Exploitation of big data the answer for supermarket giants battling low cost competitors11th June 2019
Dave McNulty talks to Stuart Richards
The pace of change in our industry never seems to abate. The rise and rise of the German retailers is seemingly inexorable, with their ultra-efficient assortments and aligned, low-cost supply chains allowing them to deliver a value proposition that shoppers need and want.
It’s an approach that has alerted shoppers to the inefficiencies of the more traditional sales technique of value through promotions.
Let’s be honest, deep cut price promotions or hi-low strategies were once the drug of the retailer, shopper and manufacturer alike. But this deep deal culture was at the root cause of huge supply chain inefficiency with forecasting, inventory management and service all increasingly complex to master for everyone in the chain.
If this inefficiency ended in empty shelves or high wastage the end result could be a disillusioned and disenfranchised shopper, something that can have a damaging effect on loyalty.
So, is the answer for the big retailers to replicate that Every Day Low Prices (EDLP) approach to win shoppers back?
Should the ‘Big 4’ tighten assortments to drive efficiency, move to an EDLP or medium-low approach and work with fewer suppliers in a more collaborative way, jettisoning those who cannot bring themselves to align?
As unpalatable as it may be, the simple answer is yes or maybe. But it’s not all that black and white and the truth lies a little deeper.
Inevitably, retailers will only want to work with those who align to their strategic agenda – even the big brand powerhouses recognise that. It’s how you align that will determine your success in navigating through the retail landscape. This begins with a re-evaluation of the landscape.
The shopper of today is a digital savvy shopper, one who is perfectly happy to shift to online in the pursuit of convenience, experience and value. The emergence of Amazon as the UK’s fifth biggest retailer may be uncomfortable for many retailers, but it’s indicative of a significant shift in shoppers’ mindsets.
Subscription models such as harrys.com or Dollar Shave Club in male grooming or Hello Fresh in meal solutions have cut out the middlemen and gone straight to their consumer. Another hammer blow to big retailers? Far from it, but it must be a concern.
So how does big retail adapt and how do manufacturers align and help? I believe the answer lies in data and the availability of it through internet shopping and loyalty/CRM programme tools.
Artificial Intelligence will be transformational for our industry. When you’re on any digital platform you’re generating hugely valuable data which the most intelligent machines will interpret and then customise their content to you.
So, working with supermarkets to utilise this data and customise your offers to individual shoppers is powerful. Accurately identifying your target consumer or shopper and presenting them with a relevant deal enhances not only their experience but it also drives tremendous efficiencies in areas such as supply chain management.
Working collaboratively with retailers in this way isn’t of course the only solution; aligning on food sourcing and sustainability, navigating legislative headwinds like the sugar levy or HFSS regulation, and capitalising on wellness trends are all valid areas of collaboration.
But big data lies behind so many facets of today’s retail landscape and its exploitation will allow manufacturers and retailers alike to work together in a unique way to drive value and loyalty for all.
Dave McNulty is a highly experienced MD and commercial director in grocery, wholesale and cash and carry, working in senior roles for global brands including Kraft and Coca Cola. Stuart Richards is a Principal Consultant in the Global Consumer Practice at HW Global Talent Partner. Contact him at email@example.com or +44 (0) 161 249 5170 or +44 (0) 7787 254 600.