The Evolving Role of the Grocer
Based on recent research from IDC Retail Insights, grocery retailers have a distinct interest in transforming their supply chains to something akin to what many in the industry are referring to as a "smart" supply chain.
“Clearly the time of the smart supply chain is upon us, and grocers are in a unique position to leverage the transformation of their supply chains to respond to customer needs for greater visibility, and industry demands for compliance and traceability efforts,” said IDC Retail Insights' Research Director Leslie Hand in a recent blog article.
Hand’s predictions for the grocery segment will have major implications for consumer goods manufacturers, especially when it comes to private label competition and product traceability.
Private Label Growth: Central to grocers’ growing effort to build visibility into the food supply chain is the desire to strengthen their brand, which today includes an increasing amount of store-brand and private-label product that thrust grocers into the role of manufacturer or at least product developer and steward.
This means that retailers will likely be more involved in the detail of product development. “So, consumer goods brands can expect more innovation in packaging and formulation for retailers that strongly position their private brands,” advised Hand.
Traceability: To build confidence in store brands, grocery retailers must incorporate a level of traceability from the design phase, through sourcing and manufacturing, to the delivery of the finished good to the customer.
“Retailers will want to collaborate more with consumer goods companies, particularly regarding traceability and recall management, as these capabilities are designed to support all products,” said Hand.?
On the flip side, however, she said that supplier collaboration can be one of the biggest challenges for retailers as they move down the path of PLM and traceability:
“There is an overarching challenge for retailers to find the right balance in the private label ecosystem. They must meet different expectations from the consumer, and continue to manage their relationship with the manufacturers of the branded products in their stores.”
To read Leslie Hand’s blog entry, “Smart Supply Chain Goes Hand In Hand With Customer Service For Grocery Retailers”, in its entirety, click here.
“Clearly the time of the smart supply chain is upon us, and grocers are in a unique position to leverage the transformation of their supply chains to respond to customer needs for greater visibility, and industry demands for compliance and traceability efforts,” said IDC Retail Insights' Research Director Leslie Hand in a recent blog article.
Hand’s predictions for the grocery segment will have major implications for consumer goods manufacturers, especially when it comes to private label competition and product traceability.
Private Label Growth: Central to grocers’ growing effort to build visibility into the food supply chain is the desire to strengthen their brand, which today includes an increasing amount of store-brand and private-label product that thrust grocers into the role of manufacturer or at least product developer and steward.
According to a recent study from RIS News and IDC Retail Insights, almost 30 percent of grocers' product mixes are comprised of more than 15 percent private brands, and half are continuing to grow private label brands as a percentage of all products sold. Almost 59 percent say that private label assortments we will grow by 1 percent to 5 percent of the total mix, and more than half are increasing the percentage of premium brand items in the mix.
“As retailers stake more on private brand success, they invest more in leveraging PLM and traceability capabilities to deepen consumer relationships by being more transparent and trustworthy, and efficient and effective at the same time. This will strengthen retail brands over time,” said Hand.This means that retailers will likely be more involved in the detail of product development. “So, consumer goods brands can expect more innovation in packaging and formulation for retailers that strongly position their private brands,” advised Hand.
Traceability: To build confidence in store brands, grocery retailers must incorporate a level of traceability from the design phase, through sourcing and manufacturing, to the delivery of the finished good to the customer.
“Retailers will want to collaborate more with consumer goods companies, particularly regarding traceability and recall management, as these capabilities are designed to support all products,” said Hand.?
On the flip side, however, she said that supplier collaboration can be one of the biggest challenges for retailers as they move down the path of PLM and traceability:
“There is an overarching challenge for retailers to find the right balance in the private label ecosystem. They must meet different expectations from the consumer, and continue to manage their relationship with the manufacturers of the branded products in their stores.”
To read Leslie Hand’s blog entry, “Smart Supply Chain Goes Hand In Hand With Customer Service For Grocery Retailers”, in its entirety, click here.