Randy Fields, CEO, Park City Group
*Everything in the supply chain will be reexamined. For years, the focus of supply chain management was to keep inventories at the stores and DCs as low as possible without impacting service levels. Now, with the cost of capital so low, there is practically no reason to not have more safety stock closer to the consumer.
*Out-of-stocks will continue to be a dominant issue. Consumers are fickle and their buying behavior is not precisely predictable. The pandemic has exacerbated this in the form of substantial out-of-stocks problems that require lasting resources to meet demand.
*The SKU proliferation battle between consumers and supply chain managers will also continue. Consumers want what consumers want and that means an ever-expanding product assortment. Supply chain managers want to manage as few items as possible so distribution can be optimized. Merchandisers are caught in the middle, working to rationalize the assortment without losing profitable customers.
*There will be a permanent restructuring of foodservice. Prior to COVID, 50% of meals were prepared away from the home. The pandemic has dramatically moved the pendulum to the advantage of retail food providers.
The foodservice segment will regain some of the lost share of stomach, but can expect to be down by 15% or more after the return to normal operations.
John Lert, Founder and CEO, Alert Innovation
*E-commerce will remain robust. Assuming (with great hope) that a vaccine will enable more pre-COVID normal lifestyle, the demand for e-grocery will wane somewhat but still remain at level that would not otherwise have been reached for five years or more. Normal growth of the online channel will continue, also at an accelerated rate compared to pre-COVID trajectories.
*Automation will drive new store-level functionality. The pressure on supermarket operators to find a path to profitability in e-grocery will thus remain strong, and automation will increasingly be seen as essential to that end. Experimentation with different automation solutions and operating models will therefore increase, and the evolution of stores from self-service facilities to omnichannel fulfillment centers will accelerate.
*Efficient distribution channels will become a competitive advantage. Manufacturers will become increasingly interested in how they can adapt their supply chain, and even packaging, to facilitate the shift of consumers to online as a way of differentiating themselves competitively.
Brian Ross, president of Precima, a Nielsen Company
*Continued rise of e-commerce in the grocery sector. The rise of the COVID pandemic in 2020 drove a dramatic acceleration of ecommerce for groceries. This shift will continue, even in "the new normal," as there is a fundamental transformation in the market that will overcome the barriers that have slowed adoption of online shopping in food.
During COVID, consumers shifted their patterns and overcame those concerns/barriers, which resulted in the establishment of critical trust and developed a habit. This will only continue throughout 2021, with an estimated ongoing share expansion to 20% of the market.
*Families will continue to cook more at home. As we go into 2021 and restrictions continue for indoor dining, there will be an increase in the number of meals families have at home. This will result in consumers changing their habits - from those who cook from scratch and work on menu and culinary skills to those that look for retailers that can help with prepared meals, meals to go and do-it-yourself meal kits.
Retailers need to realize this isn't just dinners — now that many of us are at home as the new normal, this will include breakfast and lunch as well. Retailers should focus on products that help us all manage in this environment.
*Retailers that personalize win. The changes in ordering online and eating more meals at home also means that consumers are buying different brands, different products and different pack-sizes. While we are still managing through COVID, consumers look to reduce the number of trips to store/online, have bigger baskets and are stocking-up. Those retailers who understand shifts in products and response to price/promotion will better meet customer needs.
Craig Silverman, CEO of antuit.ai
*Smarter, localized assortments: There will be escalating pressure to invest judiciously in future inventory, and data-driven approaches will be needed to forecast demand to a very granular level – SKU, location, and customer segment – to build smarter and more accurate assortments.
*Lifecycle pricing: For the foreseeable future, there is no historical view or roadmap that retailers can plan their pre- and in-season pricing, nor can they rely on blanket promotions.
Retailers will need to assess location-level demand more frequently and be able to make localized promotion and markdown decisions almost weekly to maximize margins and sell through.
*Optimizing omnichannel inventory and order fulfillment. Due to the pandemic, retailers have seen their online channel revenues double with no expectation for it to lessen, thereby creating a new need to start using advanced predictive capabilities to allocate merchandise and manage store labor for both in-store and online demand.
And to stay profitable, they will need to incorporate more advanced intelligence into sourcing online fulfillment to go beyond simple rules-based algorithms to anticipating future demand by location, thereby minimizing shipping costs while pulling from store locations that are expected to have high markdown liability.
*Personalized marketing promotions. Where personalization is not new, with the increase in online orders, consumers are likely to switch brands more easily. Consequently, to maintain customer loyalty, retailers will need to get scale up their marketing efforts, delivering hyper-personalized customer experiences across channels, and ensure that every promotion is relevant and timely to the individual.
Johanna Småros, co-founder, RELEX Solutions
*Omnichannel efficiency. The COVID-19 pandemic pushed a significant number of consumers to try online ordering and curbside pickup for the first time, and although many people will happily visit stores again as soon as they feel comfortable doing so, home delivery and curbside pickup are definitely here to stay.
While some retailers were forced to ramp up these services quickly and almost at any cost to be able to serve consumers in the most critical phases of the pandemic, they will now need to find ways of managing these new fulfillment options in a cost-effective way matching low cost with high product availability and delivery accuracy.
*More resilient supply chains. As many supply chains struggled to adapt to demand surges, availability issues, and changes in demand, increasing supply chain resilience has become a top concern for retailers. Creating resilience by simply adding more stock to the supply chain “just-in-case” cannot be the answer – no retailer can afford to sit on stock that does not move.
Retailers instead need to attain absolute visibility into their inventories and demand down to the item and each fulfillment channel and create the ability to quickly react to changes in demand in their sourcing and by redirecting inventory as needed.
*AI becomes a must-have. As traditional time-series based forecasting will be significantly disrupted by the COVID-19 induced shifts in demand, even technology laggards will be forced to look at more sophisticated, AI-enabled solutions for demand forecasting.
Forerunners, on the other hand, will leverage their forecasting advantage to unlock further operational benefits by utilizing AI to optimize their capacity utilization and deployment of resources. This cost optimization will allow them to increase profitability or lower prices to capture market share in an economic downturn.
*Sustainability/circular economy. Retailers are experimenting with business models inspired by a circular economy approach. Some specialty retailers offer to buy back used items and sell them second-hand using their own channels. Others offer consumers the option of renting instead of buying.
These channels are still to a large extent more image-building than business, but as demand grows, they offer both big opportunities to capture market share, as well as risks of inefficiencies if the business models require more goods handling than supported by their margins.