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Just 16% of UK consumers are satisfied with delivery services every time

Over two thirds (68%) of UK consumers have had an issue with delivery in the last three months – and, as a result, 24% lost trust in a delivery company and 24% lost trust in the retailer.

That’s according to Descartes Systems Group’s latest Consumer Online Delivery Research, which set out to assess consumers’ online purchasing experiences across Europe.

Undertaken by SAPIO Research during July 2021, the interviews with consumers across Europe highlighted that quality of the delivery service is undermining overall customer perception of both delivery companies and retailers – leading to lost sales.

The research concludes that retailers need to take ownership of the end-to-end experience, in order to address consumer expectations regarding tracking and communication; safe delivery and ease of return; and, increasingly, environmental considerations.

Key findings include:

  • The quality of the experience has been far from perfect: just 16% of UK consumers are satisfied with the delivery service every time.
  • Over two thirds (68%) have had an issue with delivery in the last three months – and, as a result, 24% lost trust in a delivery company and 24% lost trust in the retailer.
  • Over a third (37%) of consumers also share their perception of both delivery company and retailer with friends and family – creating a ripple effect that rapidly undermines consumer perception.
  • 71% of European consumers consider the environment when making an online order
  • Almost a third are interested in bulking all orders to one weekly delivery.

Since the beginning of the COVID-19 pandemic, the proportion of purchases made online has grown from an average of 32% to 43% and is expected to remain at 41% for the foreseeable future. More than half (51%) of consumers have increased the number of purchases they make online, and 51% now make an online purchase at least once a fortnight – almost double the number (28%) pre-pandemic.

Despite these statistics, the research findings underline the fact that deliveries are failing to achieve complete customer satisfaction, with nearly nine in ten (87%) customers not always satisfied with the delivery services received. With satisfaction rates even lower for consumers who have reduced their online buying behaviour during the COVID-19 pandemic, the implications of inadequate delivery experiences cannot be overlooked.

Timing is the biggest issue for home deliveries – with two in three (68%) UK consumers reporting a delivery problem in the last three months. Delivery problems radically affect customer perception – and not just of the delivery company. While almost a quarter (24%) lost trust in the delivery company, 24% also lost trust in the retailer and 23% did not buy from that retailer again.

Given that many consumers were a captive audience during COVID-19 pandemic lockdowns, these delivery problems should raise serious alarm bells for retailers. With just 16% of UK consumers confirming they are totally satisfied with the delivery service, a company’s ability to meet its delivery promises will become increasingly important to reinforce the quality of customer experience and maximise the chances of customer retention.

Descartes says questions retailers should, therefore, be seriously considering, include:

  • How proactively is the retailer tracking delivery performance?
  • What is the strategy for managing spiralling delivery costs and optimising driver time?
  • What is the strategy for meeting customers’ environmental expectations? Can the delivery model support bulk orders and green scheduling? Are the right vehicles being automatically assigned to deliver in Clean Air Zones?

Pol Sweeney, VP Sales and Business Manager UK, Descartes, said: “Consumers will not return to pre-pandemic shopping habits; having become used to the convenience of ecommerce, online purchasing will continue to dominate. Individuals have become far more confident and sophisticated online over the past 18 months and expectations have risen, leading retailers to enhance the online experience, but as this research reveals, the quality of the delivery service is undermining the overall customer perception and leading to lost sales. Retailers that take ownership of the entire end-to-end experience and truly optimise the delivery process have the opportunity to transform customer perceptions, drive additional sales and, critically, entice customers from poorer performing competitors.”

Action demanded on UK’s LGV driver shortage

Two of the UK’s biggest business groups, Logistics UK and British Retail Consortium (BRC) have written to the Department for Business, Energy and Industrial Strategy (BEIS) to outline key three steps the government can take to overcome the national HGV driver shortage problem and protect the supply chain.

According to the groups, which together represent more than 23,000 members nationwide, the crisis is anticipated to worsen in the coming months as demand for goods increases with the new school year starting, businesses returning to their workplaces post-Covid-19 restrictions, and the build-up to Christmas beginning – traditionally the peak time for logistics movements.

Writing to Rt Hon Kwasi Kwarteng MP, the Secretary of State at BEIS, David Wells, the Chief Executive of Logistics UK, explained that retail and logistics industries are taking proactive measures to address the driver shortage challenge – including increasing pay rates, offering bonuses, and implementing internal training schemes – but the government must take immediate action to support supply chains:

“The current shortfall of around 90,000 HGV drivers is placing unsustainable pressure on retailers and their supply chains. While there was a shortage of HGV drivers prior to the Covid-19 pandemic and Brexit, these two events have exacerbated the situation; the pandemic halted driver training and testing for more than 12 months, while an estimated 25,000 EU drivers returned home during the pandemic and following the end of the transition period.

“Logistics UK and BRC are urging the government to adopt three policies immediately. First, to increase DVSA’s testing capacity permanently so the agency is able to process the backlog of driver tests placed on hold during the pandemic – this has left thousands of aspiring HGV drivers unable to join the workforce. The government should also review its decision not to grant temporary work visas to HGV drivers from the EU, as such drivers could supplement the domestic HGV workforce in the short-term, while the testing backlog is cleared, and new drivers are trained and become qualified. Third, industry needs government to ensure its skills and training schemes support the recruitment of HGV drivers, by reforming the National Skills Fund to fund HGV driver training and injecting flexibility into the Apprenticeship Levy.”

Writing with Helen Dickenson OBE, the BRC’s Chief Executive, Wells added: “Logistics UK and BRC need BEIS to work with us to ensure the government provides a clear road map and tangible support for industry to ensure that our stores can continue to provide what the country needs every day.”

Big changes ahead as supermarkets embrace smart tech

A study has found that nine in ten Brits now believe the average supermarket will be significantly different in just nine years’ time, with many of the changes that people predict being once the stuff of sci-fi films. 

The ThoughtWorks research showed that just over a quarter of adults (26%) believed the supermarket checkout will have disappeared by 2030, while around a fifth of respondents (18%) believed shelves would be stacked by robots. A further 13% of people believed there would be no human staff in stores at all by 2030, rising to 21% of students about to enter the world of work. 

The research was conducted by MaruBlue among a nationally representative sample of 2,007 adults. The research was conducted online.

Many also saw a big future for AI – with a fifth (19%) of people believing their food and drink for the home would be automatically re-ordered by our fridges, cookers and cupboards by 2030. 

These findings are from a new ‘2030 Britain’ study commissioned by ThoughtWorks. Following a home isolation era that has largely re-defined the consumer’s relationship with food, retail, work and home-life – the new study on food retail suggests the evolving use of technology in powering people’s lives has resulted in many seeing it as having a far more widespread role in shaping people’s everyday routines in tomorrow’s Britain. 

In terms of physical presence, while a quarter of those surveyed (25%) believed that the size of the average supermarket would likely grow – selling a range of additional items beyond just food – one in five (19%) believed the opposite: that supermarkets would only exist online, or that food would come direct from the food producer and, in doing so, would bypass the retailer.  

Asking about what supermarkets would sell, a third (32%) of people believed local food producers would take up more shelf space than they currently do, reflecting the current trend to support local suppliers and farmers. One in six people (17%) went further, suggesting that supermarkets would become centres for local artisan food producers and farmers to sell their produce, while one in seven (15%) believed the supermarkets would start to operate new local farms. 

As a result of almost 12 months of lockdown restricitons, the ThoughtWorks study saw a rise in expectations prompted by a year of acclerated digital skills. Technology has become the enabler for many many challenges presented, with earlier research from ThoughtWorks finding that over a third of people in the UK (24%) believed local producers will deliver straight to their door by 2030. 

Kevin Flynn, director of retail strategy at ThoughtWorks, said: “Crystal ball gazing tends to say more about our current times than it does about the future. Supermarkets have enjoyed a boom in activity during the lockdown, and consequently many can see them continuing to grow and expand over the next decade. However, as many people have been forced to look further afield for different products, they have new and better ways to meet their demands, and support causes that matter to them. This is a watershed moment for the retail industry which will have long lasting effects.” 

BRC seeks to reduce unnecessary retail waste

The British Retail Consortium (BRC) and Company Shop Group have joined forces to help reduce unnecessary waste in the retail industry.

The Company Shop Group, a redistributor of surplus food and products, has also been confirmed as the BRC’s official Sustainability Partner for the year ahead.

It will be working closely with the BRC, engaging with BRC members through various digital resources and events ‘to help educate, inspire and change mindsets across the industry’ when it comes to sustainably handling surplus stock and reducing unnecessary waste.

The partnership comes at a critical time, as the country enters a third national lockdown which will create ongoing high levels volatility within the supply chain as a result of retail and hospitality closures, likely leading to an additional increase in surplus stock.

To support the industry’s recovery from the pandemic, the BRC and Company Shop Group are encouraging retailers and businesses to ensure they are unlocking all value from stock and operating as sustainably as possible. The Group’s distribution network enables it to provide ready-made solutions to help retailers to minimise unnecessary waste, extract maximum value from surplus and ensure all products reach the end consumer, as intended.

The Group works with all the major retailers, manufacturers and brands to stop good food and products from needlessly going to waste. By purchasing surplus stock from the FMCG supply chain and redistributing it across its network of 17 membership-only stores at heavily discounted prices, Company Shop says it alsoprovides a financial return to its industry partners, whilst generating positive social and environmental benefits.

The latest partnership between the BRC and Company Shop Group reflects both parties’ long-standing relationship and is another step on the road towards building a more sustainable retail industry, with the reduction of unnecessary food and product waste and greater industry collaboration key.

Helen Dickinson OBE, Chief Executive of the British Retail Consortium, said: “The BRC and Company Shop are at the forefront of driving a greener, more sustainable retail economy. This new partnership creates a powerful collaboration supporting the industry to embed more sustainable practices across its supply chains. As we begin to look at how we might recover from the coronavirus crisis there has never been a better opportunity to rebuild a more sustainable industry.

“We look forward to continuing the work already underway and hope that this partnership will give BRC members the insight and opportunities to make the progress needed to reduce food and product waste.”

Jane Marren, Managing Director of Company Shop Group, said: “We have long worked closely with the British Retail Consortium and its members to help tackle unnecessary waste and to champion sustainable business practices which protect the environment, support businesses stability and maximise positive social impact.”

“It is essential that businesses use surplus management and redistribution as an asset for themselves, for the planet and for communities everywhere. Fluctuations in the supply chain are likely to be greater than ever this year, especially with another national lockdown, but we can help – if stock can be eaten, used or worn, then we can take it.

“This partnership with the BRC is fitting for our collective and ongoing sustainability work, and we very much look forward to continuing to work closely together as we support the industry and our retail partners to achieve their ambitious goals.”

IRI COVID-19 data reveals impact of pandemic on FMCG and retail

The latest IRI Markets Dashboard report has reviewed the FMCG trends to watch and implications for food and drink brands, retailers and supply chains as the world continues to battle the effects of the coronavirus pandemic.

For the first time, the monthly report incorporates US market analysis, in addition to seven Western European countries (France, Italy, Spain, Greece, Netherlands, Germany and the UK). 

Key trends to watch in the US and Europe include:

  • After unprecedented value sales growth (up to +9% at the peak) due to panic stockpiling, FMCG demand growth remains high, but has recently slowed down in Europe (+3%), with the exception of the Netherlands (+13%) and France (+7%). In the US, demand remains 10% higher than year-ago levels. 
  • Food value sales outperform non-food, but declining trends have stabilised in most European countries and the US.
  • Private label sales are slowing down in food and drink in Europe, except in the Netherlands. Brands of mid-size and small companies are the winners in most countries. This aligns with consumer expectations for more local and healthy products. In the US private label sales have not increased as anticipated.
  • In terms of range optimisation that retailers have undertaken, private label in food and drink is significantly more impacted than brands, shrinking respectively by -6% and -3%. E-commerce is the only channel where range is not impacted. 
  • Channels: Online growth remains high. Recently hypermarkets in most countries have seen their performance increase as they are seen to be the best place for social distancing with all products available ‘under one roof’.  Despite a favourable economical context, discounters are struggling against other channels; lack of investment in e-commerce is a weakness.
  • Price growth has started to decrease (+2.7%) as promotions are back (+6.4%) in Europe with the exception of the UK where inflation remains high in food and drink (+7%) until the Every Day Low Price (EDLP) strategy that retailers have recently adopted has an impact. In the US, promotions remain down compared to a year ago, but with some easing evident. 

Opportunities in FMCG:

  • As consumers work from home and dine out less, they will continue to eat more at home, impacting the demand for convenient, healthy and affordable price options. Demand for categories such as healthy food, treats, ready- to-cook, ready meals and home-cooking ingredients will remain high: chilled pastry sales in the UK are at +31.1% value sales.
  • Shoppers have a national supportive behaviour and prefer to buy national to save jobs but at the best price. 
  • Price is important as unemployment is rising again in most European countries and the US. As promotions return to support weak demandthere is an expectation of weak prices (estimation for Italy: average 2021 -0.3%) in the context of a price war.
  • The growing EDLP strategy is mainly in the UK for the moment. It will require suppliers to adapt products to this low-price expectation.
  • Innovations will shift the focus from price to the consumer experience. Brand equity and innovation is the must-have that drives category growth and/or the footfall that retailers need: for instance, a collaboration to provide meal solutions that combine national brands and private label.
  • Range reduction is also an opportunity to refocus the portfolio and align range with demand in the ‘new normal’, ensuring that the right products with the right attributes are available in the right channels.
  • As e-commerce remains the winning channel, supply chain will need to sustain this growth, avoiding out-of-stock issues that is a blocker for shoppers. The momentum of hypermarkets in Europe highlights interest for bricks and mortar as a marketplace. 
  • The success of local and small brands can be acquisition opportunities for companies that need to expand in new consumption universes. 

Additional reports and analysis can be found on the IRI COVID-19 Impact Portal and IRI CPG Economic Indicators, which include FMCG demand and supply indexes and inflation trackers, and more on how the pandemic is impacting FMCG.

IRI is also hosting a series of in-depth discussions with C-level leaders on how businesses are managing through the COVID-19 pandemic.

75% of shoppers ‘will boycott grocery brands’ over environmental concerns

Over three-quarters (77%) of UK grocery shoppers have, in the last 12 months, switched, avoided or boycotted buying certain products, or would consider doing so in the future, based on brands’ environmental policies.

Kantar questioned over 1,200 UK consumers between the ages of 16 and 65+ about their concern over a range of environmental issues, their purchasing decisions based on a brand’s sustainability credentials, environmental responsibility  and whether, as a consumer, they had ever decided to boycott buying a product or switch to another brand based on its environmental reputation. 

Brand loyalty is lowest among the youngest age group of 16-24 year-olds with 87% saying they have switched or might do so, with more males (24%) switching or boycotting brands than females (18%).

Responses differ considerably among generations too, with 40% of Millennials saying they have avoided buying, or decided to choose a different brand over the last 12 months, compared to only 9% of Baby Boomers. However almost half (46%) of this generation of 55-65+ year-olds indicated that while they hadn’t switched or boycotted brands in the last year because of their environmental credentials, they might consider doing so in the future – the highest among all age groups.

Harsh working conditions, environmental pollution and the overuse of packaging are some of the issues consumers think carefully about before purchasing FMCG products. 

Much needs to be done by the FMCG industry when it comes to publicising the positive work it is doing to address the environmental problems resulting from the throw-away, disposable culture we live in today, say 76% of consumers. This sentiment is high across all regions (>73%) with shoppers in the northwest of England (80%) agreeing followed by Greater London (78%). Only 9% considered this issue unimportant.

Mark Chamberlain, managing director of Brand, Kantar UK, said: “Responsible living is being driven by cross-generational groups of ‘woke’ consumers that look towards inspiring brand heroes as change leaders. Governments and organisations are being forced to listen and respond to consumers’ demands for greater transparency as businesses strive to become more purposeful.”

Almost 90% of respondents surveyed agree that brands need to take more responsibility for the waste they produce and the impact it this has on our environment. This sentiment was high across all age groups (>82%) but highest among those aged 65 and over (92%).

Three-quarters of shoppers agree that, due to inaction from many of the world’s governments, they want brands to act as forces for positive change in our society. However, when questioned about their response, over 70% of all consumers agreed that efforts by businesses to protect the environment are ‘too little, too late’, with younger generations of Millennials agreeing most with this statement (78%).

Environmental concerns

Consumers ranked global warming as their number one environmental concern (25%), followed by the overuse of plastic and other forms of packaging (18%) and then deforestation and the loss of biodiversity (14%). They appeared less concerned about the depletion of the ozone layer (4%), extraction of fossil fuels from the earth and natural resource depletion (5%), overfishing of our seas (6%) and household/industrial waste (8%).

These and many other of today’s environmental issues are caused, in part, by a lack of responsibility taken by some of the world’s leading brands, say 83% of consumers; a sentiment expressed most among 25-34-year-olds (88%).

Chamberlain added: “The rise in responsibility and conscious consumerism is being influenced by a top-down approach as the consumer voice grows and pushes forward environmental and social agendas.

“Consumers now expect the FMCG industry to be driven by some direction other than simply making a profit. These values are fast becoming key assets in helping boost brand value whilst projecting a positive corporate image, and by doing so businesses can demonstrate a clear sense of purpose. This is what consumers are now looking for in today’s brands, and this preference will only intensify as the next generation comes of age. Purpose-led FMCG brands enjoy stronger growth and a deeper connection with consumers.”

The study says UK brand Divine Chocolate  is an  FMCG brand that has earned greater trust from consumers due to its commitment to becoming more transparent and respect for the environment. While Waitrose has committed to no plastic and glitter in its Christmas crackers in 2020, Tesco has stopped using plastic bags for home deliveries and Morrisons now allows customers to use their own reusable containers at their meat, fish and cheese counters.

Kantar says the most-loved brands will be those that attempt to achieve a zero-carbon footprint by re-thinking operations and finding solutions that are fully sustainable both for the environment and the business bottom line.

Other key trends:

  • Plastic problem – Over half (53%) of consumers rank the overuse of plastic and other types of packaging as one of their top three environmental concerns. More women than men are concerned about it (58% v 49%), with 45-64 year-olds expressing most concern across all age groups (60%).
  • Buying decisions – 82% of 25-34 year-olds say they sometimes or always check a brand’s commitment towards sustainability, the environment and saving the planet before making a purchase.
  • Taking responsibility – Almost 90% of consumers agree that brands need to take more responsibility for the waste their products create and the impact it has on the environment, with 50% ‘strongly agreeing’. This sentiment is strong across all age groups (>82%) and is highest among the 65+ cohort (92%).
  • Younger generations – Those most concerned with the issue of global warming are 16-24 year-olds, the youngest age group overall, with 65% ranking it as one of their top three concerns; of those, over one-third said it was their number one concern. 
  • Boycotting brands – 76% of consumers said they had boycotted buying certain clothes, had switched brands in the last 12 months or were thinking of doing so because of a brand’s environmental policies.

Tackling the changing nature of retail with a well-prepared supply chain

By Ian Stone, CEO, Vuealta 

Debenhams, House of Fraser, Arcadia – these are just a handful of once-reliable High Street retailers and brand groups who now find themselves battling for their place on Britain’s high streets.

With shops closing at a rate of 14 a day, traditional high-street players are now facing unprecedented levels of competition from online and digitally-focused disruptors. But has the High Street really been crippled? Ultimately the answer is no, it’s simply being reinvented.

In fact, it appears that 62% of shoppers still prefer to shop on the high street, but their expectations have changed dramatically, and retailers need to buck their ideas up if they’re to meet them. As such, there has recently been a resurgence of interest in physical stores from industry giants, but in an entirely new and integrated way. 

It’s now more important than ever that retailers entice customers back into stores with refreshed and exciting takes on what the physical store really is – crossing the realms of digital and physical so customers can get the best of both worlds. That’s why, while many brands are already mastering the art of personalisation online, they’re now also using these data-driven insights on consumer behaviour to bring the same levels of customer experience and relevancy to the physical store.

For example, Amazon has introduced various initiatives from its four-star experience to Amazon Go, which cater to very specific demographics and consumer needs. But the changing nature of retail is moving at an unprecedented rate, making it difficult to keep up. To do so, brands need to begin making the most of their data to carefully map their supplychains and streamline costs.

Keeping up with evolving consumer demands 

Running a physical store is expensive. The property price boom in the UK has only recently reached its peak and May saw retailers suffer their worst month in almost a quarter of a century. To try and overcome these challenges, retailers like Amazon are returning to the high-street with smaller footprints to streamline their expenditures and offer more personalised experiences for their customers. Aldi and Lidl, for example, continuously change their stock depending on seasons and current trends in order to maintain reduced costs and keep their bargain hunting customers loyal.

But today’s customers expect instant gratification and ventures like this are fragile. They rely on a robust supply chain that can cope with consistently changing consumer demand, meaning these new types of stores can no longer rely on traditional supply chain structures. They need expert stock management with the ability to respond and adapt to change at speed – especially when it comes to peak shopping seasons like Black Friday and Christmas. 

The need to be agile in the digital age 

It’s ironic, but the answer to coping with the demands of these new stores lies in the digital technologies that are creating the need for them. In today’s digital age, consumer behaviour can change as a result of one Instagram post, and supplychains need an agile solution that can react just as quickly as the market changes and plan for likely peaks in demand – whether that’s with the ability to deliver more strawberries to Aldi’s Wimbledon store in July or hairdryers to Argos when the latest reality TV star posts an ad on their story.  

While data may now be considered the world’s most valuable resource, it has always been possible to access a variety of external and internal data sources to provide hard evidence to back up insights and assessments when developing plans. The real challenge has been being able to bring all that together, across internal silos and in varying formats, to form a cohesive and clear direction. Now, however, supply chains and their respective retailers have the ability to quickly connect and verify different data sources. By breaking down the silos, they can then access a clear view of what’s needed in order to formulate solid, evidenced-based plans.

That connection then allows supply chain organisations to rapidly harness data from a variety of sources to quickly formulate and adapt plans. That could be rerouting shipments into a distribution centre where demand is higher, deploying trucks and drivers to new shops, or updating promotions and stock availability if deliveries are delayed or demand outstrips supply. And streamlining this process can lead to significant competitive advantages.

The supply chain is the backbone of retail

The speed at which markets change today may appear to render long-term planning redundant, but it does the opposite. The key to keeping up with consumer demand ultimately lies in a well forecasted plan.

When retailers and supply chains plan for all their ‘what ifs’, including unexpected peaks and troughs in consumer demand, they’ll be prepared to respond to any changes that may otherwise expose their fragility and bring them to their knees. And when customers’ needs aren’t met, they will be quick to shout about it online, ultimately harming the business’ reputation. But when these unexpected, and expected, challenges are handled appropriately and responded to in adequate time, retailers can truly reap the benefits of increased sales. 

Planning isn’t a static process, and by no means has a simple beginning and end. If you’re starting out from a disjointed and siloed process, organisations need to be prepared to go through some level of trial and error initially, which will take time and multiple iterations before they get it right. But the end result will truly pay-off as companies will be able to access and collate critical data sources enabling them to reduce the impact of uncertainty and build realistic, actionable responses to all their potential ‘what ifs’.

Retailers and supply chains that do decide to take the planning leap will therefore be in a much stronger position when it comes to keeping their customers loyal by seizing all opportunities that will inevitably appear.

GUEST BLOG: Data holds the key to food sustainability

A raft of new sustainability and food wastage initiatives is undoubtedly focusing the attention of food service and hospitality providers. Otherwise wasted food from kitchens is increasingly being repurposed by a number of great charities, which is a great start but should not distract from the bigger issues within the end to end food production supply chain.

In addition to improving the measurement and monitoring of food production within kitchens, it will be the sharing and analysis of data from manufacturers, 3PLs, processors and hospitality that will be key to achieving the ambitious targets in reducing wastage, Peter Ruffley, Chairman of Zizo explains…

Front Line Responsibility

There has been a plethora of recent initiatives to tackle the £3bn of food wasted in this food service and hospitality sector every year, from ‘Step Up to the Plate’ which encourages organisations to make commitments to measure and reducing their own food waste, to the ‘Guardians of Grub’ from Wrap and ‘Food waste, Bad taste’ from the Sustainable Restaurant Association.

While the target to halve food waste by 2030 may seem ambitious, its goal is to get half of the 250 largest food businesses measuring, reporting and acting on food waste this year under the IGD Food Waste Reduction Roadmap that will require a very significant change in mindset. Right now, many of the companies in this sector looking at food sustainability have passed the buck to those on the front line: signing up with any one of the excellent charitable organisations, such as FareShare, which repurpose and redistribute surplus food.

While this is clearly an important step in ensuring this food is used wherever possible, it does not address the reason for that waste in the first place. Companies are not actively monitoring and measuring the entire food preparation process to better understand the causes of waste.

Data Driven Reduction

Clearly attitudes are changing; the idea that wastage is an inevitable biproduct of food production is being challenged. Given the economic challenges facing the issue, the financial benefits are also compelling: according to research from Wrap, the average benefit-cost ratio for food waste reduction was 7:1 over a three-year time frame.  And key to achieving this benefit is data driven understanding; from measuring food waste, to rethinking inventory and purchasing practices and reducing food over production.

Some steps are easier than others. Food waste is highly visual – and with the right approach companies can quickly map trends. Are some menu items routinely uneaten? Can portion sizes be reconsidered? Clearly it is easier to impose control within those mass market organisations with ubiquitous, often microwaved, food products. In many ways the trend towards fresh, local and healthier eating has made it more difficult to manage and reduce wastage. But measuring trends in food utilisation and consumption can quickly reveal opportunities to reduce portion size, tweak menus and rethink supply.

Changing Attitudes

Cultural shifts in this area will also pay dividends.  Change customer expectations by reducing the extensive menus, for example. It is far easier to predict demand and ensure consistent quality with a smaller product set, which will reduce waste; and publicising the sustainability goal will resonate with the customer base.  

Companies also need to look beyond the kitchen and consider the end to end supply chain – and this too will require a change in attitude from the industry to achieve transparency and understanding.

Right now, an organisation with a supply chain that stretches around the world will typically have no information from multiple manufacturers or third-party logistics (3PL) about wastage or fuel consumption. To achieve any meaningful insight into environmental impact will require a collaborative approach to data sharing if food overproduction is to be addressed right from the beginning of the supply chain.

Image by Lars_Nissen_Photoart from Pixabay

Some logistics firms ‘will evolve to become retailers’

Some logistics companies will evolve to become retailers as the first standardised wave of ecommerce fragments in a variety of creative new ways to sell and add value.

That’s according to a new report from IGD, in association with The Consumer Goods Forum.

Looking at how companies can respond to this change and how businesses will utilise digital technology to become more relevant, the report explores three digital retail models of the future and predictions for an increasingly digital food and consumer goods industry.

Major grocery ecommerce markets will continue to expand rapidly, growing at almost four times the rate of any other channel. Data highlights from the research include:  

  • Asia-Pacific’s online grocery market will grow by 196% by 2023, adding $198bn
  • North America’s online grocery market will grow by 152% by 2023, adding $38bn
  • Europe’s online grocery market will grow by 66% by 2023, adding $21bn

Asia and North America will lead the way on the rate of growth, with Europe set to develop this channel at a comparatively slower pace.

Indeed, grocery ecommerce sales in Asia-Pacific are set to triple over the next five years, with IGD forecasting that in 2023, ecommerce’s share of grocery in Asia (7.5%) will be twice that of North America (3.4%), and close to three times larger than Europe’s (2.5%). 

IGD says businesses are transforming their established operations through digital technologies to enhance their stores, reduce costs and improve connection with customers. Its predictions for rapid evolution include:

  1. Technology-led strategic partnerships will accelerate rapidly. Technology companies will have a much stronger influence on CPG retailing
  2. Advanced digital technology will help physical stores close the data gap on pureplay operators
  3. The commercial trading interface between established retailers and suppliers will be transformed by AI
  4. The most advanced traditional retailers will diversify to become less reliant on selling products
  5. Retailers with the best data capabilities will win in the long term by becoming incrementally better every single day

Ecommerce 2.0 – The first, mainly standardised wave of ecommerce is fragmenting in a variety of creative new ways to sell and add value.  IGD’s predictions for Ecommerce 2.0 include:

  1. Successful pureplays will diversify offline, either by opening their own stores or forming alliances with traditional retailers 
  2. Manufacturer D2C businesses will become a major force and they could be consolidated through a single ordering platform
  3. Specialist retailers and marketplaces will proliferate
  4. Some logistics companies will evolve to become retailers
  5. Social commerce will go global, with platforms integrating with ecommerce to offer more frictionless shopping

Ecosystems A network of retail and consumer services is emerging, linked by logistics, financial services and technology.  IGD’s predictions for Ecosystems include:

  1. Ecosystem evolution will vary considerably by market
  2. More technology companies will evolve into ecosystems, with more major technology businesses broadening their capabilities and services
  3. Ecosystems will recruit a growing number of established businesses to get even closer to shoppers and the wide range of products and services they need and want
  4. New consumer services will be bolted onto ecosystems (e.g. healthcare, leisure, hotels etc.), connecting as many consumer touchpoints on the path to purchase as possible
  5. The centralisation of data and use of advanced technology means that ecosystems will gain real time insights, promoting rapid change, driving greater personalisation for shoppers and raise profitability, a benchmark for all other retail models.

Peter Freedman, Managing Director of The Consumer Goods Forum, said: “While of course growth remains challenging for all of the established players in the industry, many are nevertheless finding that the ongoing disruption presents exciting opportunities. This report presents several ideas for consumer goods and retail companies looking to secure their long-term future, and we’ll be discussing some of these themes at the Global Summit in Vancouver: how scale and agility can impact your business model, how digital technologies will permeate decisions and how new forms of collaboration will help drive the sustainable evolution of our industry.”

Download IGD’s free report: igd.com/digitalretailmodels

Image by StockSnap from Pixabay

Retail woes ‘increase supply chain risk’

A new report suggests that growing pressure on the retail sector could increase risk-taking in the supply chain, resulting in further store closures and collapse of well-known brands.

The analysis, published by Cranfield School of Management and Dun & Bradsheet: ‘Global Supply Chain Risk Report,’ cites the fact more than 7,500 stores closed in 2018, with many high street brands hitting the headlines with profit warnings.

The new data shows increased levels of risk-taking since Q4 2018, with retailers reporting high levels of dependency on suppliers and indicating a propensity to off-shore to low-cost, high-risk countries where suppliers are more likely to be financially unstable.

“We know from recent news headlines about store closures, and the collapse of well-known chains, that the UK retail sector is under huge pressure at the moment. With many consumers preferring to do their shopping online, any retailer with a bricks and mortar footprint will be feeling the pressure,” said Dr Heather Skipworth, Senior Lecturer in Logistics, Procurement and Supply Chain Management at Cranfield.

“Analysis suggests that the sector is sourcing more from low cost regions, which are often associated with heightened risk and potential for supply chain disruption caused by political, environmental, or economic factors. There is also an increased probability of suppliers themselves being financially unstable in these countries. To mitigate against these risks, it is imperative retailers ensure they are practising dual supply strategies to help manage the trade-off between risk and cost and ensure smooth running of operations.”

Chris Laws, Product Leader at Dun & Bradstreet, said: “With retailers under pressure to identify cost efficiencies, it’s more important than ever for them to know exactly who they are doing business with to help minimise risk and ensure compliance with regulations. 

“Having robust due diligence processes in place is key to ensuring the stability of the supply chain and maintaining responsible, ethical procurement practices. In a challenging economic environment, risk-taking is understandable, but retailers need to ensure they have a full picture of supply chain relationships to flag potential risks and protect their reputation.”

Using four key metrics – supplier criticality, supplier financial risk, global sourcing risk, and foreign exchange risk – the Global Supply Chain Risk Report investigates the level of perceived supply chain risk faced by European companies with international supplier relationships.

The Q1 2019 Global Supply Chain Risk Report is available to download now from https://www.dnb.co.uk/perspectives/corporate-compliance/q1-2019-global-supply-chain-risk-report.html

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