Blue Yonder
Customer Experience
in Grocery Retail:
the Fresh Opportunity
A global survey of 4,000 consumers shines light on
customer experience in fresh and product availability
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Introduction
How Can You Delight Your
Customers in Fresh Without
Risking Profitability?
Blue Yonder has surveyed 4,000 consumers and
750 grocery professionals, reviewing perception versus
reality of customer experience delivery in fresh and
product availability. The results show a significant gap
between perception and reality in a number of key
operational areas.
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04
Introduction
Fresh: the Most
Important Battlefield
for Grocery Stores
40 percent of grocery’s total revenues are driven by fresh, from fruit and
vegetables, to meat and seafood, to baked goods and prepared food. New
entrants to the grocery market, combined with channel complexities have
generated fresh challenges for grocers. Additionally, the battle for the
customer has not only intensified due to increasing competition, but the
shopper is more complex and sophisticated in their needs. What constituted
good customer experience in the past has evolved rapidly as lifestyles
change and technology advances. Nothing stands still for long.
Critical success factors for grocery replenishment
Today’s shopper is not simply looking for the best price, but also the best
choice, best availability and importantly, the freshest product. Get availability,
price and choice right in fresh and the rest should follow, including the
customer. Sounds simple, but as grocery retailers know all too well, the
perishable nature of fresh comes with fast, furious and complex decisions
around managing price and replenishment. Decisions that, if made
inaccurately or at the wrong speed, can leave shoppers heading for the
exit sign and into the welcoming arms of the competition.
Cost to serve: customer experience and profitability
But if customer experience is the yin, profitability is the yang. Many grocery
retailers are struggling to deliver the right experience in fresh, availability
and choice while also getting margin right. Balancing their fresh value
proposition with availability, waste – in the omnicommerce era – has become
increasingly complex. Grocery could be forgiven for believing there is a need
for a trade-off and that one goal can only be met to the detriment of another.
This is not true – implementing best practices and the best decisions on a
daily basis can improve both customer experience and profits.
Introduction
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“The real battle for the customer lies in fresh.
And getting fresh right to make it profitable is
even more complex. The best opportunity for the
grocer of today and tomorrow is in the marginal
gains that can be delivered in balancing freshness,
availability, price and choice – profitably.
At Blue Yonder, we make it our mission to provide
retailers with the learning that will enable them to
make the best decisions, delivered daily. Decisions
that will improve their customer experience and
dramatically improve performance.”
Uwe Weiss
Chief Executive Officer
Key Findings
Key Findings
1
68% of shoppers feel
disappointed with fresh
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81% of shoppers cannot
get the products they want
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0% of shoppers abandon
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their carts if they cannot get
what they want
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Key Finding 1
Best Freshness
68%
of shoppers feel disappointed
with freshness
81%
of grocery retailers believe
they are delivering
Key Findings
68%
62%
67%
UK
USA
70%
72%
France
Germany
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of respondents have felt
disappointed with the freshness
at their grocery store
The discounters let
shoppers down 74% of
the time
Online
52%
In the
supermarket
71%
In discount
retailers
74%
In mass
merchants
(US only)
71%
54%
have been put off shopping with
a particular grocery retailer due to
the lack of freshness of their shop
55%
45%
UK
USA
53%
62%
France
Germany
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Key Findings
The younger the shopper,
the more discouraged they
are by a lack of freshness
65%
70%
69%
16-24
25-35
53%
42%
45-54
55+
of shoppers have felt let down by
the selection of fresh items during
their grocery shop
57%
74%
69%
68%
UK
USA
France
Germany
Shoppers are more likely to be let down by the
selection of their fresh items in the store
51%
Online
67%
70%
68%
In the
supermarket
In discount
retailers
In mass merchants
(US only)
Key Findings
38%
46%
44%
53%
Online
“Yes, I was put
off the grocery
retailer when
they failed to
deliver on fresh.”
In the supermarket
In the discount retailer
In the mass merchant (US only)
Customers versus directors
Our research into grocery retailers’ perceptions of customer experience delivery found
that 80% of grocery directors are confident they are delivering the right experience
in freshness. The consumer research found the opposite, with 68% of respondents
bemoaning the freshness on the shop floor and online. This shows a gap between
perception and reality.
Breaking the brand promise
Even more concerning is that more than half of shoppers have been put off a
particular grocery brand due to unsatisfactory freshness. The results reveal that
younger consumers are less forgiving.
Fresh battlefields
Shoppers are not only demanding the best price and availability, but their expectations
for quality and freshness have increased significantly in recent years. Delivering anything
less than the freshest is not an option. This is where brand promise is broken and profits
are lost and won: Fresh food drives revenue. It’s also the assortment that comes with the
most complexities versus ambient and other categories.
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Blue Yonder
Key Finding 2
Best Availability
81%
of shoppers are unable to get
the product they want
91%
of grocery retailers think they
meet customer expectations of
product availibility
Key Findings
81%
of shoppers have had
an issue with getting
what they want
69%
Online
Of those that have
struggled with
availability, many
admit to being
let down at least
once a week
83%
In supermarket
85%
In discount retailer
Online
36%
In the
supermarket
34%
In discount
retailers
36%
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Key Findings
The Replenishment
Game: Complex, Costly,
and Relentless
We all understand replenishment is incredibly difficult to get right, especially in
regards to fresh. Disruptive shopping behaviors have made increases in demand
more unpredictable while grocery shopping missions based on trust, freshness,
choice and – of course – value all add to the complexity of replenishment
decisions. The demands on grocery management show no sign of abating in
the always-on world.
Yet, despite this, our survey of 750 grocery retailers revealed that they are
confident and trust that their replenishment is working effectively to deliver the
right experience to their customers. This was surprising, especially as we also
found that 46% of grocery directors admitted that their replenishment decisions
are driven by gut feeling.
Key Findings
91%
of grocery retailers think they
meet customer expectations
of product availability
The Gap Between Perception and Reality
Our research indicates conflicting viewpoints between the grocery pros and their
customers: 81% of shoppers stated that they struggle to get what they want. This rises
to 83% in the supermarkets and 85% in discount retailers.
Replenishment is not working as well as the retailers think, which has wider
implications for profitability.
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Key Finding 3
Best Experience
30%
abandon carts if they cannot
get the product they want
Key Findings
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What does the failure to deliver the
right customer experience in product
availability mean for the retailer?
EXIT
30%
who couldn’t get the product they
wanted left their shopping carts and
went elsewhere for their grocery shop
28%
bought a similar product but were
not satisfied
I left the grocery retailer and
went elsewhere
35%
US
35%
GER
26%
FR
23%
UK
Unsurprisingly, shoppers are nearly 20%
more likely to buy a similar product in
the supermarket rather than online, where
they are more likely to abandon their
shopping carts.
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Key Findings
Long-term consequences for profitability
20%
of shoppers who have found
a product unavailable have
stopped shopping with the
retailer either permanently or
for a period of time
The UK is the least forgiving
across all channels.
Many shoppers permanently
stopped shopping or
stopped for a period of time,
after not being able to get
the product they wanted:
Online has the least loyalty
31%
25%
33%
27%
35%
US
GER
FR
UK
Online
20%
In discount retailer
In the supermarket and discount
retailer aisles, the UK shopper is
still the least forgiving
Supermarket
17%
13%
16%
16%
23%
US
GER
FR
UK
In supermarket
Discounter
20%
16%
18%
26%
US
GER
FR
UK
Key Findings
EXIT
35%
that left empty handed
have stopped shopping
with the retailer
Our research tells us that 30% of shoppers will abandon
their shopping carts and head to another grocery retailer
if they cannot buy the product they want. This leads to
lost revenues, not just from that one product, but the
entire shopping cart.
Retailers that fail to deliver the best availability,
are literally handing over precious customers to
the competition.
More alarming for grocery is that the consumer research
found that this is not just an issue for that moment in time.
Being unable to deliver the product when and where the
shopper demands has long-term consequences for revenues.
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The Importance of Machine Learning
Importance of Machine
Learning in Delighting
the Customer with Best
Freshness and Best
Availability
It takes more than a gut feeling to deliver the best freshness and availability.
While many grocery retailers realize they’re under pressure to deliver the best
customer experience possible, few understand how far they are from their goal.
Enter machine learning: Solutions based on machine learning technology learn
from customer data, predicting their behavior and empowering grocers to
determine the effect of each consideration, on each product, across all locations.
This can be done on a daily basis, resulting in hundreds of millions of daily forecasts.
As the program learns, it becomes better at optimizing prices and assessing the
best availability.
The result? Retailers using machine learning have seen a reduction of up to 80%
in out-of-stock rates without increasing waste or inventory. In short, grocers are
able to understand and leverage the elements that matter most to their customers,
allowing them to deliver the best choice of the freshest products at the best price
The Importance of Machine Learning
“The added complexity of the omnicommerce environment
has made satisfying a myriad of factors, such as freshness or
price, that affect the customer’s experience – and purchasing
decisions – nearly impossible while still turning a profit. It has
become an either-or decision for those who aren’t choosing
to innovate.”
Prof. Michael Feindt
Founder of Blue Yonder
“For our organization, it is critical to have the right amount of
fresh meat available for the customers in each store. Automated
replenishment based on accurate sales forecasts plays a key
role. Working with Blue Yonder has resulted in optimizing our
processes significantly.”
Ralph Dausch
Executive Board Member of Fresh Meat
Products International, Kaufland
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Study Sample
Survey Information
1,000 consumers in each territory, looking at shopping experiences across online, in the
supermarket and at the discounters (see below for demographic split for the infographic).
Respondents
Overall
France
Germany
UK
USA
4,032
1,006
1,006
1,013
1,007
Overall
France
Germany
UK
USA
Men
2,176
478
494
747
457
Women
1,856
528
512
266
550
Overall
France
Germany
UK
USA
16-24
340
62
81
165
32
25-34
577
161
196
166
54
35-44
726
240
206
154
126
45-54
897
268
280
170
179
1,492
275
243
358
616
Overall
France
Germany
UK
USA
Online
2,052
697
440
603
312
Supermarket
3,879
988
986
974
54
Discounters
3,172
822
988
823
539
844
N/A
N/A
N/A
844
Total respondents
Gender
Age
55+
Shopping Method
Mass merchants
Survey Sample
About Blue Yonder
Blue Yonder is the leading provider of cloud-based predictive
applications for retail. Every day, we deliver decisions to our
customers that boost revenues, increase margins and enable
rapid responses to changing market dynamics.
Our replenishment and pricing solutions are driven by sophisticated machine learning
algorithms developed by one of the largest teams of PhD-level data scientists in retail.
Founded in 2008 in Karlsruhe, Germany, by former CERN scientist Professor Michael
Feindt, Blue Yonder now operates in Europe and the United States.
We are backed by leading private equity firm Warburg Pincus and the Otto Group. In
2014, we established the Data Science Academy to provide businesses with relevant data
science know-how for retail.
Blue Yonder has been awarded the Gartner Cool Vendor Award 2015, the Experton Big
Data Leader Award 2016 and the BT Retail Week Technology Award, among many others.
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Blue Yonder
Are you ready to find out how
machine learning can significantly
improve your business?
Talk to Blue Yonder to discover
what we can do for you.
Blue Yonder GmbH
Ohiostraße 8
76149 Karlsruhe
Germany
+49 721 383117 77
Blue Yonder Software Limited
19 Eastbourne Terrace
London, W2 6LG
United Kingdom
+44 20 3626 0360
Blue Yonder Analytics, Inc.
5048 Tennyson Parkway, Suite 250
Plano, Texas 75024
USA
[email protected]
blue-yonder.com