There is no doubt that as people work
longer hours and children spend more time in school and at after-school activities, there
is less time to shop for, and to cook, full meals. The world’s food is becoming far
more grab-and-go.
The likes of Tesco in the United Kingdom,
and other supermarket chains, have seen this shift in behavior and are trying to respond
accordingly by creating and installing smaller versions of themselves in town and city
centers, so that they can maintain market dominance. It is ironic, since a decade ago,
being in-town was uneconomical – hence, the massive out-of-town stores on acres of
land. Now, as affluent workers across the world return to living in city centers, it is
time for the urban assault.
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By positioning themselves in the very areas
where they ousted the small independent shops, the big boys could carve a big slice out of
the convenience store pie, with ready-made meals, prepared salads and party food. At
present, the convenience food market, which is estimated at $15 billion, is highly
fragmented, with independent corner shops still accounting for 57%. That percentage will
drop.
In theory, it makes sense for the
supermarkets to create these ‘metro markets.’ In practice, however, they must
resist the temptation to run the business in the exact same manner as the suburban stores
– especially when it comes to the Supply Chain.
Assuming that the supermarkets work with
suppliers who have Efficient Response/Efficient Consumer Response (ER) in place, the same
principle can work for smaller, in-town stores because the technology already exists;
however, it needs to be tailored to the urban market. Less shelf space, smaller storage
areas, decreased variety, different ranges and a high turnover of customers and inventory
mean deliveries on a much tighter leash. It also needs to be extremely flexible, so that
if there is a sudden run on ice cream or ready-to-eat lettuce, there is always fresh stock
to replace it by the end of the day or first thing next morning. The convenience store is
anything but, if it continually runs out of stock.
The principles of ER provide a sustainable
source of competitive advantage for businesses on both the demand and supply sides of the
Food & Beverage Industry. Hand in hand with better customer service is improved
customer loyalty – for the retailers from its shoppers, and for suppliers from the
retailers. With increasing shopping choices for urban dwellers, office workers and
commuters, customer loyalty will be the key to survival. Since overall product pricing
will need to be higher due to higher overhead costs (such as in-town rents) and the
dominating presence of pre-prepared meals, customers will be returning to a store
primarily because of convenience and not prices. Convenience will not only mean that it
will be easy for them to pop in-and-out, but also that their favorite items are always
stocked and fresh.
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By GlobalDataER focuses on many areas of business, but
the three main functional or strategic areas are:
- The whole Supply Chain
- Customer Service
- Logistics
The installation of these ‘metro
markets’ could provide the perfect opportunity to design an even leaner and meaner ER
strategy while still focusing on these areas.
Whether providing to the supermarket chains
in their ‘super stores’ or their ‘metro markets,’ Food and Beverage
companies should ultimately strive for Supply Chain transparency to increase the
likelihood that demand is always met by supply. The steps to take to achieve this goal
are:
- Clear communication and cooperation between
producer, manufacturer, distributor, retailer and consumer - Analysis and redefinition of all the
processes involved in the flow of goods - Industry and enterprise-wide optimization
with the objective of achieving larger contribution margins
It has already been proven that ER can
significantly improve speed-to-market. If a Food or Beverage manufacturer can provide a
seamless process that eliminates delays, inventory surpluses or gaps, and provides
improved customer service to the ‘metro retailer’ and therefore the urban
consumer, it will be a major contributor to the success of the suburban supermarkets
becoming city slickers.
About JBA
JBA is a leading worldwide supplier of enterprise management software
to the highly competitive mid-market sector. Typically, JBA customers gain competitive
edge from the rich functionality of our products combined with our @ctive™ Enterprise
strategy. This strategy optimizes business process performance, based on international
best practices, to consistently reduce costs and improve margins without continuous
systems development.
JBA industry focused solutions meet the
exact needs of selected target industries by incorporating industry best practice
functionality integrated with best of breed partner products and services. In the Food and
Beverage, Apparel & Footwear, Automotive Supplier and Electronics sectors, JBA
Industry Teams skilled in both industry and products, optimize their use for each
customer.
In 1998 JBA completed its 18th year of
continuous growth with revenues over $470 million, growth built on our consistent
investment in people, products and most importantly our customers. JBA employs 2,700
people, supporting over 4000 customers in 53 countries.
About JBA Food & Beverage
JBA Food and JBA
Drinks, our market leading software, provide the most comprehensive and flexible
business solutions available to the Food & Beverage Industry. They have been developed
as a result of a close understanding of the issues crucial to the Industry, and the
extensive expertise gained working with customers in the Dairy, Bakery, Meat &
Poultry, Brewing, Wines & Spirits and Wholesale Distribution sectors.
For more information:
Steve Loynes, Text 100, Tel: 0181 242 4235,
stevel@text100.co.uk
Michelle McMahon, JBA, Tel: 01527 496234, michelle_mcmahon@jbaworld.com
