Canadian Retailer - Spring 2017 - 41

FOR grocery retailers, it's clear that this is no longer your father's supply chain.
"The traditional supply chain for retail is pallets," explains
Food and Consumer Products Canada's (FCPC) Errol Cerit. "It's
trailers, it's cases, it's mass products and full trailer-loads. It's all
built on efficiencies. But you can't be reactive to a consumer that
buys one toothbrush online, for example, and all they want is that
one thing, delivered tomorrow. Supply chains aren't used to that."
"The model for retailers has become much more complex,"
agrees Kees Jacobs. "They need new capabilities in order to
serve consumers in this new world. It's a big shift for grocery
retailers, and it's very different from the capabilities that make
them great right now."
Both Jacobs and Cerit have spent a considerable amount of
time examining the changing landscape of supply chains in
Canada and beyond-Cerit as FCPC's Vice Presi" TECHNOLOGY IS MAKING
dent of Industry Affairs, and Jacobs during more
THINGS POSSIBLE, BUT THE
than a decade as a Global Expert in Consumer ProdBIG SHIFT COMES FROM NEW
ucts and Retail with consulting firm CapGemini.
WAYS OF WORKING AND NEW Both agree that the grocery retail business is in the
WAYS OF WORKING WITH
middle of a seismic shift, one that upends traditional
IT. UBER DIDN'T COME INTO
notions of the linear, top-down supply chain, in faPLAY JUST BECAUSE THERE
vour of "value networks" that are nonlinear webs of
WERE MOBILE PHONES. IT'S
manufacturers, retailers, and distributors with the
THE SAME WITH ONLINE
consumer in the middle.
GROCERY, WHICH REQUIRES
"50 years ago, if you had 10 stores and one distriNEW WAYS OF WORKING AND bution centre, you could predict how much volume
NEW MODELS."
a product was going to sell," notes Cerit. "You'd have
- KEES JACOBS one location for inventory. You could manage your
CapGemini costs. Today, you have to be so much more reactive."
The new world

Like so much else in the world of retail, this change is being
largely driven by technology; the proliferation of smartphones
and online shopping, same-day delivery and click-and-collect
pickup options. While other areas of retail have embraced all
of this for years, grocery retailers are still working to catch up.
"Technology is making things possible, but the big shift
comes from new ways of working and new ways of working with
it," Jacobs is quick to identify. "Uber didn't come into play just
because there were mobile phones. It's the same with online
grocery, which requires new ways of working and new models."
Currently, online orders account for only $2 billion of the $140
billion in annual grocery sales in Canada. By 2019, according to
research firm Forrester, they're expected to grow at a rate 3-4 times
higher than in-store sales, climbing to nearly $4 billion. With that
growth will come a need for changes to infrastructure, increased
labour costs, and the potential for stretching already thin margins
even thinner. Consumers are also pushing for more transparency;
IGD ShopperVista data shows that 56 per cent of consumers want
to know more about the origin of their food products. As both
Cerit and Jacobs note, however costly the transition may be, it's
no excuse for retailers to drag their heels.
The great wide open: grocers are realizing the endless opportunities to
improve efficiencies through a collaborative value network approach.

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THE FOOD & GROCERY ISSUE

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