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Fresh Tech: What grocers need to win in fresh

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How can technology increase your competitive advantage in fresh? Here are three ways data and technology can drive fresher products, safety and transparency, and better customer experience to capitalize on the growing fresh food movement.

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Fresh Tech: What grocers need to win in fresh

  1. 1. October 30, 2018 FRESH TECH
  2. 2. F r e s h T e c h WELCOME! How can technology increase competitive advantage in Fresh? 2
  3. 3. As demand among shoppers for Fresh grows, so does the opportunity for grocers to differentiate themselves. F r e s h T e c h 48% Nearly half of Americans consume more fresh products than they did three years ago. Source: Research by Opinion Way among 1000 consumers in U.S., Dec 2016 FRESH IS GROWING FRESH IS STRONGLY ASSOCIATED WITH QUALITY 75% 74% 74% FLAVORFUL HEALTHIER BETTER QUALITY 3
  4. 4. Brick & Mortar Grocery is best positioned to take advantage of the Fresh Opportunity. F r e s h T e c h After Amazon bought Whole Foods, the company discontinued Amazon Fresh grocery delivery service in parts of at least nine states. “We made the hard decision to focus on dry good groceries and having that be national," Brian Elliott, the general manager of Google Express said. "For now, we're not going to sweat the milk and eggs, and ice cream side of it." 4
  5. 5. Three Ways Technology Can Help You Win in Fresh F r e s h T e c h Fresher Product on the Shelf Safety and Transparency Great Customer Experience 5
  6. 6. Improve Demand Forecasting Accuracy - Upside Potential is Huge! F r e s h T e c h  58% of retailers report an out-of-stock rate of 6-10%  Only 37% of firms report the ability to forecast demand at the store SKU level  54% of retailers report significant markdown rates  Inventory shrink averaged 1.38 percent of retail sales, or $45.2 billion Sources: A study conducted by Forrester Consulting on behalf of IBM, July 2018; National Retail Security Survey 2016 Fresher Product on the Shelf 6
  7. 7. Value Creation from Improving Forecasting Accuracy F r e s h T e c h Fresher Product on the Shelf 7 • +2.3% decrease in transportation costs +$420M increase in sales -> $20M profit improvement at 6% EBITDA • +0.58% increase in sales due to accurate fulfillment and reduction in out of stocks • +1.0% increase in inventory costs Business Impact: +$10M decrease in inventory cost Net profit improvement of $60M Financial Results (for $10b retailer per year): +$30M decrease in transportation costs +60M Net profit improvement
  8. 8. Improve Demand Forecasting Accuracy – How can tech help? F r e s h T e c h ● Understand local demand, by combining relevant external data with your internal POS data: ● AI for predictive analytics and to facilitate “what-if” analyses ● Blockchain (distributed ledgers) to improve visibility, trust and efficiency ● Create real-time dashboards to improve visibility & collaboration with a “single view of the truth” Fresher Product on the Shelf 8 Social Media Traffic and Weather Demographic Patterns Local events
  9. 9. Major Food Manufacturer Case Study F r e s h T e c h ● Model dashboard recommends forecast 8 weeks out ● Automated what-if analysis ● End-to-end collaboration with “single source of truth” +15% forecasting accuracy Fresher Product on the Shelf Retail Promotional Activity Retail Price Dynamics Seasonality Customer Order Dynamics Hyper-Local Effects Predictive Modeling & Machine Learning 9
  10. 10. Food Traceability at Speed of Thought F r e s h T e c h Safety and Transparency 10
  11. 11. Food Traceability at Speed of Thought F r e s h T e c h ● Transparency: End-to-end visibility ● Trust: Improve confidence in information ● Speed: Digitize for instant access Safety and Transparency 11
  12. 12. Essential Capabilities for Great Customer Service Have One Thing in Common F r e s h T e c h “What digital technologies are essential to evolve the retail experience?” Source: Riverbed Retail Digital Transformation Survey 2018 Great Customer Service 12
  13. 13. Essential Capabilities for Great Customer Service Have One Thing in Common F r e s h T e c h Source: Riverbed Retail Digital Transformation Survey 2018 Great Customer Service “What digital technologies are essential to evolve the retail experience?” THEY REQUIRE YOUR DATA (however 80% of data is either inaccessible, untrusted or unanalyzed) 13
  14. 14. Five steps to Unlock Your Data and Enable Great Customer Service Technology F r e s h T e c h Source: Riverbed Retail Digital Transformation Survey 2018 COLLECT Make data simple and accessible regardless of where it lives ORGANIZE Create a trusted, business-ready foundation for analytics and AI ANALYZE Scale insights on-demand with Machine Learning everywhere TRUST Provide trust & transparency in outcomes; and INFUSE AI Automate and scale AI across customer experience processes. Great Customer Service 14
  15. 15. Unlock Your Data for Great Ahold: Customer Experience In-Store F r e s h T e c h Digitally enhanced Deli experience ● Improve customer experience ● self order with mobile notifications ● Free up store associates for other customer service activities Agile development process ● New solution deployed to initial stores within 12 weeks ● Ongoing development iterations based on customer learnings Great Customer Service 15
  16. 16. Unlock Your Data for Great Customer Experience Online F r e s h T e c h GROCERY RETAILER CASE STUDY ● Customer Experience streamlined to one platform, one design system, and shared content. ● Streamlined checkout from 6 screens to 1 ● Helped launch a partnership with Instacart to expand the delivery footprint +11% Lift in orders +10% Lift in daily revenue Great Customer Service 16
  17. 17. Solutions May Require Different Approaches F r e s h T e c h Fresher Product on the Shelf Safety and Transparency Great Customer Experience Data available: start now @ scale Design solution: MVP / Garage approach 17
  18. 18. How IBM can work with you F r e s h T e c h 18 Create value from reciprocity Customer co-creation Ecosystem collaboration Capitalize on data Customer insights Organization agility Commit to innovation Capital reallocation Technology investment + + +
  19. 19. When people and technology work together, Retail Thrives. F r e s h T e c h 19
  20. 20. F r e s h T e c h 20 Get Fresh with… Safety and Transparency through the speed and connectivity of IBM FoodTrust. Delightful customer experiences through digital design and innovation. Accurate demand forecasting for fresher products and greater sales. Learn More Learn More Learn More

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