Almost half of UK grocery retail directors say replenishment is still driven by gut feel, according to research by Blue Yonder, which supplies predictive applications of retail. It said that interviews with 750 grocery managers and directors in the USA, UK, Germany and France, showed that despite a rise in accurate machine learning algorithms for automated replenishment and demand planning, 46 per cent of surveyed directors in the UK say replenishment is still an entirely manual process. Some 85 per cent of respondents identified automation as a key tool for making the fast decisions needed to meet customer demand. The research also identified that 31 per cent of directors in the UK feel there are now too many decisions to be made manually, with the same number stating that gut feel is slowing them down. The research also found that 62 per cent of UK directors say they have invested in replenishment optimisation in the last two years; 31 per cent say they will be investing further in replenishment optimisation in the next two years.
Technology has long since advanced to the point where it can make decisions better than people can, and yet grocery managers are still happy to use their own experience to drive decision-making, sacrificing speed, efficiency and savings. By optimising key strategic areas of pricing and replenishment, and automating decisions using machine learning, retailers can combine the speed of their decisions with their KPIs (margins, volumes, mark downs). Yet still retailers are not currently marrying the two in a responsive and effective way. As part of Blue Yonder's recent survey of 750 grocery retailers across the globe, we asked some probing questions about decision making and customer service. The research revealed that grocery retailers believe robotics, machine learning and artificial intelligence will be some of the key game changers for the industry.
A global survey of 4000 consumers reveals that shoppers are being left disappointed with the freshness of their grocery purchases. Set against a backdrop of declining retail profitability and significant changes in consumer lifestyles, grocery retailers are under pressure to deliver the best freshness to their customers, while also turning a profit. McKinsey reports that 40 per cent of grocery revenue is driven by fresh, which puts tremendous pressure on category managers to get it right. Yet category managers in fresh know too well the complexities of delivering the best fresh to their customers: Fresh goods are perishable, demand varies from day to day and supply chain lead-times are difficult to predict. Stock too much and you risk providing a less than satisfactory level of fresh if the stock is not sold in time, or you generate food waste.
As the 2018 holiday shopping season approaches, the retail sector will once again take center stage. Brick-and-mortar retailers haven't had it easy in the past decade, as more and more consumers shift their shopping habits as a result of ecommerce. However, despite some predictions that brick and mortars are doomed to become mere memories of the days of old, many retailers continue to turn a profit in an ecommerce-dominated market. Many successful brick-and-mortar retailers aren't just brick and mortars; they aggressively pursue omnichannel strategies that blend ecommerce with traditional commerce in a way that puts customers' needs first. The IoT (Internet of Things) is playing a key role in keeping retailers up to speed with consumers' wants and needs.
AI has been identified as a threat to the warehouse and logistics industry, but what about retail workers? A new report from Blue Yonder looks at how AI could support rather than replace human retail workers. A report from the Martin School at the University of Oxford and Citi estimated that, while perhaps unsurprisingly 80 per cent of retail transportation, warehousing and logistics jobs are at risk due to automation and artificial intelligence, 63 per cent of sales positions are also under threat. Uwe Weiss, CEO at Blue Yonder, argues that removing sales staff from the shop floor to be replaced by AI would be the wrong approach for retailers, as they should be enabling their employees to do what they do best, providing friendly, responsive and bespoke customer service, and letting the machines take care of the manual time-consuming processes, such as replenishment, that require analysis of vast quantities of data and keep staff away from delivering good customer service. For decades, large-scale retail companies have used manual processes to anticipate consumer demand, and stock replenishment has often been based on gut feeling, assumptions, existing agreements with wholesalers and expectations that are hard to measure.