A wide variety of fresh food is exactly what consumers expect from supermarkets, but at the same time the growing environmental awareness let many people critically examine the product availability as a main reason for food wastage. These concerns are not unjustified, as the figures demonstrate. Between 30% and 50% of all food produced annually is wasted before reaching a human stomach, which is often trace back to the poor assortment planning in the grocery industry. Why product availability and environmental protection are nevertheless not mutually exclusive with the right technologies:
A balancing act between stock-outs and food wastage
By looking at the number of more than 10 million tonnes of food wastage in the UK each year, we can imagine the negative effects on the profits of retailers and manufacturers, but despite these large environmental and economic impacts, the UK government felt forced to urge supermarkets to halve their food waste by 2030.
The reasons are clear, as changing demand can be one of the biggest challenges for retailers, especially with ever-increasing and changing product portfolios. As a consequence, we can see significant overproductions caused by companies’ apprehension that they would lose customers due to stock-outs. In the following, we will introduce a way to adapt the inventory to the needs of each customer.
No alternative to customer centricity
As mentioned previously, overproductions are mainly caused by bad forecasts of customer demands, as retailers find it hard to collect and/or use further data to move away from a reactive concept towards precise predictions. The only way they can tackle this problem are therefore assortments that are aimed at customers as accurately as possible. Much has been said about the mentioned customer centricity, but how can it be adopted in practise?
Putting the customers’ point of view at the centre of every decision means that it is not sufficient anymore to analyse their transactional data from online and in-store purchases. Various channels require prompt responses of retailers across all touchpoints in real-time. If a customer prefers to change his buying behaviour weekly, this needs to be analysed. The following questions can help retailers to recognise those habits immediately:
Why do customers prefer a specific channel?
Are there any visible eating habits and/or allergies?
How do external events influence consumer behaviour?
The last question brings us to the next point, as external events affect people’s buying behaviour significantly and are therefore closely linked to their purchases. Most enterprises only use transactional data and ignore weather conditions and holiday seasons, that inevitable leads to full supermarket shelves in times of a low demand. This is clarified by specific events that make people buy more promotional products over a limited period.
In responding to these questions, smart retail technologies are essential. Demands need to be forecasted as accurately as possible to recognise buying preferences of each customer with building connections between products and habits. Personalised offers can therefore point the customer in one direction with a result of better predictable interactions across all channels.
Product availability vs. Environmental protection
Product availability = Environmental protection
Despite everything, the mistreatment of data precludes a higher data quality, not only from a retail perspective, but also from a customer point of view. Retailers’ hesitant stance over data collection is eminently surprising when you consider the benefits it brings.
As mentioned in the introduction, full supermarket shelves are often associated with large quantities of food wastage, but if supermarkets are ready to align themselves to customers that are more than just programmed machines, they can provide a more personalised assortment. The consequence would be a range of products that are really needed.