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Customer Centricity in Retail Grocery: 3 Effects on Warehouse Operations

On behalf of : Roary Lee

It's 4:30PM, and it's almost time to pick up the kids from daycare. I am a husband, father and executive chef of my household, and I am struggling with choices for tonight's dinner. I'm quickly running out of time. Suddenly, I have a bright idea. I go to my favorite grocer's website which has already defaulted to my home store's page based on my zip code. I link to this week's sales flyer for my home store, and I notice that chicken cutlets are on sale this week. Then, I link to the Recipes page and check out a few suggestions for chicken recipes and voila! The "Basil Chicken with Fresh Tomato Sauce and Cavalier Couscous" recipe sounds delicious, so I decide to go with that. The same page allows me to print a grocery list of items that I will need for the recipe. So, I print the grocery list, grab my keys and head to my favorite grocer before picking up the kids. Life is great. Welcome to the world of customer centricity.

As mentioned on my online profile, I'm health conscious and prefer to consume chickens that have led a happy, healthy lifestyle- in other words, organic, no steroids and cage-free or free-range. Furthermore, we are in the midst of an era wherein consumers are becoming more particular regarding their food choices. Diets and lifestyle changes like Atkins, Paleo, non-gluten, vegetarian, Vegan, Whole30 have fueled more consumer preferences. Also, consumers want fewer preservatives. We have become "informed readers" who want ingredients on the label that we can understand and pronounce...less preservatives! Retailers have responded by making these foods available in their stores usually via specialized sections throughout the stores. The effects on merchandizing and assortment are apparent, but how has this affected operations in the grocers' distribution centers?

Increase in local/regional distribution - Decreasing transport time is one method that is used widely in the grocery industry. Therefore, we are witnessing a trend wherein more local distribution is encouraged. Take Organic Valley, for instance. Based in Southwestern Wisconsin, the cooperative is supplied heavily by local farmer-members. Consumers are growing increasingly concerned around their regional economies. Sourcing locally not only extends shelf life, but it satisfies customers' desire to support local farmers and other businesses.

Increase in barcode-based and RFID technology - The proliferation of technologies including handheld scanners and RFID has improved freshness and product safety For example, barcode scanning reduces errors that can occur when manually inputting data (i.e. incorrect expiration date or lot identifier). Also, programming RFID tags with valuable information including quantity, description and use-by date and attaching these tags to crates or pallets of fresh food has resulted in faster and better stock rotation

Equipment upgrades - In addition to technology upgrades, grocery retailers are also investing in their refrigeration equipment in order to extend shelf-life. I recently read about a Baltimore-based grocer that was experiencing significant spoilage issues. This occurred because their cooling & refrigeration system could not accommodate the high temperatures and humidity during the summer months. The grocer installed a new cooling and dehumidification system which resulted in extended shelf-life and lower energy consumption. Today's consumers are demanding "greener" stores, and equipment upgrades facilitate more energy efficiency while helping to preserve product freshness.

These are just a few of the areas where we are witnessing changes to distribution center operations based on the customer-centric paradigm. All three examples increase the speed at which the retailers get product in front of the customer. The end result: customer satisfaction! By the way, the Basil Chicken with Fresh Tomato Sauce and Cavalier Couscous turned out great. What experiences have you had with this new philosophy, and what do you see forthcoming?

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