“The battlefield is in constant chaos. The winner will be the one who controls the chaos, both his own and the enemy’s” (Napoleon Bonaparte).
Picture the scene: you’re a store associate at a large grocery retailer. It’s your second day. You start your shift at 6am and arrive to a flurry of activity. Online pickers dashing between aisles, dodging night shift workers. Product lines are already in need of replenishing. Bakery items are not ready. Pallets everywhere.
Then the store opens. Customers come flooding in, moving items. Asking questions. Stopping you from unpacking stock. Just as you’re getting used to fresh produce, you’re told to move to ambient. It takes 10 minutes to find the product you’re supposed to mark down.
Suddenly - smash! A customer drops a large bottle of sauce. And it’s your job to clean up.
It’s only 7.30am, but already the store feels like a battlefield.
While we don’t want to get carried away with the military analogy, Napoleon had a point. When chaos is a constant, winning is about navigating, not eliminating the mayhem.
The experience above reminds us of the daily disorder that faces all frontline grocery retail staff and permeates every corner of your in-store operations.
From regular stockouts to ineffective markdowns, from labor shortages to inaccurate inventory records - it's no wonder in-store operations can feel chaotic. And with associates tackling an ever-greater number of tasks, prioritization is getting tougher by the day.
So, given the status quo in stores, what does good look like? Is there a smarter way to run your in-store operations?
We believe it all starts with data. With the right insights in place, we can re-write the story.
The first key step in improving in-store operations is identifying the specific challenges your estate is facing.
Given the complexities of running the ‘perfect’ store, cutting through inefficiencies and recognizing problem areas is easier said than done.
Let’s start by exploring some of the most common challenges faced by grocers.
The shortage and attrition of store associates, combined with the increasing cost of wages and recruitment, creates a perfect storm for retailers.
Indeed, a recent survey conducted by Deloitte found that talent availability (41%), talent retention (40%), and attracting emerging and in-demand skills (36%) were the most significant workforce challenges faced by grocery retail executives1 .
In addition, many stores rely on temporary or seasonal associates to fill shift gaps. While this may deliver short-term relief, it doesn’t enhance long-term labor productivity. Temporary staff are more likely to be disengaged, with less training than a permanent associate.
Store associates were already inundated with tasks before they became harder to retain and recruit. And yet, running parallel with labor shortages is the greater workload and wider remit expected of staff. Traditional activities such as replenishing shelves, serving customers and setting up promotions are now intertwined with growing online tasks, from order picking to selecting substitutions.
Inevitably, fewer associates and increasing workloads mean conflicting priorities. For example, the Retail Insight ‘Shelf Actualization Survey’ found that 62% of respondents don’t believe store colleagues are ‘always clear on the replenishment tasks they need to do and when’.
And what about associates who are new to the store, or simply disengaged? Their potential inefficiencies place even further pressure on the workloads of established staff.
Whilst an ever-increasing list of tasks is not an ideal situation for any store associate, if your store is set up to prioritize tasks and provide dedicated alerts, it can be manageable. The problem is that this is easier said than done, and retailers often struggle to provide this guidance.
As a result, store associates will try to maintain a regular routine of activities, including online fulfilment, manual gap scans, date checking for near-expiring items and manual inventory audits. These are time-consuming activities, and a lack of direction means you aren’t necessarily addressing the most pressing or valuable issues.
Time is a precious commodity for a reduced workforce in a fast-paced, customer-facing environment. As a result, you are potentially adding to product availability issues, losing sales from items not marked down, and not freeing up store associates to serve and sell.
From economic uncertainties to omnichannel demands, the resilience of supply chains is severely tested. Interestingly, it’s your in-store operations that may be causing some of the biggest challenges for your forecasting and replenishment.
There are typically two recurring challenges, historic process and poor inventory data. Most retailers conduct manual audits once or twice a year, and, as a result, your inventory record is out of date the moment it’s completed. The issue is that your forecasting and replenishment solution feeds off your inventory data, which could be either over or understated. Similarly, there may be a historical process that states an order is made when inventory hits a certain level.
As a result, you could receive a replenishment consignment and end up with a waste issue as your store fails to shift excess stock. Alternatively, your system may not replenish at all, affecting your on-shelf availability and leading to longer-term stockouts.
You have a reduced workforce, with more to do, less guidance and poor replenishment, which adds to existing issues, but you still have to serve your customers. The challenge is that their expectations are changing.
Wallets are tightening, and sustainability considerations are on the rise. According to the latest data from Retail Insight, grocers are seeing ‘resourceful consumption’, with 78% of US shoppers trying to reduce food bills to cope with cost-of-living pressures and 79% trying to be more sustainable with their buying habits2.
They are also increasingly more likely to shop elsewhere if you don’t provide them with the products they want when they want them. A study into the UK grocery sector by Retail Insight found that 82% of shoppers have experienced out-of-stock products in the past 12-months, with a separate study showing that in at least 36% of cases of stockouts, shoppers abandon their purchase and defect to another store3 .
The net result is that retailers need to provide sustainable practices, accurately and timely reduced to clear items, and consistent product availability. No small feat.
So, what are the solutions to some of these challenges? As a retail decision-maker, you’re bombarded with technology promising to bring order to your stores. From AI and ML to camera technology, robotics and RFID, the options are as varied as the price tags.
But when assessing capex budgets, it’s important to understand the limitations as well as the capabilities of these options. Take cameras, for example; capturing real-time product availability and interpreting this data with computer vision software seems like a sophisticated way to mitigate stockouts. But what happens when the positioning of shelves obscures the view of the camera? What’s plan B when your cameras can’t distinguish between similar products?
It’s also worth remembering that many solutions only tackle one problem. RFID tags are presented as a solution for automatically monitoring inventory levels, but, in reality, they typically record instances of theft - just one component of total loss. Despite the considerable investments required for many of these solutions, it’s often the case that no point solution provides a silver bullet.
Before making the business case for new technology, retailers would do well to remember the value that can be gleaned from their existing data sources.
As Retail Insight CEO Paul Boyle reminds us:
Foundational data in the form of markdown data and item and store data contain a wealth of insights which are often overlooked. But when scrutinized, these data points may contain a signal that preempts a future issue with sales, profit or waste performance.
When deploying capital, time to value is critical. That means any technology solution must be able to scale at pace with minimal disruption, and integrate with your existing processes. The beauty of a data-led approach to managing in-store operations is that it leverages what you’ve already got; plugging into your systems and sweating your existing data. But the key is that it also supports and benefits from any existing solution you have in place, be it cameras, robotics or computer vision. The result: quick to implement and fast to value.
With foundational data working harder, the focus must turn to driving and presenting insights. To drive priority actions in stores, you need simple and elegant ways of instructing associates.
As Paul Boyle points out: “The churn in retail has been 100% in some areas for the past few years. Often staff haven’t received high levels of training and lack the required experience. So when they come to look at a problem, if you don’t make that a really simple message, you run the risk of over-instructing them. We need to focus on getting maximum impact from minimal intervention. What are the fewest possible instructions we can give to deliver the maximum value?”
To conclude, let’s return to our opening story. How does our associate’s experience change when the store is run by data-led insights? What do analytics and alerts look like in practice?
You start your shift at 6am and arrive to a flurry of activity. Online pickers dashing between aisles, dodging night shift workers. Product lines already in need of replenishing. Bakery items not ready. Pallets everywhere.
Then the store opens. Customers come flooding in. But your to-do list is already sorted. Your shift starts with a simple alert which directs you to the exact products you need to markdown. Not only that, but your device calculates the best discounted price for each expiring product. And because you’re not wasting time waiting for instructions or walking the aisles looking for gaps, you’ve got more time to help shoppers.
Suddenly - smash! A customer drops a large bottle of sauce. No panic, there’s plenty of time to clean up.
It’s only 7.30am, but already your shift feels manageable.
References
1 https://www2.deloitte.com/us/en/insights/industry/retail-distribution/future-of-grocery-retail.html
2 Retail Insight Consumer Research Survey, 2023
3 'Desperately seeking shelf availability: an examination of the extent, the causes, and the efforts to address retail out-of-stocks', Daniel Corsten and Thomas Gruen, International Journal of Retail & Distribution Management