Article
Achieving the benefits of a retail sustainability strategy
JoAnn Martin, vice president, industry strategy and market development, at JDA Software, explains how and why sustainability is now a top strategy for retailers and grocers, and she offers tips on attaining success.
November 12, 2019 by Judy Mottl — Editor, RetailCustomerExperience.com & DigitalSignageToday.com
The millennial consumer is fast overtaking the Baby Boomer when it comes to who’s shopping, browsing and buying, and the generational trend is creating shock waves in the retail sector.
Millennials are not only expecting faster access to product and faster delivery as well as a seamless omnichannel experiences on any device they happen to be holding, they’re also concerned with a brand and retailer’s sustainability strategy. That, in turn, is driving innovation in everything from the adoption of emerging data analysis tools, to AI and machine learning technology.
To get a perspective on what and how retailers and grocers are doing to respond, Retail Customer Experience talked with JoAnn Martin, vice president, industry strategy and market development, at JDA Software.
Q. In the past few years studies are indicating that consumers are very interested in what grocery retailers are doing in regard to sustainability — mostly driven by the younger consumer. Is this a cultural trend or a reflection that younger consumers realize they have some power/impact in driving greater sustainability in the retail/grocer segment?
A. I think it's both. While we may see sustainability as being a social conscious, it's really just a way of life for younger consumers. We're seeing more purposeful social activism and political involvement from younger generations. Environmental issues, like emissions and clean air, have been extremely popular conversation points, and sustainability measures, like food waste reduction, goes hand-in-hand with that.
Younger consumers feel like they have the power to impact sustainability efforts and I think that they've exercised their voice to be able to do so. They want healthier choices, less landfills, more environmentally savvy business practices, etc. And this is leading to various trends in fresh grocery, like expanded fresh food selections within grocers, center-of-store contraction, perimeter-of-store expansion and restaurants.
Q. Do you think that most grocers/retailers understand the importance of the sustainability strategy? Are they just starting to get it or is there deep traction happening? What is the status of understanding the importance?
A. Most grocers and retailers do understand the importance of sustainability because it's an old concept with a new name. The reality is that we've been talking about grocers and retailers needing to control demand and minimize waste since the beginning of time. But our conversation point was not about sustainability to save the world, it was about maximizing profits and minimizing margin drain because of the tight margins that grocers and retailers have to operate within.
Sustainability, in my opinion, is the new spin on the same concept of focusing on being able to predict the demand and flow of products and minimize waste. Retailers have known that minimizing waste is the only way to increase margins, and ultimately, profits. But previously, sustainability was just an outcome of this. Now, grocers are focused on this as more than a benefit of having proper demand forecasting, but a goal that companies are actively striving for.
Q. Where do innovative technologies, such as AI and machine learning, play into sustainability efforts? And can you provide an example of how it's being used in sustainability efforts?
A. When you look at where innovative technologies, such as AI and ML, are coming into play, it starts with demand forecasting to identify how and where consumers want to shop. No longer are you relying on historical trends, you're able to use external, real-time data to determine the most efficient ways to minimize waste. This will help contribute to sustainability programs and propositions shared by grocers and retailers. These technologies come into play in three areas: demand, fulfillment and pricing.
Fresh products, like produce, meat or anything with a short expiration, is where grocers are seeing the largest returns on investments. There is potential for sustainability in assortment planning through accurate demand forecasts and response to new consumer trends, like replacing less single-use plastic for more environmentally friendly materials.
We're also starting to see an emergence of AI and ML technology helping to combat fuel emissions to enhance optimization of the movement of products from a trucking and shipping standpoint. Grocers and retailers can put products where they're demanded, which ultimately reduces transportation and fuel emissions. Increased visibility also leads to more efficient warehouse management and workforce productivity, tying directly into companies' sustainability efforts as well.
Q. Adopting a sustainability strategy and philosophy isn't quick and easy. Any tips/best practices you can offer for the retailer or grocer?
A. Grocers and retailers need to first optimize their demand, pricing and fulfillment by taking advantage of the insights unlocked by AI and ML. By doing so, they will remove bias from historical trends and data to drive more accurate forecasting that will help minimize waste and maximize profits. It's important for grocers contemplating updating their sustainability strategies to understand that these technologies do not just enhance sustainability efforts, they directly impact bottom lines.
Sustainability is about the minimization of waste and creating a healthier planet for a multitude of reasons, so any place where there is an opportunity for automation and a reduction of excess is where you can start to drive sustainability and realize the benefits.
About Judy Mottl
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