New grocery tech has driven overwhelming sentiment and buzz in the first few months of 2019. Much of it centers around the growing abundance of really cool digital and mobile technology for taking orders, fulfilling orders and delivering them to consumers.
While shiny new technologies can bring great benefits, they may underdeliver on the promise if your organization has been living with underlying challenges that have gone unsolved for years … like out-of-stocks.
Corsten and Gruen recently updated their groundbreaking study on OOS and introduced a new measure, NOLA (non-online available), which identifies products that are visible in the retailers online catalog, but unavailable for fulfillment. They calculate the NOLA level is 15% in the eCommerce world, costing upwards of $22 billion!
At the same time the grocery industry has barely improved on the stubborn 8% in-store OOS measure despite decades of trying. When in-store order picking enters into the equation, this issue can have a magnified impact.
So, we still have an availability problem, and we might be creating an even larger one by exposing our shortcomings on-line to more shoppers who come with more demanding expectations. Because of that, lots of intriguing technology doesn’t get very far in its shine.
Some retailers are deploying robotic order fulfillment centers that can pick an order without human intervention. Very swift and efficient, but they can’t pick NOLA items.
Inside the store there is much ado about self-check-out systems that aggregate purchases using a mobile device while the shopper selects items in the aisles. Also the greatly-hyped “just walk out” technology at Amazon Go convenience stores. These sound great, and are indeed frictionless, but one can’t simply walk out of the store with their purchases when the desired product simply isn’t there.
How about autonomous delivery? Super cool right? My order is delivered to my door in a driverless vehicle – talk about shiny! Well, even the fanciest self-driving buggy can’t magically bring me the spaghetti sauce I need for dinner if it’s not available before it leaves the store or the picking center.
Even a technology that’s been around and successful for a while, Price & Promotion Optimization, can help make a product more appealing, but this only can drive store take-away if it’s actually available for purchase. On-line, it can be grotesquely frustrating when a grocer’s weekly flyer generates a great meal idea – at a great price – only to have the product sold-out when ordering.
It’s made all the more maddening when the suggested substitution by the retailer or order picker isn’t even remotely close to the solution as the Wall Street Journal reports. It begs the question: How effective is a promotion that leads ultimately to a rain-check or substitution at a higher price?
Compete on Availability
For those retailers who resolve the in-store and online availability problem, it becomes even more strategic to compete on item availability. Perpetual inventory and computer-generated ordering are foundational capabilities for keeping shelves fully and properly stocked.
Grocery retailers who can unequivocally say they are in-stock 99.95% of the time (like Itasca retailers), gain a leg-up over-time and create a trusted level of service that Walmart has historically struggled to deliver. It wins big versus third-party delivery services that are notorious for their high item substitution rates. Against Amazon, an in-stock advantage means the consumer gets the product they need for store pickup or while they are in the store and not have to wait for later delivery.
Product availability might just be the one thing that could hold the grocery industry from achieving its collective goals, while at the same time rendering some fantastic technology moot. NOLA, in actuality, exposes more friction.
So, grocery retailers should seriously consider solving their underlying stocking conditions before exposing their shortcomings to loyal and prospective shoppers by implementing other cool tech.
State of the art ordering technology has been easy to place lower on the priority list until now, but this gap could render today’s sexy technology ineffective.
Yes, new grocery tech is cool, but long-time problem-solving technology is better… Itasca retailers have proof!