5 Trends, Drivers, and Challenges in Grocery Retail

2 Five Trends, Drivers, and Challenges in Grocery Retail

Grocery retailers pursue operational efficiencies to retain customers

The pandemic has changed grocery retailing forever. Consumers now have many more choices, with new online mass merchants entering the grocery space and quick service delivery changing shopping behavior.

Economic uncertainties and inflation are driving consumers to explore new products. They’re looking for merchandise that aligns with their lifestyle and beliefs yet is sustainable, healthy, and ethically made.

For grocers, these forces, along with labor and general cost increases, are pushing margins down, so they’re seeking efficiencies across the supply chain to keep prices competitive and customers loyal. In addition, to continue offering quality products that suit consumer preferences, grocery retailers are providing a greater variety of private label and national brand products on their store shelves and channels.

Serving customers nowadays involves a complete reengineering of every aspect of the grocery operation, affecting sourcing, procurement, replenishment, and allocation, especially with perishables, to deliver on a retailer’s brand promise.

Consumer insights

Consumers favor physical stores for groceries, and they point to the availability and variety of products as crucial factors in their shopping experience.

Oracle Retail’s latest retail consumer survey shows that 68% of consumers prefer to buy groceries at physical stores and that 53% have returned to in-store shopping. Generation Z (55%) and those with children (54%) prefer online grocery shopping.

A wide variety and assortment of products, including private labels, was pointed out by 63% of survey respondents when asked what they associate with a great grocery shopping experience.

Those who prefer in-store shopping

Percentage by country Percentage by segment

80% Australia 74% Baby boomers (57+)

79% US 66% Families w/o children

75% UK 67% Men and Gen X

69% Italy 70% Millennials

58% Brazil

50% China

Five Trends, Drivers, and Challenges in Grocery Retail 3

http://www.oracle.com/industries/retail/consumer-research/

4 Five Trends, Drivers, and Challenges in Grocery Retail

The following trends and drivers are forcing the grocery industry to transform, resulting in permanent changes in consumer shopping habits, ongoing challenges in maintaining a superior grocery store experience, and consumer exploration of new brands.

1 Economic uncertainties and inflation

Inflation has led consumers to buy less and care more about value. They seek promotions and deals to maximize their spending and maintain buying power.

Our research reveals that 75% of consumers do more online and in-store price comparisons, and 32% connect personalized offers and discounts with a great grocery shopping experience.

For retailers, inflation can lead to cash flow disruption, excess inventory, high

Mike Webster

storage costs, lower revenues, and reduced margins, which limit the ability to invest in new technologies and shopping experiences.

Retail Keynote: The Future of Retail Delivered Today (41:09)

Watch Mike Webster, senior vice president and general manager at Oracle; Sara Ciotti, vice president at Giant Eagle; and Rudy Kulas, managing director at Deloitte, discuss the future of retail at CloudWorld 2022.

Controlling all aspects of the operation and eliminating waste are essential for the retail business. Connect data within the grocery retail operation and share relevant information with individual stores, workers, supplier partners, and consumers to generate trust, increase profitability, and create space for innovation.

https://www.youtube.com/watch?v=whEUqeowQdA https://www.youtube.com/watch?v=whEUqeowQdA

5 Five Trends, Drivers, and Challenges in Grocery Retail

2 Supply chain disruptions

The entire retail supply chain has been affected by rapid and unpredictable fluctuations in product prices and availability that have produced abrupt shifts in consumer behavior. These changes have forced retailers to rethink their fulfillment models, streamline their merchandise assortment, and rethink their supplier network to meet consumer demand. Retailers must balance supply with demand when dealing with razor-thin margins and customer service as a differentiator.

Consumers have some patience when there’s a lack of inventory, but not much. When consumers can’t find an item they want, our research indicates:

39%

32%

22%

8%

will try an alternative product at the same retailer

will wait for the retailer to restock the desired product

will go to a different retailer because they’re unwilling to wait

will ask an associate to ship it from another store

To meet consumer needs, grocery retailers are adopting different modes of predictive analysis to plan and prioritize supply and demand, change supply chain processes, explore private label offerings, and expand supplier networks.

Five Trends, Drivers, and Challenges in Grocery Retail

3 Rising consumer expectation

Faced with unexpected challenges during the pandemic, consumers have increasingly looked for brands that make their lives easier and meet them at the point of demand. For retailers, differentiating themselves from competitors through interactive and engaging omnichannel experiences is crucial.

Research shows that customers want grocery retailers to dive deep into their preferences for products and services.

Our survey respondents said a great grocery shopping experience includes:

In-stock inventory and a wide variety and assortment of products, including private labels

A fast checkout and easy-to-find floorplan

Personalized offers and discounts and customer service

Delivery options (curbside pickup; home delivery; buy online, pick up in-store)

37%

36%

32%

28% Having the customer at the center of a retailer’s strategy with solutions that help integrate buying behavior data with store operations, planning, the supply chain, and omnichannel is vital to enhancing the consumer experience.

Deliver localized groceries and improve private label offerings.

Request a demo on how Oracle helps grocery retailers improve their operational efficiency.

Five Trends, Drivers, and Challenges in Grocery Retail 66

http://www.oracle.com/industries/retail/grocery/demo/

7 Five Trends, Drivers, and Challenges in Grocery Retail

4 Sustainability and private labels

Consumers want choice, not only in the assortment of products offered for purchase but in how they affect the environment. Sustainability and private labels are gaining traction.

Consumers are open to exploring new products. However, 60% of respondents in our survey said they intend to stick with store brands or shop a mix of new finds and preferred brands, while 40% of consumers surveyed will buy their preferred national brands. Private label and store brands rise in popularity when economic uncertainty rises, creating opportunities for grocers to boost their margins.

To buy with confidence, consumers want information about products and their provenances. Consumers also want the ability to resell, reuse, recycle, refill, and repair products.

Woolworths South Africa ensures ethical product sourcing with Oracle Retail

“We believe that setting ambitious sustainability goals challenges our business to do more and inspires our suppliers to collaborate. Oracle Retail Brand Compliance Management guarantees that every product sold at Woolworths has a sustainability attribute that can be identified, measured, audited, and reported.”

Karin Carstensen Scientific and Regulatory Affairs Manager, Woolworths South Africa

A brand’s values, seen, for example, in their approaches to sustainability and ethically sourced materials, matter—57% of consumers in our survey said they’re more inclined to buy products aligned with their values.

Consumers are pressuring retailers to enact sustainable policies and processes that demonstrate efforts to safeguard the environment. Sustainability should begin early in the supply chain as grocers evaluate key suppliers and partners.

http://www.oracle.com/customers/woolworths/ http://www.oracle.com/customers/woolworths/

8 Five Trends, Drivers, and Challenges in Grocery Retail

5 People and productivity

To keep up with the daily dynamism of the grocery industry and keep customers satisfied, retailers must attract and retain talented workers.

With tight margins, properly balancing workers and technology across the entire grocery retail operation is imperative, especially on the store floor.

Most consumers prefer in-store shopping, but 37% of all consumers in our survey say that a slow checkout experience causes frustration. Self-service kiosks can speed up checkouts.

Grocers should create an employee experience that attracts the best workers. Technology can create efficiencies by automating tasks and real-time insights so that employees can make smarter, more strategic decisions.

The workforce has changed, and grocers now compete for talent with disruptors such as Uber, DoorDash, and Instacart. Best-in-class human resource technology lets grocery retailers recruit, onboard, educate, and retain full-time and seasonal employees.

Albertsons produces payroll 50% faster on Oracle Cloud Infrastructure for 265,000 employees

“Because we run payroll weekly, it’s critical to make sure all the different divisions and groups are paid within a proper timeframe. The Exadata migration helped us immensely on that front. We have seen a huge gain in performance, and the overall time it takes to run payroll has improved significantly.”

Sambuddha Ghosh Solutions Architect, Albertsons

http://blogs.oracle.com/retail/post/albertsons-produces-payroll-faster-on-oracle-cloud-infrastructure http://blogs.oracle.com/retail/post/albertsons-produces-payroll-faster-on-oracle-cloud-infrastructure

Five Trends, Drivers, and Challenges in Grocery Retail

Grocery retailer’s customer spotlight

7-Eleven Mexico The convenience store chain implemented Oracle Retail to simplify operations and facilitate the customer experience. In Mexico, today’s consumer demands access to brands and a differentiated experience. 7-Eleven Mexico embraced technology, empowering them to keep up with changing market demands. 7-Eleven Mexico operates 1,950 convenience stores supported by eight distribution centers and 18,000 collaborators across 15 states in Mexico.

They implemented Oracle’s solutions to automate best practices, improve communication among stores, and provide more complete data to empower associates.

Oracle Retail solutions: • Oracle Retail Merchandising System • Oracle Retail Price Management • Oracle Retail Sales Audit • Oracle Retail Invoice Matching

Read more

Five Trends, Drivers, and Challenges in Grocery Retail 99

http://blogs.oracle.com/retail/post/7-eleven-mexico-deploys-oracle-retail-to-streamline-and-simplify-operations

Five Trends, Drivers, and Challenges in Grocery Retail

Giant Eagle COVID-19 brought a surge in customer demand and high variability in supply for grocers such as Giant Eagle, which operates more than 200 US supermarkets. See how Giant Eagle continues to invest with Oracle by expanding programs centered on consolidated sales and margin forecasting.

Read more

Carrefour Operating with more than 13,000 stores worldwide, including more than 5,000 supermarkets in France alone, Carrefour is combining its global store network with online shopping websites unique to each country. Carrefour chose Oracle Cloud Infrastructure to accelerate the migration of their critical databases.

Read more

The Kroger Company One of the largest retailers in the United States and one of the top employers in North America, with 2,750 grocery retail stores, an ecommerce site, 35 manufacturing facilities, 1,885 fuel centers, and 2,256 pharmacies, uses Oracle Retail solutions. Agile people management is crucial in the retail industry. To quickly adapt to meet the demands of the business, Kroger needed to move off a very complex and customized environment that included 15 disparate HR legacy applications.

Read more

Explore Oracle Retail grocery solutions

Five Trends, Drivers, and Challenges in Grocery Retail 1010

http://blogs.oracle.com/retail/post/grocery-retailer-giant-eagle-selects-the-oracle-cloud http://blogs.oracle.com/retail/post/carrefour-chose-oracle-cloud-infrastructure-to-accelerate-migration http://blogs.oracle.com/retail/post/kroger-chooses-a-cloud-based-hcm http://www.oracle.com/industries/retail/grocery/

11 Five Trends, Drivers, and Challenges in Grocery Retail

The power of Oracle Retail Platform

Grocery retailers are constantly evolving to deliver sustainable business models with agility and flexibility to expand product offerings.

Retailers that can standardize processes around proven best practices and provide teams with the right AI and machine learning tools will react quickly and build a blueprint for agility to serve customers with the experience they prefer. And retailers that can leverage the power of a retail platform will stay on top.

Oracle provides a complete cloud infrastructure platform for retailers to strengthen their merchandising core, create efficient warehouses that improve inventory visibility, and consolidate customer and purchase data for more effective decision-making. Oracle Cloud Infrastructure (OCI) is available globally. It offers a comprehensive portfolio of cloud services for any retail workload, from cloud native applications to high-volume enterprise workloads, to help retailers innovate and accelerate their business.

12 Five Trends, Drivers, and Challenges in Grocery Retail

Inventory control: Control day-to-day retail merchandising activities with seamless, accurate execution.

Back-office operations (ERP): Model and plan across finance, HR, the supply chain, and sales; streamline the financial close process; and drive better decisions.

Private label management: Source ethically and profitably, maintain brand compliance, and improve sustainability and financial performance.

Supply chain planning and execution: Create optimized plans and position inventory at the right place, at the right time, in the right quantities, from suppliers to warehouses, to stores and customers.

Category management: Use retail AI and machine learning (ML) to help you make better decisions on assortments, offers, inventory, forecasts, planning, buying, and pricing.

Customer experience: Reduce costs, improve efficiency, empower associates, and enhance customer service by predicting expectations, personalizing offers, and streamlining operations.

Human resources: Plan, manage, and optimize associates’ processes across your retail enterprise.

http://www.oracle.com/industries/retail/merchandising/cloud/ http://www.oracle.com/performance-management/ http://www.oracle.com/industries/retail/brand-compliance/ http://www.oracle.com/industries/retail/supply-chain/cloud/ http://www.oracle.com/industries/retail/planning-optimization/products/ http://www.oracle.com/industries/retail/marketing/ http://www.oracle.com/human-capital-management/

13 Five Trends, Drivers, and Challenges in Grocery Retail

Accelerate your retail software projects

Available to our retail customers and partners, the Retail Reference Model (RRM) is a collection of detailed implementation information that includes a glossary, business processes, and technical models based on retail best practices.

Oracle solutions empower grocery retailers to:

• Get closer to the customer: Customers should be in a retailer’s data model to better understand wants and preferences and use customer data throughout the process.

• Build a blueprint for agility: The pace of change continues to increase. Retailers need agility in their operations, and Oracle Retail can help build that blueprint.

• Create space for innovation: Retailers need to create innovation in retail processes and their people, but this requires freeing up resources.

http://www.oracle.com/industries/retail/products/reference-model/

14 Five Trends, Drivers, and Challenges in Grocery Retail

the customer and to drive agility across the business. Oracle Retail customers can deliver an authentic customer experience while protecting their people, processes, brand, and customers.

About Oracle Retail

Oracle is the platform for modern retail. Oracle provides retailers with a complete, open, and integrated platform for leading retail solutions, cloud services, and hardware that are engineered to work together. Innovative retailers use Oracle solutions to pivot to

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