Grocery retail after coronavirus:
how to thrive in the "new normal"

Changes that retailers need to undertake in order to succeed in the near future
Our CEO and Chief data scientist Alexey Shaternikov shares his thoughts on the future of grocery retail after the global health crisis and how to succeed in the "new normal":
Grocery retail is among industries that were most affected by the outbreak. Here I'd like to share my thoughts on changes that retailers need to undertake in order to succeed in the near future.

Retail automation

The recent crisis has shown that we, humans, are a weak spot in many aspects, and business processes are no exception. It takes one infected employee to quarantine the factory floor or the whole warehouse; offices usually packed with people are closing due to government regulations; supply chains are disrupted in the fear of spreading the virus across borders. From service industries to manufacturing to construction to food processing: a lot of businesses were - and many still are - suspended in the face of the pandemic.
Top managers across various industries have learned the hard way and are actively relaunching automation projects. The idea is simple: everything that can be automated should be.
For grocery retailers, it means re-thinking logistics, store operations, and supporting business processes. While self-checkout stores, contactless interfaces, self-driving trucks, and robotic warehouses demand extensive capital and time investment, business processes can be rebuilt now. Think all highly-intensive, everyday tasks like demand forecasting, replenishment, or pricing. Smart prediction algorithms have already proved their efficiency in managing demand uncertainty during the pandemic. Of course, forecasting systems and prediction algorithms cannot forecast the tipping point: it is up to retail experts to define when the trend in demand changes. But once it's done, forecasting and replenishment processes run autonomously eliminating the risk of relying solely on human employees.

Online retail

Online grocery retail has been stepping up its presence for the past 3 years. This time is different though. Our e-grocery clients report that the average daily orders have more than doubled. The user base grew threefold during the last month. The most active users place orders 2-3 times a day, which is 60-90 times per month. These newly acquired customers may stick with online grocery stores when the things are "back to normal". What we witness now is the shift in customers' behavior and the emergence of new buying habits.
What we witness now is the shift in customers' behavior and the emergence of new buying habits.
To catch up, brick-and-mortar grocers that traditionally generate the majority of revenues offline have to scale delivery services and expand their courier network. Grocers also have to bear in mind that online demand requires a vastly different approach to forecasting. Among other things, going online requires hourly forecasts to plan courier workload and real-time on-shelf availability monitoring to fulfill orders completely. For some, the "online first" concept seems ahead of its time but it's likely to be a new reality much sooner than we all expect.

While the consequences of the global health crisis are still unfolding, retailers need to develop new strategies to adapt and thrive in the "new normal". Automation and going online are among the changes retailers need to undertake now in order to succeed in the future. The transition won't be easy but available technologies and modern forecasting tools are here to help.

To know how retailers are dealing with the effects of increased demand, read our article How is coronavirus influencing the retail industry? Managing effects of increased demand.
Alexey Shaternikov
CEO and Chief data scientist at DSLab

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