Product availability has never been so urgent. | Facing the transportation challenge head-on | Think your customers don't care about accurate product knowledge? Think again.
January 16, 2019
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Value chain insights
Product availability has never been so urgent.
Product availability has never been so urgent.

As we begin a new year, one topic has been top of mind for me -- ensuring on-shelf availability. Believe it or not, many retailers still struggle with the basics of on-shelf availability and the lost sales associated with out of stocks. Take this scenario: When shoppers walk into a store or go online to look for a particular brand of, say, soda and don't find it, it's no big deal to them.

Research indicates that 70% of the time, the shopper simply chooses another brand. The second time it happens, the same 70% of shoppers will either buy a substitute, buy nothing or shop elsewhere. The third time it happens, they simply move on to another retailer that does have what they want.

We know the on-shelf availability (OSA) rate, the measure of products that are not available to buy right now, has been stuck at a stubborn 8% for some time. If that doesn't sound like much to you, translate it into dollars. If your company records $100 million in annual sales, that's $8 million you're leaving on the table.

As omnichannel shopping becomes more ubiquitous, the consumer will want more products, more quickly, all the time. That make OSA a serious challenge, but one that can be met. The Trading Partner Alliance comprised of FMI and the Grocery Manufacturers Association has launched a research project to come up with some solutions.

The OSA challenges, they found, fall into four categories:

Metrics and data. There is no industrywide accepted definition of what OSA is, and therefore no way to measure exactly how serious the problem is. Not everybody is using the same numbers.

Process and practice. Retailers and manufacturers sometimes have trouble working together. When a retailer creates a specific sales program, but the manufacturer can't get the product to it in time, that's a problem.

Organizational issues. Who on the retailer's organizational chart is responsible for inventory management? Is it the supply chain specialist? The category manager? The buyer?

Technology. The industry is still struggling to wrap its head around how and when to use data, and how to analyze the massive amount of data pouring in.

The retail and manufacturing executives involved with the TPA project did come up with some action items to resolve these issues. It is just one of the several industrywide initiatives in which FMI will act as a thought leader in the coming year.

For those attending the FMI Midwinter Conference, I look forward to seeing you in Miami.

Best,
Pat
 
Opportunities in value chain
Facing the transportation challenge head-on
Facing the transportation challenge head-on
Numerous forces have led to significant changes in food retail. One such disruptor is a severe capacity shortage in the trucking industry, which has had a negative impact on the consumer experience. With this formidable challenge ahead, the Trading Partner Alliance is bringing together trading partners at the 2019 TPA Transportation Summit, June 5-6 in Arlington, Va., to discuss this and other transportation challenges in the retail supply chain. Join in for two days of idea sharing, brainstorming and learning. Find out more.
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Think your customers don't care about accurate product knowledge?
Think again.
Think your customers don't care about accurate product knowledge? Think again.

Currently, when shoppers are at home, they're often staring at their computer screens to get information about the products they want before they hit your food retail shelves. Why are they doing this? Why is accurate product data so important to consumers today, and why is it important to you, the food retailer? Remarkably, few in the industry can answer those questions. Anticipating what consumers value and delivering on those needs is a must. Learn more.
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Reliable resources
The Social Responsibility: Launching a road map for the seafood industry
The Social Responsibility: Launching a road map for the seafood industry
The seafood supply chain is a complex one, often long and fragmented. The US seafood market is becoming increasingly transparent as seafood-buying companies make use of the tools available to describe where their seafood comes from. Get a sneak preview at an online road map and a set of tools to be used by stakeholders to improve socially responsible practices in seafood supply chains. Listen to the recording or view the presentation.
 
Securing the supply chain for the future: Transportation logistics
Securing the supply chain for the future: Transportation logistics
The backbone of any sustainable supply chain relies on a performing and reliable transportation network. When dealing with supply chain, it is widely understood that transportation is indispensable to most businesses. For many companies, though, specific transportation trials have become a costly and pervasive issue. What are some of the catalysts for these challenges, and how is the industry dealing with them? Read more.
 
Delving deeper
Plug in: The future of AI in food retail
One thing is certain -- our futures will likely involve more artificial intelligence. But what does that really look like and how will the food retail industry incorporate AI? Will our future with AI look more like a sharing of information between machines and humans in order to make better decisions together? We will have a discussion on this and other key issues at the upcoming FMI Midwinter Conference. Read more.
Learn more: The market power of private brands
US food retailers have long known their private brand shares are generally much lower than those in Europe. However, in this new era of innovation and growth for US private brands, it's worth considering if the US can advance and approach those higher shares in the coming years. Download this webinar to learn more.
Find out: Is data an enterprise asset?
Data has been at the center of many discussions and presentations for years. For many retailers and brands, data is not the strategy, but the intel that informs or supports a broader product and/or consumer engagement strategy. Centralized data is one of the key omnichannel operational imperatives and will be discussed further at the upcoming FMI Midwinter Conference. Read more.
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Food Marketing Institute proudly advocates on behalf of the food retail industry, which employs nearly 5 million workers and represents a combined annual sales volume of almost $800 billion. FMI has almost 1,000 food retail, wholesale member companies, 85 international member companies and almost 500 associate member companies. For more information, visit www.fmi.org.
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