Retail Grocery Challenges in the Omni-Channel WorldFebruary 15th, 2016
With omni-channel retailers becoming more heavily focused on the building out of e-commerce channels in the past few years to address the challenge of Amazon, the instore experience has suffered. In addition, the large format stores have suffered whilst the race for more local, small format stores has intensified. Because bricks and mortar stores are the financial anchor of the business, a decline in this sector is serious at best and a crisis at worst.
The profile and pattern of retail grocery shopping over the last 10 years has accelerated at a far quicker pace than retail has been able to react to, and has likely been compounded by the economic recession in the United Kingdom.
Sainsbury’s told BBC Radio 4’s ‘Today’ News Program in late 2015 that since 1965 over 50% of customers had given up the big weekly shop and that only 1/3rd of their shoppers come through their doors to stock-up for the week.
As a nation we are now buying more often, in a greater variety of shops and in a wide range of ways. The new breed of shoppers buy little and often (usually daily), giving rise to the basket-only shopper who spends less than 10 minutes in the shop, meaning that the opportunity of upselling or the purchase of additional discretionary products in now greatly reduced.
A new report says there are now more than 51,000 local grocery shops in Britain, with more opening every week. Most are independently owned and run, but the big supermarkets are keen to increase their share of an expanding market.
No frills retailers such as Costco, Lidl, Aldi, Poundland, B&M and Home Bargains are undercutting the big name supermarkets, creating a far more competitive market for consumers. The ‘discounters’ only have 10% of market at present in the United Kingdom but are focused on further growth. Of these discounters, not all have developed full omni-channel operations with many having not yet rolled out their Home Delivery operations.
But is Home Delivery a key consideration for the discounters with only 5% of all food sales being made online? Home Delivery is an expensive operation to set-up and run, whether you are picking products from in-store or distribution centres, but it is a key element of the retail portfolio dominated by the big four who, across the omni-channel, have nearly ¾ of all grocery shopping sales.
What’s necessary is an approach which blends Big Data with the day to day operational data management and analytics used to measure and power the business. Traditionally parts of retailers worked in operational silos, but these barriers need to be removed and information shared across operational and strategic functions, whilst including data scientists into the day to day operations rather than keeping them in ‘labs’ within the business.