“Retailers are leveraging technology to streamline operations and cut costs, enhance service and meet market demands with increasing precision,” said Pat Walsh, FMI vice president of industry and trade development. “It’s become an integral part of the supplier-retailer relationship.”
Frequent Shopper Programs Results in Greater Loyalty and Spending
The technology study found that 48.8 percent of retailers have a frequent shopper program and 90.0 percent of their customers participate in it.
Identifying shopper needs and trip habits can lead to greater customer satisfaction, greater basket sizes and better category management. Among supermarkets in the survey, 84.2 percent claim a greater number of weekly store visits from program participants and 76.5 percent cited higher gross margins for shoppers holding frequent shopper cards.
Most grocery shoppers today have a choice of several food retailers and formats. However, consumers are making only 1.9 trips per week for their groceries, down from 2.1 trips per week in 2006. With fewer opportunities to interact with the shopper, retailers must maximize the shopping
Frequent shopper programs are used to attract consumers to supermarkets. The programs provide data to the retailer to better meet the needs of the consumer. As a result, the programs improve the efficiency of store operations and provide a cost-effective way to customize product selection. Retailers maximize their selling space and save customers money through discounts when they are able to maintain an inventory that reflects the store’s demographics.
In addition to product discounts offered through frequent shopper programs, other benefits to the consumer may include:
- Automatic electronic coupon deductions, 85.0 percent.
- Points toward store discounts on any product , 55.0 percent.
- Donations to charities, 40.0 percent.
- Points towards specific free products in store, 40.0 percent.
Technology Improves Efficiency From Supplier to Store
Technology helps the supplier-retailer relationship and prevents waste, address inventory problems and avoid additional costs. It also makes communications more effective, decreases the rate of errors and makes it possible to track product preferences. In fact, 85.7 percent of companies use electronic data interchange (EDI), up from 67.0 percent in 2005. EDI is most frequently used for purchase order remittance advice, invoices and advanced shipping notices.
Scan-based trading (SBT) is used by 50.0 percent of retailers, up from 26.0 percent in 2005. SBT is the process in which the supplier maintains its inventory within a retailer’s warehouse or store until the product is scanned at the checkout. Data synchronization, which ensures suppliers and retailers are sharing accurate and consistent product information, is used by 25.0 percent of respondents.
Internet Widely Used by Food Retailers
The Internet is used by 93.0 percent of companies at the store level. It is used for a number of in-store applications such as labor scheduling, time and attendance and loss prevention and safety applications as well.
Seven in 10 retailers said they also use an intranet as an employee communications tool to post human resource policies and job vacancies and 48.7 percent said they use it to provide training for their employees.
Supermarket websites are used to complement the consumer’s shopping experience. In addition to providing the store location and weekly sales flyer, many websites provide additional information such as a list of general specials, career opportunities, menu planning ideas and recipes, gift card information and general cooking tips.
Food Retailing Technology 2008 is based on an FMI survey of 45 companies operating 5,188 stores across the United States. Questionnaires were sent in December 2007 and January 2008 and reflect data from 2007.
This report was made possible by the generous support of SAP. To purchase a copy ($95 for FMI retailer/wholesaler members, $150 for FMI associate members and $195 for nonmembers), contact the FMI Store at 202-220-0723 or visit www.fmi.org/store/.