Progressive Grocer

FEB 2017

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108 | Progressive Grocer | Ahead of What's Next | February 2017 Supply Chain Digital Solutions to make it easier to just push a button than it is to go to a store," he observes. "Of course, that's what Amazon is after with Amazon Dash." Kilcourse further contends that changes in consumer behavior are forcing retailers to es- sentially localize their offerings in the physical space, which has huge implications for the way they manage their supply chains. "As the Internet of ings in the home becomes a real concept, it's feasible that in the future, routine shopping lists will be filled automatically, so retailers will be forced to think about making their stores more convenient," he observes. "at means more localized assortments, as well as different floor sets that are based on what neighborhood you're in. Food retailers currently have these huge 60,000-square- foot boxes that have highly standardized assortments. Now they need to think about whether or not that box is too big, whether or not they're carrying too many products, and those kinds of things. It basically breaks a lot of the basic assumptions of their supply chains." While this more futuristic vision of the supply chain may sound a little daunting, Kilcourse points out that "the good news is that if retailers can achieve more localized stores, then theoretically they could have less inventory in their entire enterprise." As grocers work to create more localized assortments and store layouts, they'll need to strive for a much higher level of inventory visibility, he adds. "Grocery already has a fast replenishment cycle, but they need to work toward having perpetual inventory." At least a few retailers are already on board with this thinking, he notes, pointing to Cincinnati-based Kroger, which is trying to estab- lish real-time visibility into all of its inventory. e national retailer is also using technology to monitor cold boxes. Merging Store and Online Functions Retailers also need to seriously consider their response to the direct-to-consumer trend, advises Kilcourse: "Looking at their supply chain, and particularly their distribution centers, they need to think about how they're going to ship to consumers. Are they going to have a whole separate warehouse, like Ocado in London, or are they going to pick from the same inventory in their warehouse?" In addition to the picking and shipping co- nundrums, retailers need to think about how their online and store presences fit together. At least one technology company is advising grocers to follow the example of Amazon when it comes to direct- to-consumer retailing. Pete Catoe, president of Boone, N.C.-based point-of-sale solutions provider ECRS, maintains that "retailers have to make it really easy for consumers to do business with them, wherever they want to do business." Catoe's company is in the process of rolling out a solution called Catapult WebCart Click and Collect 2.0, which is designed to give grocers the same transactional system in the store and on the internet. "ese solutions can't just be pieced together," he explains. "If you look at the Amazon solution, you see a holistic approach. at's exactly what retailers are going to need to do. ey're going to have to make sure that whatever they're doing in the store, they're doing on the web." With ECRS' new design, if a grocer has a store with 12 lanes, but also offers online ordering with store pickup or delivery, it'll now have a 13 th lane that's essentially its web store. "To us, it's just another lane," notes Catoe. "e consumer will make their transaction online, but it will be tied into the store POS system. It's the same data, same customer, everything. is allows the consumer to look up their historical transactions, whether they were made on the web or in the store, redeem their loyalty points, use coupons, etc. We call it 'unified transaction logic.'" e new technology also promises secure trans- actions, as payments are typically made via Token instead of using credit cards, according to Catoe. So far, several of ECRS' current POS custom- ers, including Langhorne, Pa.-based McCaffrey's Food Markets and LaBonne's Markets in Con- necticut, have signed on to start rollouts of Click and Collect 2.0. Catoe hopes to have hundreds of deployments by the end of 2017. He says his target customers are smaller upscale grocers and "super regional" chains. As both smaller, regional grocers and large chains turn to technology firms like ECRS to aid them in supply chain fixes, RSR's Kilcourse advises them to "start small" with discrete projects, and to seek active advice from people on the outside who have experi- ence in other industries. Last but not least, "fail fast," he says, encouraging retailers to move on quickly if the technology isn't working. At the end of the day, even the flashiest technol- ogy doesn't matter if it isn't addressing a business' operational issues, he observes. "Trying to drive transformation through technology is a mistake," he cautions. "You want to drive technology adoption through business transformation." PG "Retailers are going to have to make sure that whatever they're doing in the store, they're doing on the web." —Pete Catoe, ECRS Read about how Walmart is building food safety with blockchain technology at progressivegrocer.com/blockchain.

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