billion in 2017, up from an estimated £9.9 billion in 2016*.

As the number of sales and fulfillment channels increases, retail operations are becoming increasingly complex. It is now imperative for traditional grocery retailers to find ways to reduce costs, especially in areas of labour and waste. Retailers need 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.

Making the move from traditional to omni-channel

Moving from traditional grocery retail to omni-channel grocery retail adds new aspects to demand forecasting that need to be considered, including how to forecast per sales and fulfillment channel; how to react when products fall out-of-stock; and how to optimise operations. Here are five steps to help organisations succeed in omni-channel grocery retail:

Prepare for different sales and fulfillment channels

A basic forecasting requirement is the need to link online sales to the right fulfillment channel, irrespective of whether the product is picked up in distribution centres, by third-party couriers or through drive-through pick-up options. Simply lumping regular store sales together with online orders to form the basis for forecasting does not suffice.

For example, online orders that are picked in a distribution centre need to be included in the demand forecast driving replenishment to that centre, even though the actual sales transactions belong to the online channel. On many occasions, online orders follow a different sales pattern compared to regular store sales as consumers’ shopping behaviour changes. This means that separate forecasting of online sales is needed to accurately account for the sales channels’ varying demand patterns.

Manage product assortments and availability

Out-of-stocks and product substitutions pose challenges across all channels, but it has an especially negative impact on the shopping experience when the product desired isn’t available online. This has led many grocery retailers to use a multi-step process of enabling online consumers to review and accept alternative product substitutions to keep customer satisfaction high. However, these replacements often erode already thin margins as they are commonly substituted with higher priced items.

A better option for e-grocery retailers is to quickly react when products fall out-of-stock, and if possible, remove them from the offered assortment. In addition, it is imperative to accurately estimate how much demand was left uncaptured because of the out-of-stock and assortment update in order to accurately forecast future demand.

Forecast for workforce optimisation

In traditional bricks-and-mortar grocery retail, shoppers do a lot of work by picking the products they want. However, when sales take place online, retailers need to perform the order picking, which is extremely labour-intensive. This means that omni-channel grocery retailers need to forecast picking volumes and times very accurately to fulfill the lead-time promises made to their customers, without excess labour cost.

Additionally, forecasting is not only needed for optimising inventories, but also operations. By smart-timing optimisation of work tasks, retailers can, for example, move personnel from the checkouts to order picking when business is slower in the store. Planning for this in advance means that excellent service is possible while keeping costs in check.

Collect data for better forecasting

Grocery retail usually has massive amounts of data due to the high number of SKUs and daily transactions. Still, forecasting is often hampered by the limited amount of information on relevant historical price changes.

In bricks-and-mortar retail, it is quite onerous to test different approaches to pricing, promotions and assortments as it requires a lot of manual work. Electronic shelf labels make changes easier, but online stores still offer a much better opportunity to run lean experiments on a limited scale. Systematic testing allows omni-channel retailers to better understand consumer response to assortment width or price sensitivity in different product categories and for specific items, enabling continuous online pricing optimisation and providing insights for bricks-and-mortar stores.

Invest in a combination of people and systems

Tackling the challenges of demand forecasting in an omni-channel retail operation will require a combination of people and systems. Omni-channel grocery retailers need to invest in planning teams with a comprehensive understanding of both demand planning and retail operations in which the demand forecasts are used.

The team should then be equipped with tools that:

● Enable a high level of automation to cope with the massive amounts of data and extremely granular planning needed;

● Make use of all available planning information and data, such as applying machine learning to forecasting of promotions;

● Support demand planning and forecasting for both fulfillment and workforce optimisation, and;

● Provide the flexibility needed to adapt to a continuously changing business environment.

Despite the challenging nature of online grocery retail, it is expected that traditional grocery retailers will continue to expand their online operations. However, what is clear is that protecting and growing margins will become even more challenging as grocers deal with growing price competition and rising labour costs.

 

Tweet

  • tweet
IntraLogisteX 2018 - Ricoh Arena, Coventry 27/28 February 2018 Cold facts on Cold Store lighting

Warehousing Ireland

Related articles
  •  TVH continues sponsorship of FLTA 2021 Awards
     TVH continues sponsorship of FLTA...

    Apr 17, 2021 Comments Off on  TVH continues sponsorship of FLTA 2021 Awards

  • Current shortage of intermediate bulk containers in the marketplace
    Current shortage of intermediate bulk...

    Apr 17, 2021 Comments Off on Current shortage of intermediate bulk containers in the marketplace

  • CHEP Europe achieves top Corporate Social Responsibility rating from EcoVadis
    CHEP Europe achieves top Corporate...

    Apr 10, 2021 Comments Off on CHEP Europe achieves top Corporate Social Responsibility rating from EcoVadis

More in this category
  • Current shortage of intermediate bulk containers in the marketplace
    Current shortage of intermediate bulk...

    Apr 17, 2021 Comments Off on Current shortage of intermediate bulk containers in the marketplace

  • Kalmar and Maritime Transport extend cooperation with new order for straddle carriers
    Kalmar and Maritime Transport extend...

    Apr 03, 2021 Comments Off on Kalmar and Maritime Transport extend cooperation with new order for straddle carriers

  • ONWARD HOLDINGS OPEN TO OFFERS FOR NEW LOGISTICS FACILITY
    ONWARD HOLDINGS OPEN TO OFFERS FOR NEW...

    Apr 03, 2021 Comments Off on ONWARD HOLDINGS OPEN TO OFFERS FOR NEW LOGISTICS FACILITY


Tweets by @warehousingIrl

Recent Posts

New Modulean Lite shadow boards from Beaverswood

New Modulean Lite shadow boards from Beaverswood

Nov 14, 2020 Comments Off on New Modulean Lite shadow boards from Beaverswood

Improved organisation of workplace tools is in warehouse and logistics centres is provided with new Modulean Lite shadow boards from workplace visual communication solutions specialist,...
Hyster Europe expands its range of electric counterbalance lift trucks

Hyster Europe expands its range of electric...

Sep 13, 2020 Comments Off on Hyster Europe expands its range of electric counterbalance lift trucks

Linde Training Solutions – Well Trained Without Fail

Linde Training Solutions – Well Trained...

Aug 09, 2020 Comments Off on Linde Training Solutions – Well Trained Without Fail

Warehouse Strategy, Design & Operation for a Post-Covid-19 World

Warehouse Strategy, Design & Operation for a...

Aug 03, 2020 Comments Off on Warehouse Strategy, Design & Operation for a Post-Covid-19 World

How to safely buy a used ATEX forklift

How to safely buy a used ATEX forklift

Jul 12, 2020 Comments Off on How to safely buy a used ATEX forklift

Recent Posts

Axial Properties Ltd fined €80,000 following serious incident in Clonee warehouse

Axial Properties Ltd fined €80,000 following serious incident in Clonee...

Nov 22, 2020 Comments Off on Axial Properties Ltd fined €80,000 following serious incident in Clonee warehouse

On Friday 20th November, at Trim Circuit Court, Judge Martina Baxter imposed a fine of €80,000 on Axial Properties Ltd following a serious incident at one of their warehouses in Bracetown...
New Modulean Lite shadow boards from Beaverswood

New Modulean Lite shadow boards from Beaverswood

Nov 14, 2020 Comments Off on New Modulean Lite shadow boards from Beaverswood

How to safely buy a used ATEX forklift

How to safely buy a used ATEX forklift

Jul 12, 2020 Comments Off on How to safely buy a used ATEX forklift

A-SAFE launches new hygiene partition for industrial facilities

A-SAFE launches new hygiene partition for...

May 31, 2020 Comments Off on A-SAFE launches new hygiene partition for industrial facilities

Hospitality casualties could join warehousing workforce says UKWA

Hospitality casualties could join warehousing...

Mar 25, 2020 Comments Off on Hospitality casualties could join warehousing workforce says UKWA

Newsletter

Recent Posts

  •  TVH continues sponsorship of FLTA 2021 Awards
  • Current shortage of intermediate bulk containers in the marketplace
  • CHEP Europe achieves top Corporate Social Responsibility rating from EcoVadis
  • Brexit packaging regulations ‘here to stay’ – TIMCON
  • Kalmar and Maritime Transport extend cooperation with new order for straddle carriers
  • ONWARD HOLDINGS OPEN TO OFFERS FOR NEW LOGISTICS FACILITY
  • 7-point Checklist to Warehouse Systems-design 
  • Tax, tariffs and port delays are prompting UK online retailers to switch storage to Europe
  • Crown Paints adds further Flexis to its forklift fleet
  • Onward Holdings Ltd is open to offers for a refurbished warehouse in Leeds
  • Hyster modifies its range of Container Handlers & 18+ tonnes capacity Lift Trucks
  • Jungheinrich focuses on green electricity 
  • Food processors are establishing “the era of ‘Hygiene 2.0’”
  • Online retailers facing cardboard packaging ‘double whammy’ of longer lead times and higher prices
  • Cantilever Racks – AK 1324: Noble Metal for Quick Access
Copyright 2020 Warehousing Ireland / All rights reserved