Grocery Store Analytics: Boosting Profitability with Data in the Food Industry

1. Grocery Store Analytics: Boosting Profitability with Data in the Food Industry Even if the global grocery industry grew by 4.5% annually in the past decade, the growth has been quite uneven with deeper problems underneath. The disruption in the industry can be ascribed to three big reasons: new technologies, growing competition, and changing consumer habits and preferences. These forces are always at work, but the magnitude and speed of change have caught most retailers off guard. Retailers today are increasingly turning to Artificial Intelligence (AI) and data to gain an edge over the competition. Many large retailers today are partnering with AI companies to help them understand what to promote, how and when to do it and the price they should sell it to drive sales. Retailers with archaic store replenishment practices are more likely to suffer from above-average spoilage levels than competitors who extensively use forecast-driven store replenishment technique. A key driver of profit in the grocery industry is predictive analytics and retailers are leveraging predictive technology tools to unleash the power of data for operational and customer-facing functions. Priority Areas Wherein Retailers Can Use Predictive Analytics Today a grocer’s marketing effort must go beyond a weekly mass mailer as these are no longer effective. Since the customer has moved on to mobile coupons on smartphones from coupon clipping, the marketing is now a two-way street. Customers are driving how retailers market their products by stating

2. their preferences, price sensitivity, location, basket sizes through their browsing behaviour. The marketer must make sense of this digital stream and come up with real-time targeting, promotions, dynamic pricing, and replenishment. Here’s a list of priority areas where retailers can take advantage of analytics for food & grocery retail: 1.Campaign management: With predictive analytics, marketers can optimize individual campaigns armed with a specific purpose for a specific segment of customers. Without changing the marketing budgets, grocers can fetch better results. 2.Baseline forecasting: For perishable products, it is important to get daily forecasts right to prevent spoilage without impacting availability. Through smart forecasting systems, retailers can consider weekday disparities in estimating on a store and product level and adapt to fluctuations in local demand patterns. 3.Promotions: Shoppers unconsciously give away details about themselves to grocers about their online and offline behavior. Grocers use predictive analytics to gather information from these acts, match them with real purchases, thereby helping them anticipate customers’ needs. Thus, it helps retailers build smarter and rightly targeted loyalty programs and promotions. 4.Weather patterns: Weather significantly impacts demand –for center-store and fresh products. With short shelf-lives limiting the chance to use buffer stock to lower the impact of demand variations, it becomes important to take weather fluctuations into consideration when preparing the stock of fresh products. 5.Shopper targeting: Shopping as an act with the customer at its centre forms a unique pattern, especially with access to granular data like customer demographics. Retailers can subsequently use this to their advantage, for instance, to create customized, focused offers, targeted specifically at particular shoppers. 6.Pricing: Retailers who often use pricing as a tool to pull in customers can use predictive analytics to get answers to questions that retailers have such as: • What will be the impact of competitive pricing on sales? • What is a customer’s optimal attainable price? • How often to launch price-based promotional activities? • What is the correct price point to maximize sales? For traditional grocers, a return to gainful growth won’t materialize without bold moves and tough decisions. Competitors are already moving quickly, and they are making the most of technology to enhance operations and persistently pull customers away from conventional grocery stores.