0.0%
2000
11,662
-5.0%
2005
11,077
-23.9%
2010
8,876
-41,1%
2015
6,870
•
… is there a tsunami for grocery stores on the horizon?
… (and history suggests they will not stop before they do) …
If amazon fresh gets quality and service right and cost under control …
Book online boom spearheaded by Amazon.com
No. of Book Stores in the US 2000-2015:
Could amazon hit grocers as hard as book stores?
Source: U.S. Census Bureau
3%
7%
11%
13%
19%
32%
34%
44%
"
I am afraid of datI have had some negative experiences in the past a abuse
I am afraid of data abuse
The selection isn’t big enough
I don’t have the possibility to buy online
The initial effort is too big (opening an account, etc.)
The products are more expensive than in the supermarket
Delivery takes too long
I don’t have enough trust in the product quality
Source: Oliver Wyman survey of 1,000 consumers in May / June 2017
Question: “What are the main reasons preventing you from buying fresh goods online (again) today?”
Amazon’s legendary persistence will overcome current customer doubts
Question: “What are the main reasons for you to continue buying fresh goods in physical food retail stores?”
20%
36%
42%
68%
76%
I like the personal advice in supermarkets
The product quality is better in the supermarket
I like the bigger selection in supermarkets
I like to buy food in the supermarket
I can take the products with me straight away
I can touch and pick the products
Customer views on grocery stores’ strengths shows fresh quality as open flank
THE key
for grocers to fight back and retain customer loyalty to stores
Improving the fresh offering is
15%
5%
stores out of business
share to online can drive up to
of physical
of market
Our simulations show that losing
NOT
80%
consider fresh
of consumers do
quality or service a big loyalty factor to stores
Grocers must act now or prepare for a dramatic decline in their store base
Excellent in-store execution
Best product quality right up to the shelf
The right volumes at the right time
Close collaboration with suppliers
The perfect range store by store
The perfect product presentation
Achieving a quantum leap in fresh demands a comprehensive, cross-functional approach along six areas
Quality Control System
Shelf maintenance
• • •
Quality-focused store operating model Consequent removal of shrink Local de-listing of permanent shrink-drivers
Store handling
• •
Right storage temperatures Careful hand-ling of sensi-tive goods
Picking & Delivery
Fast turn-around in DC Educated product handling Right storage and delivery temperatures
DC Quality Control
High quality control coverage at DC reception Transparency /feedback loops on results
Product volumes
• • • •
Forecasts & order recommendations Inventory data & store insights Short store lead time Right space allocation
Supplier screening and selection Quality performance tracking Supplier suspension criteria Trustful collaboration
Supplier management
Product specs
Clearly defined product quality standards, easily accesible for entire organization
Product quality as purchased by consumer
Taste quality control assurance process
Strong quality communication and information/education to clients
Example Quality:
The approach to quality must be redefined and go well beyond the quality department alone
Weather impact
Cannibalization
New and discontinued products
Promotions and price changes
Holidays and events
Seasonality and trends
Impact of weather on forecast accuracy Example: German Bratwurst
Weather-adjusted forecast
Original Forecast
35
34
33
32
31
30
29
28
27
26
25
24
0%
10%
30%
40%
50%
Calendar week
Mean forecast error (%)
Example Forecast:
One of the main reasons for success is its extremely accurate forecasting engine, specifically designed to deal with the challenges of predicting Fresh sales
Highly dynamic fresh range
Part of the assortment is changed frequently, giving customers the chance to consistently explore and find inspirations
Leading regional and local offering
Strong presence of regional, sub-regional, and local products and specialties.
Store-specific range extension
Store-specific supplementary products, aligned with each store’s specific customers in the catchment area.
Cluster-specific core range
Well defined core assortment based on store cluster and sales magnitude, differentiated by season
Defining the store range needs to be artfully crafted along four building blocks
