Success in a Challenging World
The grocery retail sector is in the midst of considerable market change, with radical shifts in the way consumers, work, live, and shop.
What are the forces influencing these new patterns of consumption, how is the cost to serve impacted, and what are the consequences for the retailers and their logistics processes?
There are a number of established and emerging trends within the Australian food and grocery market that have the potential to significantly disrupt the finely tuned mechanism that is the food distribution chain.
These trends include the rise of e-retailing in both home delivery and click and collect models, time-poor consumers switching from weekly big shops at large stores to smaller but more frequent use of local stores, and the growth of discounters such as Aldi.
None of these trends in themselves are creating large changes in the market, but they have the cumulative potential to produce quite disproportionate disruption to established supply chain practices — all in challenging economic times that also constrain retailers’ ability to adapt. No wonder then that some foresee the end of a “Golden Age” for the large retailers in the face of new forms of competition — Amazon for example — while others see the good times for grocery consumers disappearing as the new models fragment the services offered and increase the cost to serve.
Innovation and Diversity
The emerging grocery retail landscape has become highly complex, requiring innovative and highly diverse logistics solutions. While the challenges are real, there are huge opportunities to re-shape existing grocery supply chains for competitive advantage. Retailers who make sensible, considered decisions across their channels stand to gain greater control of costs and, at the same time, improve market offerings.
Efficient store replenishment, effective order fulfilment, and the appropriate application of automated processes, will be the key differentiators in a highly competitive market.
The key to this is the ability to sequence products onto pallets by family group so that they are presented in an aisle-friendly manner — a particular challenge when, for example, fresh produce arriving at a cross-dock does not appear in the sequence that the stores want.
First, it is important to understand the dynamics of the market and the challenges ahead.
- Convenient Home Shopping — at a Price
- Local Store Trends — the New Hot Spots
- The Rise of Discounters
- Optimising the Cube — and Going “Dark”
- Automation is up for the Challenge