The food and agriculture supply chain experienced unprecedented disruption and is unlikely to return to previous norms in the short to medium term. Key drivers include:
Quality Food Demand Rising Due to Increasing Health Concerns
With the increased media focus on obesity in adults and children, as well as the overall push to remove harmful ingredients in food (such as excess salt, MSG, trans-fats, and sugar), consumers are looking to purchase healthier food when shopping. Although not all consumers are shifting to organic products, there is an overall shift to purchasing food that is fresh, rather than frozen, and generally lower in fat and sugar content, compared with products of even just a few years ago. As a result, there has been an increased interest in health-focused supermarkets, as well as an increased demand for healthier-food sections within traditional markets.
Extreme Couponing Creating Discounting Wars
Consumers have increasingly been able to access coupons via the Internet and are using them as a way to save more money than ever before. Grocery stores are being forced to honor both manufacturers' and competitors' paper and virtual coupons to keep consumers from defecting, either to other supermarkets or to large warehouse clubs or superstores, which can often match or beat them on price and product selection.
Increase in Online Shopping, Home Delivery and Pick Up
Supermarkets are finding that consumers prefer the ability to shop whenever they want, and then select either home delivery or grocery pickup options. Expanding delivery operations is a high cost that has eaten into the profits of supermarkets. The cost of more fulfillment centers to meet these needs is also a challenge for the traditional players with larger fixed costs (stores).
How do you monitor the financial and operating health of your suppliers?
Knowledge of potential supplier weakness or trouble is important, especially with respect to ensuring that the supply chain is operating smoothly and that product can be quickly automatically restocked, including when sales or other promotions are being run.
What forecasting tools do you use for predicting sales numbers and product mix changes?
Have these tools and benchmarks been reassessed to ensure data can be easily accessed, analyzed and reported?
Are you able to fulfill online demand for delivery?
With the demand for delivery having skyrocketed over the pandemic and the majority of stores still to find to most efficient and profitable way to meet those orders it adds extra pressure to source at the right cost to keep overheads low.
How have you incorporated healthy or organic products into your offerings?
Consumers are increasingly looking for healthy or organic products when grocery shopping. Identifying key products that are being asked for by consumers is a necessary research function that must be done on a fairly regular basis, as consumer tastes and attitudes change frequently.
How has the emergence of lean packaging impacted the way products are displayed?
The use of smaller, more efficient package types can often yield more shelf space to stock a greater variety of products.
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