The growth of fresh and perishable products has been steady and strong and some rapidly growing chains have used them as the foundation of their store offerings. The recent Supermarket News gallery of the top alternative formats in food retailing shows how pervasive the focus on fresh and perishable is. It also shows on how many fronts grocery chains are facing intense competition. In addition to an increasingly challenging competition landscape, there are changes in the consumer marketplace. More Boomers, who have been the dominant demographic group to which food retail catered for years, are retiring and more Millennials, who demonstrate a penchant for fresh, non-processed food, are in the workforce and shopping for groceries.
Given the changes in both competition and consumer preferences, a shift to a focus, or at least a greater emphasis on fresh and perishable products may be a wise strategic move. Keeping up with or maybe gaining a leg up on competition is a sound move. Having product offerings that are appealing to a large consumer group coming into more and more disposable income can lay a foundation for solid growth for the time to come.
However, just because there may be strategic value in making such a move, does not mean that you are ready to make it. Bad execution will not only give your store a black eye, but it may damage your reputation in ways that are tough to recover from. What happens to your customer loyalty if you mishandle product and foodborne illness is the result? The Food Safety Modernization Act (FSMA) going into effect later this year through next spring has provisions that retailers, not just manufacturers, need to be in compliance with. What happens to your image, and your sales, if your local media reports that you are in trouble with the FDA for violating food safety rules? (You can learn more about the retail requirements of FSMA in this article.)
Be sure that you have the tactical resources available to execute this change well if you are going to move in this direction. A few thoughts:
• Do you have the right vendor partners? Fresh and perishable products inherently have short shelf lives. They need to turn quickly or be replaced quickly to be at their peak. Are your current vendors up to the task of your expansion in this area? Are there others available that you feel confident can keep your shelves full and customers happy?
• Do you have the right control systems? Excess inventory of products that have limited shelf lives can be a financial disaster. Do you have systems that allow for tight inventory levels, rapid replenishment, and quick adjustment based on consumer demand and seasonal availability? Can you find and fix areas of inventory shrink before they become damaging?
• Do you have the right people? Are they on your staff already? Or are there current staff who, with the right training, can manage a shift in this direction for you? If not, are the right people available for you to bring in? You need to find people who are not only skilled in managing something as fast-moving and dynamic as a fresh and perishable program but who also are a good fit with your company culture and personality. For additional thoughts on the importance of hiring the right people, check out this article.
My advice is not that you avoid considering or acting upon the potential strategic opportunity to make fresh and perishable a greater part of your offerings. My advice is that you have the right tactical and practical resources to do it right.
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