NEW YORK — Foodservice experts know that freshness is an important attribute that is key to staying competitive in today's retail market — whether the competing retailers are convenience stores, supermarkets or other foodservice outlets. Succeeding with it is easier said than done, but operators have more options than ever to help them do so.
Implementing technology-based automation solutions can make a major difference, shared Pat Iannotti, director of retail operations at Price Chopper Supermarkets/Market 32, while onstage at NRF 2024: Retail's Big Show on Jan. 15.
The company had its own forecasting module, but prior to partnering with cloud-based platform provider Invrafresh and rolling out its production planning tool, it always seemed to be behind the trends on what customers were looking for.
"We realized that when you're not keeping up with the trends, when you're not keeping up with the customers, it could lead to one of two things, either overproduction or underproduction," Iannotti said during the "Unveiling Automation's Wow Factor With Invafresh" session.
[Read more: Meeting at the Intersection of Foodservice & Technology]
Iannotti added that overproduction leads to more markdowns, higher shrink and spending labor where it isn't necessary, while underproduction leads to out-of-stocks, disappointed customers, and lost sales and profits.
The biggest difference in the company's processes is that the production planning tool "takes the guesswork out of fresh item management," he said. "There's no more gut feel that our teammates have to use when deciding how much product to make and at what times of the day to make it. They use the system."
The tool isn't a one-and-done solution, as company management continually examines the data to make sure that the algorithm's production recommendations are accurate. Retailers should prepare to put effort into employee adoption.
"It's a constant battle to get your folks to embrace the technology and not use it as a mandate," Iannotti said. "We want to teach them so that they see the value in what they're doing and realize 'boy, this makes my life a lot easier if I use this product.'"
THE HALO EFFECT OF FRESH
The rise of complex, data-based solutions is a major boon for fresh foodservice, according to Matt Schwartz, CEO and co-founder of Afresh Technologies, which seeks to help grocers make smarter decisions throughout their fresh supply chain.
"Fresh food is the strategic heart of the retail business, especially in grocery. It's really what drives people to choose where they shop," Schwartz said during the "Driving Optimal Decision-Making in Fresh Grocery" session.
He pointed out that in the past, even "mission-critical functions" such as ordering, replenishment, production, merchandising and supply chain were processed manually or by using systems that were not designed with freshness in mind. This prevented retailers from doing their best in the category and had a negative effect on the core customer experience.
Offering fresh products doesn't have to mean charging high prices. John Clear, senior director at Alvarez & Marsal Consumer Retail Group, pointed out that leveraging improved processes and performance can drive efficiencies and allow retailers to target customers that may be traditionally underserved in fresh while still making money.
Another important factor is the halo effect that fresh has on the broader store. "Interestingly with my current client and my current engagement, we see a really clear correlation between transaction growth for the whole store and then sales performance and fresh," Clear said.
The key is that the customer who needs to buy fresh items comes back more regularly and adds additional items when they do.
A quality fresh offering also contributes to the overall perception of a store, he noted.
The biggest challenges to success with fresh include high expectations of people who may not have the proper training tools and an ongoing time crunch. The complexity that comes with a responsive, market-focused fresh offering can also add to shrink and difficulty in executing.
"If I look at retailers that are really successful in their businesses and driving that halo effect and fresh, they find ways to drive the experience of fresh in their stores," Clear said. "They're having more of an assortment allocated to fresh food. They're more dynamically adjusting what they offer."
That's where today's fresh-focused solutions can make a big difference, according to Clear. "I think the opportunity then goes back to the how can technology, if it's purpose built for these fresh categories, actually make that a scalable thing for a retailer to roll out," he noted.
NRF 2024: Retail's Big Show, the National Retail Federation's annual show, took place Jan. 13-16 at the Jacob K. Javits Convention Center in New York.