Four-fifths of the companies participating in the survey replied that fresh products are “very important” to their businesses. The annual value of spoilage for these companies was on average $70 million and up to several hundred million dollars for the larger companies.

“Our experience is that grocery retailers typically attain spoilage reductions of 10-30% by implementing forecast-based automatic store replenishment,” says Johanna Småros, co-founder of RELEX. “It’s surprising that one in five of the responding companies still haven’t started implementing any kind of replenishment automation in their stores, and less than one-third have managed to implement forecast-based automated store replenishment extensively, so there’s a lot of money still on the table.”

Other key findings:

• 91% of responding companies that offer an online shopping channel are picking online orders in store for fulfillment.
• 69% of responding companies operating both brick and mortar and online channels do not produce separate forecasts by channel.
• 69% would like their forecasting systems to better predict promotional uplift.
• 53% are interested in the automated replenishment of ingredients consistent with the growing demand for food-to-go and meal kits.
• 50% are interested in their store replenishment planning becoming more space-aware through considering planograms.

The survey also show that attaining good replenishment results requires granular, i.e. day-level or even intraday forecasting, in combination with advanced replenishment calculations.

Most respondents found budgetary issues, investments being tied up in other projects and fear of the complexity of implementation as the main reasons why they are not investing in improved retail and supply chain planning systems.

“We have found that today’s best-of-breed systems minimize budget issues and complexity worries through SaaS deployments and flexible integration, so a new system no longer has to mean lengthy contracts and large up-front payments,” says Småros.

Study overview

Between December 2017 and March 2018, RELEX and Elastic Solutions, Dallas, Texas, invited supply chain and merchandising executives from top North American grocery retailers to participate in the study. Over 60 grocery retail executives participated in the study. Four-fifths of the respondents were directors, vice presidents or higher at their respective organizations. More than one-third of the participating companies had sales of over $5 billion.