Retailers in the grocery sector need to manage fast-moving inventory of thousands of products while responding quickly to new trends in customer demand. Grocery retailers can’t afford to have out of stock issues, as these can quickly result in lost business. Overstocks are just as bad, especially with so many items prone to spoilage; according to the Food and Agricultural Organization of the United Nations, an estimated 1.6 billion tons of food is wasted annually, of which a significant percentage comes from retail.
If grocery retailers hope to stay on top of their inventory and avoid potential revenue losses, they need to make sure they have the right technology in place to help make the most of it.
Here are our 4 key secrets to success in grocery replenishment:
1. Get real-time information
Take tens of thousands of products with sales cycles that can range from a few hours to a few weeks. Add seasonal influences on demand and sprinkle with local events and customer preferences. What you’ve got is a lot of data that can be turned into accurate insights to support intelligent decisions. The key is to have a replenishment system that can gather information about every product and its sales history across all your channels – and make good use of it by identifying sales patterns and forecasting demand. A surprising number of grocers don’t have such a system in place, and they’re quickly falling behind the ones that do.
2. Automate the process
With such a large variety of products to manage, grocers need a quick and reliable way to take care of routine replenishment decisions. If you’re still doing your replenishment manually, you’re risking errors and gaps in information that some of your competitors have already eradicated. Automating routine tasks is the secret to streamlined replenishment, but it’s important that the system works with you. It needs to process real-time information according to the rules you set and enable you to make manual adjustments for certain products if necessary.
3. Set different rules for different locations
Grocery retailers need to make the right replenishment decisions about everything – from fresh produce with a limited shelf-life to packets that can sit on the shelf for weeks. Demand can differ between branches in the chain, influenced by anything from local weather conditions to promotional activity. How can you use all that information effectively to make timely decisions about how much stock you need and at which location? Effective replenishment relies on rules to treat different types of products appropriately – while making sure you don’t have so many rules you clog up the system. Retailers enjoying the most success in this area are using automated systems that apply the rules they set, while taking relevant trends and influences into account. Using different models such as demand forecasting, re-order points, and push distribution enables those retailers to make sure every location in the chain always has the right amount of stock.
4. Connect your physical and online channels
Online grocery shopping has been surging in popularity the last few years, and retailers that can offer streamlined delivery of everything the customer ordered will soon outstrip those who can’t. But many are still surprised to learn that integrating replenishment with all their retail channels is essential to delivering a consistent shopping experience for customers. It makes perfect sense though: customer satisfaction will increase if they can immediately see what’s out of stock and get suggested substitutions before they place their order. And retailers stand to save a lot of time and expense if returned items are instantly reflected in the inventory and replenishment system – whether they’re returned to the store or to the delivery driver. The secret is to make sure the system managing replenishment is part of the same retail system you use to manage the rest of your business. This guarantees that everyone has a clear, real-time picture of demand and supply.
Grocery retail is a fast-paced business and effective replenishment is the key to delivering the fast and convenient experiences customers expect. Discover how LS Central, our unified business management software with advanced replenishment capabilities can help you keep up with your customers’ needs and optimize your inventory processes. Get in touch with our experts to find out more.
