Five Trends That Will Impact Supermarket Retailers in 2015
Mark Dunson, Emerson Climate Technologies
Supermarkets are utilizing data-driven approaches to offset a moderate economy, varying consumer behavior and the continued rise of online competitors. Achievement often depends on reacting well to difficult issues or, better, getting ahead of the next obstacles. There's no telling how the year will develop, but there are several clear challenges and opportunities for savvy supermarkets in 2015.
1. Data-Driven Insight Spills Over to Back-of-House
A recent Gartner report predicts retailers will soon spend $17.1 billion on business intelligence. Retailers are at the forefront of investing in data to cultivate closer customer relationships through personalized shopping experiences. The retail industry is now poised to turn that prowess to back-of-house operations, where data can be used to influence customer outcomes with a focus on competitive prices through reduced energy and maintenance spending.
Opportunities to leverage analytics gained through operational data are prevalent. Many retailers have already unlocked the potential savings resulting from popular energy efficiency initiatives, such as LED lighting retrofits and applying advanced refrigeration rack control algorithms. The next wave of energy savings projects will come from mining operational data to drive value in less obvious ways.
By combining data, such as increased energy usage, alarm trends and maintenance history, supermarkets can identify where problem stores exist and better invest their maintenance dollars. Further, recognizing patterns in time-series sensory data can highlight otherwise undetectable inefficiencies – such as small refrigerant leaks – which affect system efficiency. Analyzing data for insights that lead to reduced energy and maintenance costs while ensuring system performance will propel the industry forward.
2. Safe and Secure Data Access
Data lies at the core of gaining the insight required to drive impactful engineering changes. However, getting data from facility management systems has grown increasingly complex. Information and network security is a top of mind concern for today’s retailers – especially as recent data breaches have been revealed at multiple large chains. Retailers are under heightened scrutiny from internal and external sources to protect data.
Rather than completely locking down store networks because of security concerns, retailers should consider the potential benefits gained from understanding their enterprise operations. They can opt to mitigate risk and work with suppliers who share an awareness of the challenges that come with network security. Utilize vendors to enable a connection that meets all of the internal IT requirements while delivering the information needed for efficient operations.
3. Increase in Outsourcing
Today, many businesses are faced with doing more with less. Retailers are outsourcing non-core functions, turning to outside partners to supplement their teams. Just as equipment maintenance has largely been outsourced to independent contractors, it is now becoming more common for retailers to outsource internal support services. Supermarket leaders concerned with growing their business are leveraging services, such as monitoring and facilities management, from partners rather than investing in costly internal support centers.
Allowing a third party to manage energy and maintenance data provides retailers with an unprecedented enterprise view of their operations, making it easy to access vital information. Retailers are able to leverage investments in software, people and physical structures that yield the same results. These services are often customized to meet a retailer’s specific needs, ranging from full-service monitoring with remote equipment integration and resolution to management of maintenance calls and dispatch requests.
4. Less Square Footage But More Complexity
To remain competitive, many retailers are exploring new, smaller store formats with a wider variety of fresh and prepared food offerings. A recent report on grocery trends by research firm Packaged Facts revealed that the average size of U.S. supermarkets has been falling since 2006, and is now roughly 46,000 square feet. Traditional supermarkets today have competitors that vary in size, shape and focus. Consumer demand for shopping experiences that offer convenience and fresh foods are driving industry changes. Supermarkets are adapting their stores and offerings as customer preferences change.
As retailers also expand into foodservice, stores are becoming increasingly complex. Simultaneously, the number of experienced technicians is decreasing and new technicians lack the skills needed to keep up with the industry. Adding more prepared foods for fresh, convenient choices requires a different thought process:
• Stores need additional food preparation equipment, where maximizing uptime and avoiding breakdowns is critical. Selecting and connecting those devices to existing facility management systems can give retailers a view of how all equipment is performing.
• Measuring and monitoring food freshness is vital as new offerings of fresh, prepared foods are vulnerable to spoilage. Retailers are employing new sensing and wireless technologies to monitor stores to ensure food quality is maintained, which is essential when building a business model around convenience.
• Additional and more complex store equipment increases the need for technicians to quickly and easily diagnose faults. Consider partnering with manufacturers that invest in technician training to reduce unnecessary maintenance costs that come with evaluation and replacement of equipment.
5. Focus on Sustainability
Retailers are constantly looking to optimize store operations. With energy efficiency projects, they can reduce energy costs and support sustainability initiatives. One supermarket retailer with more than 1,700 stores was able to ensure ongoing energy efficiency and protect more than $7 million in energy savings through the utilization of setpoint deviation tracking services. Using less energy reduces need for production at power plants, which is beneficial to the environment.
Another sustainability area in which supermarkets are investing is refrigerant management. Monitoring services provide retailers with visibility into equipment performance. With this data, condition based maintenance can help determine the source of a slow leak, enabling early detection and potential resolution, which will save refrigerant, equipment, product and overtime labor. Appropriate action can be taken to repair the system before too much of the refrigerant leaks, which is important from a financial, environmental and regulatory perspective.
Conclusion
As supermarket chains navigate the unique challenges and opportunities these five trends present in 2015, they’ll adopt data-driven strategies and look to trusted partners to develop their approach. This will position them to succeed in an industry with a moderate economy, varying customer demands and an evolving competitive landscape. Retailers today are leveraging information, people and technology to make smarter business decisions that will optimize their facilities and enhance customer experiences.
Mark Dunson, president of Emerson Climate Technologies Retail Solutions, has led the global retail business since 2009. Emerson Climate Technologies specializes in developing energy saving techniques and devices for chain supermarkets, convenience s