In the second instalment of Retail Times’s definitive Guide to Profitable Fresh Foods Retailing, launched in collaboration with Applied Data Corporation (ADC), we explore how retailers and food service operators can optimise their fresh food sales and margins with scales management software
It’s no surprise leading grocery retailers and food service operators are setting their sights on fresh foods to drive business growth.
Insight from global information and measurement company, Nielsen, reveals fresh foods comprise 30%-60% of total grocery spending worldwide.
Its Why retailers are keeping it fresh study (March 2013), found fresh foods have not been spoiled by inflationary heat.
Indeed, in Asia-Pacific, fresh foods contribute as much as 60% of food, grocery and personal care expenses across all retail channels on average. In Europe, fresh foods contribute 53% of expenses on average, in the US, 30% and in Latin America, 25%.
Fresh foods do more than contribute to a healthy percentage of total grocery spend, however.
Fresh foods drive strong retailer equity, boost high traffic volume and constitute a staple for a healthy diet, Nielsen reports.
Fresh prepared foods opportunity
The retailer opportunity in fresh has been analysed by the global management consulting firm AT Kearney too.
Its October 2013 study, Fresh Prepared Foods: a growth driver for your company, reveals fresh prepared foods (fully or partially prepared foods requiring minimal preparation and sold at service counters or self-service areas) have been a bright spot in the US food and beverage industry — a $26bn market with growth outpacing both retail packaged goods and food service, and with expectations for even greater gains.
It’s not difficult to see why.
Food retailing has become increasingly competitive as online retailers, mass merchandisers, warehouse clubs, discounters and drug stores have encroached on supermarket territory.
With the blurring of channels, share of stomach is becoming more and more fragmented, AT Kearney reports.
“Retailers need a unique offering to shift decisions about store choice beyond the traditional criteria of prices and location,” it says.
“Emphasis on perishables — with a growing perimeter and shrinking centre store — is a prevailing theme, but the fresh prepared foods department offers one of the best opportunities to truly differentiate.”
Fresh introduces higher-margin categories that can serve not only as a traffic driver but also as a potential growth avenue and profit centre that will be critical for retailers to survive in today’s environment, AT Kearney reports.
“For retailers, “cracking the code” for fresh prepared foods is imperative,” it maintains.
Yet it’s not without risk.
Fresh prepared foods have a very short shelf life and generate a high level of unsaleable products when wastage is not controlled.
The fresh foods supply chain is extremely sensitive to the economics of sales turnover and product waste and finding the right solution is no easy task, AT Kearney reports.
Step in ADC, a specialist in Fresh Item Management (FIM), whose InterScale Sales Manager software is helping retailers and food service operators optimise sales and reduce waste to improve the margins in their fresh foods departments.
ADC works with 125 supermarket chains, across 11 countries and some 10,000 retail outlets.
Key Food Stores Co-Operative
Key Food Stores Co-Operative, the New York-based supermarket operator, is the latest retailer to get on board.
Key Food Stores comprises 149 supermarkets in the five New York boroughs (Brooklyn, Queens, Bronx, Manhattan and Staten Island) plus Long Island, upstate New York and the states of New Jersey and Pennsylvania.
It selected ADC’s InterScale Scales Manager after initiating a strategic project to achieve PLU (Price Look Up) item number standardisation across its membership.
“As a Co-operative, each of our stores assigned different PLU item numbers across all fresh commodities,” said Aliceann Conoshenti, IT director at Key Food Stores.
“Our goal is to provide accurate gross profit reporting to our members. To accomplish this required standardisation of PLUs and UPCs (barcode numbers) across meat, seafood, deli, dairy, produce and bakery departments. We needed a centralised software solution with the ability to communicate across all fresh departments, which is what led us to InterScale.”
With InterScale, Key Food Stores can manage all data for barcode labelling scales, including batch creation and management; perform network tests; re-load scales with item price and food safety information and pull back scale data for comparison reporting across an individual store or chain of stores.
Additionally, InterScale provides insight into what has been produced versus what has been sold, further helping to improve fresh department efficiencies.
Another important factor in selecting ADC’s InterScale was the ability to communicate to a variety of barcode labelling scales from different manufacturers, including some scales that are 10 to 15 years old.
InterScale Scales Manager can communicate with over 50 different types of barcode labelling scales, printers and kiosks, from a variety of manufacturers.
After completing its research Key Food Stores found InterScale had the capability to communicate with all models of price look-up barcode labelling scales and printers from all of the manufacturers.
“Our stores responded very favourably to ADC’s InterScale because of ADC’s extensive list of compliant scales – more than any other scale software company, which made this large project a lot easier for our stores,” said Frank Gambarella, director of merchandising at Key Food Stores.
InterScale also generates staffing efficiencies in fresh food departments, which have a high frequency of price changes. This has benefited Key Food Stores and provides a ‘dashboard’ view of data.
“With InterScale, we were able to provide the ability to automate pricing updates to all scales, which eliminated the manual efforts that our stores had to manage previously,” said Conoshenti.
“Our stores have visibility of all scale data. The ease of use of InterScale allows us to update and control the data at scale level from a central location, across all of our stores.”
“We worked extensively with Key Food Stores to achieve their goals and are very pleased to hear such favourable results,” said Steve Loveridge, CEO at ADC.
“Having a reliable application that can host pricing data to all barcode labelling scales is critical for profitable fresh food retail operations.
“We look forward to working with Key Food Stores on their future FIM projects.”
(A Retail Times’ sponsored article)