Avery Dennison RFID Blog

The Food Industry and Disruptive Change

Las Vegas, Nevada
GroceryShop 2019

At the first ever GroceryShop in Las Vegas, leaders from CPG, grocery and the tech startup community discussed the challenges facing the food industry and the opportunities to pivot the way we chose what we eat, source and buy. Three major themes emerged:

Supply Chains are more complex than ever.

As the food industry has evolved, supply chains have increased in distance and complexity. CUESA estimates that an average meal in the US travels up to 1500 miles from farm to plate. Every mile traveled comes with the challenge of maintaining freshness and making the journey more efficient. At Groceryshop, there was interest in tackling this challenge on two fronts, increasing local sourcing (see Forager and Bright Farms) and driving more visibility in the supply chain. For the latter, it is clear that technology for track and trace and inventory management will play a key role.

Fixing food waste is an opportunity to expand margin.

Razor thin. Every single grocer described their margins the same way: razor thin. As supply chains become more complex, it is harder to know what you have, where it is and how to drive consumption before expiry. In addition to the growing environmental impact, this known waste also has significant impact on revenue. If you include items thrown away in homes, approximately 40% of all food in America is wasted, which equates to more than $200 billion annually. One grocer shared that known food waste is a major challenge that reduces top line revenue by 3-4%. There is also a cost saving opportunity from labor and resources used to produce, process, move and discard food waste. When operating margins sit at 2-3%, unlocking the ability to reduce waste is not only more sustainable, it significantly increases profitability.

When operating margins sit at 2-3%, unlocking the ability to reduce waste is not only more sustainable, it significantly increases profitability

Consumers are changing

Omnichannel. It's no longer a model, but an expectation. Time is the most valuable asset and convenience is a key differentiator for every segment. To keep or gain share in grocery, new delivery models are no longer optional. Last mile delivery and new fulfillment models are picking up speed in the food space. Walmart showed everything from curbside pickup to autonomous vehicles to massive tower pickup kiosks. The Shipt and Instacart sessions were standing room only.  Albertsons recently announced they will be adding a fulfillment center to the back of one of their stores that will be completely automated.

Omnichannel. It's no longer a model, but an expectation. Time is the most valuable asset and convenience is a key differentiator for every segment.

New, fully automated. mini fulfillment center in the back of an Albertson's location. Groceryshop 2018


The digitally empowered consumer is in charge and even grocery retail must evolve to provide their consumers with the service they expect, the products they want and the ability to purchase the way they want it. In order to do this effectively in a tight and costly labor market, technologies that enable inventory and supply chain automation are critical.

Quick traceability for food recalls, omnichannel retail and waste reduction are just some of the challenges grocers came to the show looking to solve. In order to drive differentiation and sustainable growth in a competitive and evolving market, the food industry will continue to look for ways to improve inventory management, automate processes and drive new models that are enabled by technology.

Julie Vargas
Director, Global RFID Market Development

Source: NRDC, CUESA

 

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