Will changing shopping habits impact on the supply chain?

shopping basketThe volatility of shopping habits can often strike fear in to the heart of any business, especially when these trends cannot be easily predicted. So what exactly are these current ‘habits’ and how can they affect your business?

There are a number of frequently changing shopping habits impacting on the industry including the increasing popularity of online shopping which has meant consumers can shop 24/7. Furthermore, with consumers seemingly having less time to spend shopping due to busy lifestyles, convenience shopping is increasingly important. Finally, the rise of the ‘discounter’ stores have put pressure on the entire industry to react.

These fluctuations have all had a big impact on the retail sector as a whole, but they have affected the food sector, probably more than most. Figures from Kantar Worldpanel[1] for example show the decline in traditional market share of the ‘Big Four’ in favour of discount or multichannel shopping.

Between February 2012 and March 2015, the ‘Big Four’ saw a 3.6% reduction in their market share. This change has been directly impacted by the rise in popularity of the so called ‘budget’ stores such as Aldi and Lidl which, combined, have seen a 3.3% increase in market share in the same period.

The consumer is the number one priority and it is important that every business, big or small, caters and reacts to their needs. From production, all the way through to disposal, the supply chain should be constantly adapting in order to meet customers’ requirements.

“Increasingly the big weekly shop is being replaced by numerous smaller shops across a variety of different retail formats such as convenience and online, for example figures from Mintel[2] from last year show 20% of adults in the UK now do their grocery shopping online.”Richard Slater, director of sales and marketing

In order to adapt and compete, smaller businesses should look to ensure reactive supply chains. Richard says: “The supply chain needs to be turned on and off like a tap. Those succeeding in this sector have agile supply chain partners. The secret is to have good partner relationships – with retailers, suppliers and supply chain operators; to invest in technology which offers real-time planning and tracking.”

In terms of reacting to the increasing 24/7 demand Richard explains: “Retailers are looking to work with manufacturers that can offer flexible and regular deliveries to meet the changing demands of consumers. Smaller, more regular deliveries to retail distribution centres can ensure a regular flow of product to the consumer via their chosen shopping channel for that retailer and therefore increased availability in trolley, in basket and on doorstep.”

[1] Kantar Worldpanel, http://www.kantarworldpanel.com/en/grocery-market-share/great-britain/snapshot/01.03.15/05.02.12

[2] Mintel, Online Grocery Retailing – UK – March 2014