Is it finally time for digital transformation technology to come to the world of food and agriculture?
E-commerce? It’s been around for years and most of us don’t think twice about buying something online from Amazon or Target. For many of us it’s a part of our daily activity but, in the grocery industry, maybe not so much.
Is it Time for Tech?
A recent blog by the Food Marketing Institute’s Doug Baker, Vice President of Industry Relations, Private Brands and Technology, raises the question of whether technology is finally going to be a key force in changing our industry. For banking, travel and most industries, everything is digitized. But retail grocery and the fresh food supply chain are still disproportionately paper-based. Baker writes:
Over time we witnessed books, music and banking as the first industries to reach online maturity. Flash forward to today and we’re arguably the last industry to enter the ecommerce world – and that pace of change is aggressive. Grocery is such a fast-moving ecommerce segment we’re predicting with Nielsen that by 2022 or 2024, every U.S. household will be spending $850 online for food and beverage annually.
(For me that means I’ll need to increase my online food and beverage spending by $850. I guess I’m a food Luddite.)
Digital Transformation Technology: We’re Lagging
Not only is grocery lagging in e-commerce technology developments, but also in pre- and post-harvest technologies. Recently, however, growers and processors are beginning to realize the value of things like digitized irrigation and fertilizer and pesticide management solutions – and they’re seeing very positive ROIs as a result.
Yet, when it comes to post-harvest supply chain management, applying technology to solve problems like the massive food waste issue has been late to the game.
So Why is it Taking us so Long?
Why are we slow to adopt digital transformation technology? Are technological benefits undervalued? Is the cost too high? The ROI too low? Or do we simply lack motivation?
With Amazon’s historic purchase of Whole foods, times are changing. And, the technology exists to improve the post-harvest fresh food supply chain – and do so with a very positive ROI – and now the motivation is there.
Amazon’s entry into the grocery space was the alarm clock that roused the industry from its sleep. The arrival of other discounters into the market, including Aldi, Lidl and potentially companies like Dollar Tree, plus the aforementioned online shopping, means customers have even more options for purchasing fresh food and driving critical foot traffic. What are grocers to do? There seems to be a short-list:
- Develop your e-commerce strategy. Baker at FMI says that they’re “recommending a crawl, walk and run model for resource investment. Still, some companies are literally sprinting.” He writes that “a well-regarded food retail CEO claimed several years ago, ‘I want to be a health care company that happens to sell groceries.’ Now, I feel like I’m hearing and witnessing more often, “I want to be a technology company that happens to sell food.” More businesses are deliberating whether they should move their business online. Additionally, they must decide if they should partner with a pick-up and delivery business like InstaCart to help move their supply chain more effectively. Should they offer click-and-collect? Start simple and build out a strategy based on your strengths. Leverage outside expertise.
- Find ways to be more competitive. This is about more than technology. It’s also about mindset. For too long, we’ve considered things like fresh food waste a “cost of doing business.” For decades, it’s been acceptable to toss up to 30 percent of our produce into the dumpster. That’s tossing 6 percent or more of your product margin into the trash. Perhaps throwing away product was ok when shoppers had fewer choices and freight costs were lower, but the industry needs to mitigate this as margins are increasingly squeezed. It’s possible to reduce waste, improve margins and improve the delivered freshness of produce to increase customer satisfaction and loyalty.
Fortunately, our Zest Fresh solution helps grocers reduce waste of fresh produce by 50 percent or more. This means an immediate benefit of six percent or more to your bottom line. We do this by helping you managing the fresh food supply chain from harvest to store, ensuring that all of your produce is delivered with sufficient freshness for sell through and customer satisfaction. You can eliminate those berries that spoil on the shelf and end up behind the store in the dumpster. And, that six percent you saved can be invested in your e-commerce initiative to further enable your competitiveness and satisfy your customers.Zest Fresh is a great way to implement digital transformation technology that provides an immediate ROI.