As we enter a new era of buying in the wake of the pandemic, the grocery sector must find ways to leverage resources such as machine learning and artificial intelligence to accurately predict and navigate disruption in fulfilment and customer experience, especially now that panic buying will let up and customers will fall back to more regular shopping patterns
The Covid-19 pandemic is a global health emergency that’s forcing individuals, governments and businesses to spring into action to protect themselves and others. Measures like quarantines and social distancing have fuelled spikes in demand for online ordering and longer wait times for home delivery. Data from online retailer Rakuten shows the number of online orders jumped 151 percent through the week of March 12-15, with BOPIS (Buy Online, Pick-Up in Store) and home delivery up by 210 percent. Same-day and next-day delivery services have also warned of limited time-slot availability, with online grocery apps like Instacart, Walmart Grocery and Shipt experiencing surges in daily downloads by 218 percent, 160 percent and 124 percent, respectively.
Traditional grocery supply chains are challenged in an unprecedented manner due to the crisis. Rapidly adopting digital transformation to address both immediate and medium-term priorities holds the key to survival, sustained growth and profitability. Grocers must mitigate supply challenges by working with existing partners to develop a continuity plan, diversify supply chain, build resilience against shortages and embrace strategies like halting promotions, prioritising product and strengthening digital channels to provide optimised customer experiences.
There are certain solutions that can help address key challenges grocers face as they navigate digital innovation and customer relationships:
Optimise fulfilment A key problem for grocers in the wake of Covid-19 is to ensure customers are able to buy what they need and get it delivered/picked up quickly and efficiently. When ordering online, customers expect to have clear communication on their order status and pickup/ drop off availability. Leveraging cloud and data/machine learning solutions, grocers can utilise the full breadth of the resources available to them (store and DC network).
This could mean optimising parameters like store capacity, stock outs, shipping & processing cost; and orchestrating across all possible fulfilment nodes including stores, dark stores, third-party logistics providers, additional fulfilment centres or even temporary hyper-local stores/ fulfilment centres.
Leverage technology to forecast demand and optimise inventory As supply and demand for different products fluctuate, grocers must maintain full visibility of their supplier network capabilities to monitor fluctuations in near real-time and control demand for products in locations they are needed the most, while optimising inventories across the supply chain. Investment in big data and machine learning (ML) technologies to predict individual items and store locations based on buying patterns, the probability of future returns in emergency events like Covid-19, among other factors like seasonal demand, will go a long way in demand planning now, and in the future.
Develop centralised control towers to understand performance and risk Clear visibility and supply-chain monitoring is imperative when identifying and responding to possible threats or disruption that could affect customer experience. Establish remote control tower centres to manage and control stakeholders, supply chain performance, fulfilment and financial stress. Typically, this can work through agile, cloud-based platforming, integrating data from other internal systems and data from third-party suppliers.
Protect employees and customers Ensuring the safety of the warehouse, that of delivery and in-store workers is also paramount, especially as grocery retailers like Aldi, Amazon and Tesco work to bring on thousands of temporary employees to handle increases in demand. Proper protective gear should be provided, with considerations made to develop scheduling that follows social distancing practices. For new employees, automated online training resources can help streamline on-boarding, giving workers a place to function productively. For employees that are able to work remotely, instituting remote call centre capabilities allows employees to continue to answer customer questions through times of quarantine, office closures and travel restrictions.
Similarly for customers, grocers must create experiences that encourage social distancing, while delivering quality service. Store or curbside pick-up, cashless payment, self-check-out and restocking store shelves during off-hours are key solution areas.
Take on the role of the responsible retailer Grocers can take on the role of the 'responsible retailer', working with partners and local governments to provide for hard-hit consumers while building trust within local communities. Some grocers are setting aside additional store hours or establishing video conferencing services to accommodate elderly or at-risk individuals who are unable to shop on their own. Others are partnering with other local grocers to participate in Feed the Nation programs, dedicated to providing resources to those in need while managing inventory. Using ML/AI, grocers can optimise route-and-batch plans to improve fulfilment while picking large grocery orders for shipment or click/collect.
Evolve your business model and ecosystem As the Covid-19 pandemic continues to run its course, grocers must also focus on optimising processes and serving customers now, while planning ahead. They should be prepared to navigate shifts in demand, supplier partnerships and inventory management as panic buying slows down and consumers begin to return to more regular shopping patterns.
Black swan events like Covid-19 will change customer behaviour as it relates to shift to digital and flexibility in delivery. Grocery players must also transform themselves to this new normal.
The writer is GVP-North America Retail Growth & Strategy Lead, Publicis Sapient