Transforming Grocery Operations Mark Osborne

Grocery stores already provide exclusive discounts to their customers through various loyalty programs. However, such promotions do not contribute to maximizing store performance. Then, what else? Let’s discover how customization is excessive for an offer and how it affects the price optimization factor.

Customizing offers can go too far, think about the Ted Danson commercials for Consumer Cellular, one phone company keeps adding deals to get your attention instead of just offering a great deal at a great price. Promo offers should be baked into your pricing strategy, which can vary from one retailer to another. I’m personally not a fan of the must-buys but for instance, if product A is 4 for $12 with a normal shelf price of $5.99, how does that affect your overall category gross? Retailers should think more in terms of profit dollars versus a Gross Profit percent, would you rather have 20% of $2,000 or 10% OF $5,000 in sales? Promos should enhance your Price Optimization by lowering the cost of goods. Keep it simple, rewarding, and relevant, and bake it into your pricing strategy.

There is no denying that meal delivery packages are a lucrative industry. Customers are curious and wish for new dining experiences closer to home, which is why customization, convenience, and brand stories are the three aspects that drive meal kit results. And, through standard delivery or in-store promotions, retailers can boost planning within new audiences by partnering up that provide customization or accessibility.

YES! – Now that we have gotten back to normal, meal kits and pre-packaged foods should be at the top of every retailer’s list. This category has grown year over year for the last several years. Promoting the category of prepared foods in a bright visible zone is a huge factor in success, and offering promos encourages customers to try new items and unique flavors. These are essential in building a very successful program.

As with any highly perishable item, labor and shrink are aspects, but allowing these to influence your decisions will lead to failure. A commissary and or promo deal to drive incremental traffic will reduce labor and shrink, concentrating on driving profitable dollars will lead to big wins.

In pursuit of higher margins, the supply chain grew in complexity and length. However, the operating model decisions made by the many manufacturers often had unforeseen effects. In today’s session, we will see why many manufacturers have decreased the number of products they offer and are concentrating solely on manufacturing core items.

The studies are still incomplete, although CPG companies realized during covid that producing fewer SKUs (stock-keeping units) could lead to lower production costs without negatively affecting sales. However, variety is the spice of life and will continue to be, but do we need five sizes of Oreos and 15 flavors of yogurt? Demand equals supply, but I agree with SKU rationalization as long as a company uses real-time data to determine these decisions and is not focused on reducing expenses but eliminating specific sizes. It should be cost-effective but be aware of leading your customer to a competitor if you start cutting out complete lines and flavors only to save a dollar. 

Technological Innovation, Pricing Optimization, and Sustainability considerations led grocery retailers to implement more cutting-edge approaches and practices post-pandemic disruptions in supply chains. Mark Osborne, Director of Retail Execution at RSA America, spoke over some of the most recent concerns that grocers have and will offer some adequate directions in the upcoming session on how grocery retailers can use technology and procedures to succeed during operational transformation.

Automation can be an unexpected cost in grocery stores due to high capital expenses and unpredictable ROIs. Labor is your highest controllable expense not factoring in COGs. Self-checkout or SCOs, have come a long way in theft detection and can be a labor saver, allowing one cashier to oversee 4-6 registers versus one.

The key here is choosing the right personality for this position, they must forward facing and engaging the customer, very interactive and knowledgeable. Another issue is deli/bakery labor, these are your highest labor departments, in terms of percentage. Pre-slicing lunchmeat ahead of time using technology to allow customers to order ahead of time enables the team to slice lunchmeat during slower times of the day while allowing them to focus on other tasks and customer service, this same concept is also useful for ordering special occasion cakes.

Robotics and other floor care are still highly undertested at the store level but it’s certainly worth exploring. Customer retention falls completely on the store staff, a company can write great ads and have awesome deals, but if we do not provide a great customer experience there are too many options to shop elsewhere.

Perishable departments are your greatest opportunity to engage the customer, sampling and customer service in these departments are crucial, being interactive and engaging the customer with product knowledge will keep them coming back. The front end plays a huge role here also, being focused on your customers and speaking with them, a simple “did you find everything you were looking for today” goes a long way as well as “have a nice day/evening. The customer could have a bad experience in the grocery aisles, but an engaged cashier can turn that negative into a positive.  

Feel an affinity? Let’s discuss grocery store operations, efficiency, automation, and more.

Mark Osborne

In providing the appropriate deals to the relevant customers on time, RSA America effectively uncovers information on consumer behavior both inside and outside of the store. Independent grocers can build enduring relationships with customers by employing our digital knacks to engage customers through targeted marketing, shopper data analytics, and digital couponing promotion techniques. For more information, visit www.rsaamerica.com.