Owners and managers of grocery stores are keen to build sales and profits. They constantly strive to offer quality products that customers demand at reasonable prices. Additionally, retailers must constantly be improving customer service satisfaction in their units. While specific sales and customer service goals are common with all retailers, certain retail management challenges can hinder a grocery store’s chance of achieving these objectives.
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Whether in charge of a small, individually-owned grocery store or one that is part of a larger chain, managing a grocery store successfully involves considerable responsibility. Grocery store managers must ensure that the store runs smoothly, that items are priced competitively and that customers are satisfied. Having a thorough understanding of key concepts involved in effective grocery store management is imperative for any manager dedicated to the success of his store.
Grocers Are Stepping up to the Challenge
Grocers have learnt that establishing clear points of differentiation is important for a highly competitive price/value-based environment. Most of them believe that focusing on their primary shoppers and offering products they want to buy, at fair prices is the key to successful growth for grocery store.
There has been much consolidation in the grocery stores in recent years. The surviving grocery stores have realized that they cannot offer all things to all people. Instead, they are attempting to do the things they can do better than their competition. Nearly every survey consistently indicates what today’s customers are looking for in their shopping experience:
- Sell what they need and have it in stock when they want it.
- Make it easy for them to shop and find what they are looking for.
- Provide all the information they need in order to quickly decide what to buy.
- Have friendly helpful people available to make the shopping experience a pleasant one.
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A Challenging Road Ahead!
RMS Consulting has gathered predictions from leading grocery stores and researchers on what challenges they expect to happen in supermarket industry in term of Inventory Management and Warehouse Management.
Labour Cost
Controlling operational costs is certainly one of the biggest challenges that any retailer faces. Since grocery stores typically run on extremely low profit margins, the need for a lean and efficient operation is critical. Labor costs are the single greatest controllable expense.
Some grocery store managers have a tendency to cut labor during tough times. If labor cost reduction is not managed properly, customer service and store conditions may suffer. This, of course, results in lost customers and sales. Retailers that do not properly budget for necessary training programs will most likely see both increased employee turnover, which becomes very costly over time, as well as reduced customer service, due to a lack of training.
INEFFICIENT PROCESSES
These cause a lot of time wastages, equipment wear, and strain on the people who do the work. Most often, inefficiency distress grocery stores that operate on a manual basis, but even automated companies suffer. Inefficiencies are everywhere and are most often found when products are touched multiple times or delivery routes are undefined. Few grocery stores use softwares to automate their system but these softwares are it self inefficient to overcome these loopholes.
KNOWING THE INVENTORY
The grocery store manager must understand the inventory inside and out. In addition to knowing what the product is, the manager also has to know how often it ships from the producer, how big the packages are, the most cost-effective quantity to order, etc. Above all, the manager must know at all times exactly what is on hand, where it is located, and when it will be replenished.
HIGHER PRODUCTIVITY REQUIREMENTS AND FEWER RESOURCES
Grocery stores are always looking for ways to squeeze extra expenses out of every part of the profit and loss. One of the places they squeeze is in logistics and Inventory. Retail softwares helps and hurts this aspect of the business. It helps by finding those extra expenses, but hurts by making it appear as if there are more and more places to squeeze.
They need to focus of the profit loss ratio of the expenses they are making and what are the benefits they are achieving from that investment. Cost benefit ratio is very much important while choosing a process and software for your business.
CUSTOMER DEMAND
Most grocery store managers prefer to manage products for customers according to their needs and expectations. It is the responsibility of the grocery store manager to understand what the customer expects and to deliver the results they require. Otherwise, the manager can expect to lose business quickly as customers are quick to switch to other grocery stores.
INCREASING COMPETITION
With emergence of the grocery store chains or supermarkets in developed countries, its becoming more difficult for new grocery store owners to establish and survive in competitive environment. With low labor costs, material costs, and low currency values, these emerging grocery stores can easily undercut established supermarkets. With the availability of fast international shipping, established grocery stores are constantly challenged to compete.
OPERATION MANAGEMENT CHALLENGES
Keeping specific goals in mind, retailers are always keen to maximize value received from payroll spending and optimize their scheduling. There are manay operatons management challenges faced by the grocers, which include:
- Time & attendance system is time consuming and require manual intervention
- Payroll errors
- Punch errors resulting in unnecessary regular and overtime costs
- Time clocks lack the ability to verify the person punching in or out
- Legal compliance (i.e. minors, punch edits, etc.)
- Costs associated with over and under scheduling
- Lack of optimized scheduling
Issues in Existing Store Systems Technology
Generally speaking, most grocery store retailers have added technology at a conservative pace over the years, mainly due to precise ROI requirements. It is an industry that runs on very low profit margins. New solutions need to demonstrate quick payback through increased sales and profits, and/or reduced costs to the operation.
Technologies designed to improve the customer’s experience in the grocery store, such as faster checkout, or ways to provide additional information to the customer are sometimes difficult to justify when chains are focused on their bottom line. The impact of new system deployment, training, maintenance, and support can add to a retailer’s reluctance to simply accept the next new technology.
As technology has evolved over the years, most retailers have switched their operations to the latest tools and techniques except using older systems. Few drawbacks of existing technologies are given below:
- Many systems either do not connect, or are connected in a cumbersome manner that requires manual processes. Information is difficult to retrieve, and new releases are resource-intensive to manage.
- Some softwares purchased through vendors lack consistency in capability, have overlapping scopes, and are rarely integrated in terms of function or data.
- Many older applications are based on outdated architecture and are inflexible, making it difficult to change processes and business rules, add new devices, and so on, without touching the source code. This can present a competitive disadvantage for retailers as new innovations are made available over time.
- Older hardware is difficult and costly to maintain. IT departments have grown in size as technology has been deployed over the years.
- According to several studies of IT leaders, as much as 70 percent of a retailer’s information technology resources are devoted to sustaining and running existing capability, leaving only 30 percent for exploring and implementing new capabilities.
Systems implemented in Grocery Stores
Few of the already implemented systems in grocery stores are given below:
- POS Checkout: System that records sales and financial information, and that collects detailed customer and product related data.
- Self Checkout: Self-service POS station where customers ring up and pay for their purchases.
- Cash Management: System that controls the cash handling processes from POS to the back office, and to the bank.
- DSD: Direct Store Delivery System that supports the receiving of product distributed directly from manufacturers or suppliers on their own trucks, by-passing retail warehouse facilities.
- Labor Scheduling: Application that creates work schedules for employees and departments, based on defined parameters.
- Time & Attendance: System that is used to plan, monitor, and report employee’s work hours.
- Scale Management: System that links different weigh scales and labelers throughout the perishable departments in the store.
- Order Entry/Inventory Management: System that supports the process of inventory replenishment; an approach that combines perpetual inventory and reorder point calculations.
- Item Price Verification: Wireless handheld devices that are connected to POS and used to audit prices on the shelf.
- Shelf Space Management: System that helps manage the amount of shelf space allocated to each category, and to each product within the category.
- Loss Prevention: Auditing tool that analyzes data to identify irregular and fraudulent activities, in an effort to reduce lost profits.
- ESL: In Electronic Shelf Labels, LCD shelf tags that are linked to a backroom computer and POS, and that automatically display price changes.
- Learning Management (LMS): Computer-based training course software that delivers local or online content for new and existing employees.
- Forecasting Systems: Systems that projects expected sales of products for given time periods.
- Shelf Tags/Signs: Software that is used for printing in-store tags and signs.
- Kiosks: Freestanding, interactive terminals that display products and information on a video screen; they typically use a touchscreen for customers to make selections.
Salient Features in Latest Retail Solutions
New softwares are designed specifically for grocery stores enabling them to provide their customers with the best, most advanced shopping expperience comparatively. With these softwares, retailers can get a fully functional, highly specialized retail solution that caters to the demands of grocers. Here’s a list of a few features new retail softwares offer that can elevate the grocery store to the next level:
- Forecasting
- Optimized Scheduling
- Time and Attendance
- Employee Self Service
- Learning Management
- Inventory control with Purchasing and Receiving
- Handheld inventory support
- Customer Management with Loyalty
- Employee Management
- Extensive Reporting
- Integrated eCommerce
- Integrated Quickbooks Accounting
- Daily, weekly, monthly, and yearly sales
- Best and worst selling products
- Customer buying patterns
- Daily sales tenders & deposits
- Self-Checkout Solutions
- Monitor cash registers, and in depth Cashier Analysis
Going Forward
The past was a tough for small and few of the big grocery stores, and the near future won’t be much easier. Differentiation was, and will be, key for retailers in upcoming years. Grocery stores need to increase focus on creating a unique shopping experience, store design and product selections, and provide excellent customer service for their customers.
Successful retailing in todays’ world is more complex than ever where common challenge is Inventory management and Warehouse Management in all fields. In 2013, the economic situation in Europe and the US, a combination of rising production costs and flat prices, the pressure to improve working conditions, a lack of new production centres and low volume growth in retailing all add up to a worrying year. Grocery store managers must now learn to automate store beyond the corporate boundaries.
Hence, with the above trends and challenges faced by grocery stores today, grocers need someone who truly understands the retail industry needs and challenges, someone who is not just a technology expert but an industry expert and who can translate these challenges to opportunities to help you to grow your business. RMS Consulting is committed to support the retails management industry enabling the chain stores and single stores to further optimize every aspect of their operations. We actively use the cost effective world-class technologies only where needed while preserving the existing corporate technology investments.
