Sitting on the tarmac at Ontario International Airport, I learned everything I needed to know about the evolution of the grocery industry. Ten Boeing 767 wide-body freighter jets landed at the west end of the airport – all with the same logo of an e-commerce giant emblazoned on their side. For my fellow passengers, young and old, the commotion was a spectacular treat as we waited for our flight to take off. But what caught my attention was the steady, (almost) never-ending stream of packages being unloaded off each jet.
The entire retail revolution was happening before my eyes. Knowing that same company had recently announced its entry into the grocery market, a sense of trepidation overcame me. How can anyone in the grocery business compete against such a mammoth supply-chain operation? Not even retailers as big as Walmart and Kroger have dedicated planes shipping orders.
Why paying attention to the tarmac matters
As proven by that experience on the tarmac, the attack on the traditional grocery store is in full swing. Pure-play e-commerce retailers are continuously innovating new ways to become the most-efficient providers of food. Plus, they are engaging with their customer base to know what they want and need before anyone does.
Although this new competitive landscape is a lot for grocers to take in, this is not the time to hesitate. If they are delaying taking action because of cost and workplace culture, I understand. But I also think postponing that inevitable transition is a significant risk to the business.
The grocery game is not won with over-stocked shelves and big freighter jets. Sure, they are helpful. However, the differentiator is how well the retailer engages with consumers in the store and online and understands their needs and wants.
How grocers can capture the hearts and minds of digital consumers
Most grocers use only the physical store channel to reach the consumer. And their best asset is what’s in the building: a knowledgeable and committed workforce. For example, the butcher knows everything from the best substitute for a porterhouse steak to the benefits of varying meat consumption and the calories of a four-ounce chicken breast. The produce manager can talk about the best vegetables to complement a main course and make it healthier. And the shelf stocker can locate that one can of soup that was moved across the store to a bottom shelf of an end display.
With this refreshing view into the value workforce offers, it becomes clear that its natural ability to support consumer advocacy and engagement is a competitive differentiator. Employees should be consumer-facing associates – not task-driven shelf stockers, clerks, and order fillers – with the freedom to do whatever it takes to deliver a shopping experience that is easier, more convenient, and faster than any digital rival.
But reorganizing the workforce into a team of bottom-line contributors and consumer advocates is just part of the equation for winning over the heart and mind of the digital consumer. A three-prong digital strategy can help accelerate this competitive edge by ensuring employees have the real-time information and collaborative opportunities they need to serve consumers consistently and immediately.
- Embrace digitalization actively across the organization: Grocers need to start putting actions, not lip service, behind their digital strategies. From the executives in the headquarters to the managerial teams in the store, everyone should visibly adopt digital behaviors. This means no more Excel spreadsheets, reams of inventory printouts, and disconnected communications.
- Bring the IT infrastructure closer to the store: IT organizations are often disconnected from the rest of the grocery business. For any digital strategy to be successful, the IT team needs to go beyond just keeping the lights on and making sure the point-of-sale system works. It should also participate in executive-level conversations around the leadership strategy, technology roadmaps, and the process of evolving the company.
- Focus on the digital shopper at all times: Whether it’s the supply chain, store operations, merchandising, or consumer management, every organizational process and store improvement should add value to the consumer experience. Building a competency for leveraging technology and guiding the culture towards consumer-centricity helps the business gain real-time insight into its consumers.
Digitalization of the grocer: It’s already here
Traditional grocers have no choice but to embrace, cherish, and pursue this new era. Digitalization needs to be an imperative because every digital competitor out there is already improving as we speak and will be soliciting your customers’ business.
To safeguard themselves and grow, grocers should break down the walls between processes and add technology across the entire organization. And we’re not just talking about providing a mobile app or e-commerce site. Digitalization must be extended across the whole company to drive value for the consumer while reducing costs, keeping employees motivated and engaged, and enhancing profitability.
Join Randy Evins for the whiteboard session “The Roadmap to Supply Chain Nirvana – Great Customer Service with Lower Inventory” at the GMA/FMI Supply Chain Conference on April 15-17 in Orlando, Florida. For more information, visit www.fmi.org/supply-chain-conference and follow @SAP_Retail and #TPASupplyChain.