The critically acclaimed 3-part “Supply Chain Winter Olympics” series, directed by Steve Keifer (VP Global Marketing at GXS), is a big hit now at the DC Supply Chain festival. Meanwhile, riding on its success wave, here’s my review of the flick. Trust me; there are no spoilers in here.
Following the historic mid-Atlantic Snowmageddon 2010, DFW saw the snowiest single-day storm of the century. Predictably, the storm-induced staycation fever displayed the documented symptom of consumers flocking to the grocery store to stock up their kitchen inventory, a behavior that might seem like a unique feasting ceremony. My geographical coordinate falls under the snow-rain line and I had to do my part to shield my family away from the pangs of hunger. Not resorting to the routine parade, I pondered at the alternatives on hand to call myself a smart (indolent) shopper, and here they are.
3. Hibernate
Go on a feeding frenzy; build fat reserves and get into a state of torpor. Call it a demand-driven seasonal survival tactic! The gene therapy firms should love this idea for the convincing business case to genetically enable hibernation as a self preservation tool in humans.
Verdict: INFEASIBLE biologically, as of now.
2. Beat the Shopper-traffic
Keep a tab on the weather channels and hit the grocery stores well in advance to avoid any crowd chaos. The idea here is to act before the herd reacts. The only constraint to be kept in mind is the shelf life of the staples.
Verdict: Though FEASIBLE, I missed the boat.
1. Do Nothing
Not really! To really do nothing, we need the grocery chains to function efficiently and innovatively. Here’s a simplified process playbook for the grocery retailers on how they could be attacking their hot-product stock-out issues.
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Retailer Challenges |
Retailer Process Play Book |
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Maturity Level 1 |
Maturity Level 2 |
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Stock-outs on perishables due to pack-rat mentality of snow-scared consumers |
1. Segment the products by SKU for intelligent forecasting. 2. Leverage POS data and other intelligence on seasonal variations to improve the quality of forecasting. |
1. Leverage market sensing data such as geographical demographics, brand economics, and promotional plays. For more details, read Steve’s white paper on looking beyond POS Intelligence – http://tinyurl.com/beyond-POS |
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The economics of EconoMIX |
1. Increase the inventory for hot moving goods but still hold niche products to cater to the elite few. 2. Demand a higher price to adjust for high inventory liabilities and downstream distribution challenges . |
1. Introduce time-sensitive pricing promotions. 2. Establish hot time-zones around peak demand period. 3. Demand Shaping – Establish premium discounts outside the hot time zones to influence purchasing behavior of consumers. |
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Upstream and Downstream Distribution Risks |
1. Consider near-real time agile distribution alternatives to address last-minute ATP (available-to-promise) commitments. |
1. Go Local, embrace farmers market and set up joint ventures or partnership with local producers. 2. Create a sustainable risk-proof supply chain. Read Steve’s note on Green Grocery Supply Chain. |
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Lack of Shelf Awareness |
1. Create mass consumer adoption of products through collaborative shelf awareness between brand owners (national or retailer-owned) and retailers. |
1. Establish critical supply chain metrics to monitor the product velocity of every product thereby eliminating the non-movers. 2. Introduce ‘product velocity’ on the management visibility dashboard for continuous inventory management. |
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Welcome the clouds, the one with online shoppers |
1. Embrace online shopping in the grocery world. 2. Create incentives for pre-orders, thereby improving your demand management significantly. |
1. Enable door-deliveries for a reasonable service fee (like Amazon super saver shipping). 2. Attempt market-on-wheels to test drive door-step shopping (at least for the hot moving staples). |
Verdict: I decided not to grocery-shop-hop; I just got lucky to get some supplies door-delivered from an ethnic neighborhood market.
Bottom-line, any natural or man-made events that spike up the demand are significant business drivers for grocery chains to tune-up their forecasting accuracy. Online grocery shopping with the option of door-delivery (no different from online-ordering of a pizza) holds a key to grocers to improve their customer loyalty and set their cash registers ringing at all times.
2 Responses to “Grocery Market Everywhere, Nor a Milk or Bread to Shop…”
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Excellent post. I particularly like the supplier segmentation concept – maintaining a different forecast for perishables due to pack-rat mentality.