Insight

COVID-19: Overcoming Challenges in Grocery

At brick-and-mortar locations, food and essential supplies are going out of stock as panic buying continues, putting pressure on grocers to rapidly optimize their existing systems to meet the challenge, while creating safe environments for customers and employees. The ability for grocers to rapidly scale their digital commerce platforms to cope with the demand, leverage their physical store network, digital channels, distribution centers and other models like hub-and-spoke will be critical to meet current demand and a future that is likely going to be shaped by changing consumer habits.

“Traditional grocery supply chains are challenged in an unprecedented manner due to the COVID-19 crisis, Vivek Puri, group vice president, growth and strategy lead, Publicis Sapient, said. “Rapidly adopting digital transformation to address both immediate and medium-term priorities holds the key to survival, sustained growth and profitability.”

True omnichannel capabilities are central to respond to a crisis like COVID-19. Traditionally, grocers have been relying on legacy methods of demand forecasting and creating supplier/manufacturer contracts around them. Now, grocers must mitigate supply challenges by working with existing partners to develop a continuity plan, diversify supply chain, build resilience against shortages and embrace strategies like halting promotions, prioritizing product and strengthening digital channels to provide optimized customer experiences. An agile approach to engineeringsolutions is also paramount to get to market quickly, especially in times of crisis when a need to react swiftly is even more critical.

There are certain solutions that can address key challenges grocers face as they navigate digital innovation and customer relationships:

Optimize fulfillment

A key problem for grocers in the wake of COVID-19 is to ensure customers are able to buy what they need and get it delivered/picked up quickly and efficiently. When ordering online, customers also expect to have clear communication on the status of their order and pickup/drop off availability. With demand at its peak, this becomes even more of a challenge, as delivery slots become congested and workforce shortages constrain delivery capabilities.

Grocers need to ensure they can use the full breadth of the resources available to them (store and DC network) and optimize order fulfillment in a way that’s quick, safe and cost efficient. This could mean optimizing parameters like store capacity, stock outs, shipping cost, processing cost and orchestrating across all possible fulfillment nodes including stores, DCs, dark stores, third-party logistics providers, additional fulfillment centers or even temporary hyper-local stores/fulfillment centers.

Gathering the right set of data to understand the locations (stores and DCs) and the products (fast moving vs. others) that could help fulfillment would be the first step. A robust store inventory management processes supported by the latest cloud-based technologies can provide visibility across the distribution network, ensuring customers are able to purchase what they need and provide transparency on fulfillment options, allowing grocers to better meet consumer needs and communicate effectively in the event of supply limitation.

Leverage technology to forecast demand and optimize inventory

As supply and demand for different products fluctuates, grocers must maintain full visibility of their supplier network capabilities to properly monitor fluctuations in near real-time and control demand for products in locations they are needed the most, while optimizing inventories across the supply chain. Investment in big data and machine learning (ML) technologies to predict individual items and store locations based on buying patterns, the probability of future returns in emergency events like COVID-19, among other factors like seasonal demand will go a long way when demand planning now, and in the future.

Develop centralized control tower to understand performance and risk

Clear visibility and supply-chain monitoring is imperative when identifying and responding to possible threats, inconsistencies or disruption that could affect fulfillment and customer experience. Establish remote control tower centers to manage and control stakeholders, supply chain performance, fulfillment, and financial stress. Typically, this can work through agile, cloud-based platforming, integrating data from other internal systems and data from third-party suppliers.

Protect employees and customers

Grocers are an essential service, allowing stores to remain open in times of restricted travel or quarantine scenarios. At brick-and-mortar locations, grocers must ensure they’re creating an environment that encourages social distancing, while delivering quality service. As grocers consider advocating for customers to shop online, leveraging technology like store or curbside pick-up, cashless payment, self-check-out, and restocking store shelves during off-hours can help limit human contact in-store.

Ensuring the safety of warehouse, delivery and in-store workers is also paramount, especially as grocery retailers like Aldi, Amazon and Tesco work to bring on thousands of temporary employees to handle increases in demand. Proper protective gear should be provided, with considerations made to develop scheduling that minimizes contact and follows social distancing practices. For new employees, automated online training resources can help streamline onboarding, giving workers a place where they can learn, get answers to common questions, and receive updates on progress on their own.

For employees that are able to work remotely, instituting remote call center capabilities allow employees to continue to answer customer questions as offices remain closed through times of quarantine, office closures, and travel restrictions. Conversational tools like chatbots can help expedite processes, especially when customers inundate call centers with requests.

Take on the role of the responsible retailer

As consumers deal with the unexpected fallout of crisis situations like COVID-19, grocers can take on the role of the “responsible retailer,” working with partners and local governments to provide for hard-hit consumers while building trust within local communities.

Some grocers are setting aside additional store hours or establishing video conferencing services to accommodate elderly or at-risk individuals who may be especially vulnerable or unable to shop on their own. Others are partnering with other local grocers to participate in Feed the Nation programs, dedicated to providing resources to those in need while managing inventory.

With online grocery orders at its peak, all aspects of the supply chain are under stress. Serving online orders at scale and speed needs processes like picking to be highly optimized in order to achieve maximum efficiency. Every additional order picked in the current scenario is an additional order served for a customer in need. Using ML/AI, grocers can optimize route-and-batch plans to pick large grocery orders for shipment or click/collect. The optimization utilizes volumetric data to identify the number of pick trips and the prioritize picking using specific business rules while identifying the shortest picking route.

Relentlessly focus on customer needs

Understanding customers and employee needs can help craft communications and programs that best serve the direct needs of different communities. Along with responsible retailer programs, grocers can connect with shoppers online, offering content revolving around cooking at home, recipes, and tips for navigating extended stays at home.

Evolve your business model and ecosystem

As the COVID-19 pandemic continues to run its course, grocers must also focus on optimizing processes and serving customers now, while planning ahead. While harder to predict, grocers should be prepared to navigate shifts in demand, supplier partnerships, and inventory management as panic buying slows down and consumers begin to return to more regular shopping patterns.

Will this crisis have long-term impact on the way people shop, or how grocers do business? The steps grocers take to optimize the supply chain have the potential to reshape how grocers interact and build relationships with customers, employees and partners now, and for years to come.

“Black swan events like COVID-19 will change customer behaviors as it relates to shift to digital and flexibility in delivery,” Puri said. “Grocery players must also transform themselves to this new baseline.”