Focus on Fresh: Perimeter’s Importance Impacts the Supply Chain
Today’s shoppers are demanding fresh products more than ever before—a fact that is transforming the marketplace in ways that present challenges as well as opportunities for grocery retailers, especially when it comes to the perimeter of their stores.
In fact, categories including fresh meat, deli, produce, bakery, seafood and prepared foods in some cases now make up to 40 percent of a store, industry data show.
“The perimeter of the store is growing exponentially faster than other areas, and it is where grocery retailers are differentiating themselves,” says Rick Stein, vice president of fresh foods for the Food Marketing Institute (FMI).
Fresh Supply Chain Track Debuts at 2016 Supply Chain Conference
The FMI/GMA Trading Partner Alliance (TPA) has added a fresh track to the program offerings at its seventh annual Supply Chain Conference, Feb. 22-24, 2016 in New Orleans. Rick Stein, FMI vice president of fresh foods (and a self-described “retailer at heart”), suggested the track after observing the program was heavily focused on center store issues during his first trip to the event in 2014.
“With the help of input from retail members, we convinced the conference committee to add a fresh track,” Stein says. “It is a big deal, because this is the first time there is a focus on fresh.”
For more information, visit http://www.gmaonline.org/forms/meeting/Microsite/SupplyChain16
Consumer Demands = Supply Chain Challenges
Customers shopping perimeter departments today are educated about food issues and bring with them certain demands; they want to know what’s in their food as well as where that food came from and where it has been on its route to store shelves.
“One of the things consumers are driving is transparency,” Stein notes. “Was the product grown organically? Is it all natural? Antibiotic free? Those are the things that are really resonating in the perimeter. And that is a transformational change.”
Those demands are adding a layer of complexity, as retailers seek new sources for product through either owning their own farms or working with local farmers and sustainable suppliers that turn the traditional supply chain upside down, according to FMI.
Shorter shelf lives and special handling requirements are two complexities that must be addressed.
“It’s critical to consider how unique products and transportation requirements could cause hiccups in your supply chain,” says Jeremy Rasmussen, an account manager at Robinson Fresh, the fresh produce division of C.H. Robinson that provides customers with national, proprietary and private brands, global solutions and innovations, and cold-chain expertise.
Berries and asparagus, for example, are time and temperature sensitive and require refrigerated transportation, while seasonal items and unexpected surges in demand can add another layer to the planning process, Rasmussen notes.
As challenging as managing the fresh supply chain can be, doing so in ways that let retailers provide all the information their customers seek can deliver significant bottom line benefits. Retailers who embrace food transparency grow sales up to 25 percent faster than their peers, reports FMI.
The Role of Food Safety Legislation
For the first time, the FDA has a legislative mandate to require comprehensive, prevention-based controls across the food supply. The FDA’s Food Safety Modernization Act (FSMA) requires food facilities to evaluate the hazards in their operations, implement and monitor effective measures to prevent contamination, and have a plan in place to take any corrective actions that are necessary.
“Regulatory issues are a big priority now,” Stein says. “Retailers have an opportunity to track and trace where temperature-controlled food has come and gone … [so] you want to make sure you’re in compliance with FDA regulations.”
Stein says retailers should consider moving beyond basic compliance to “embraced compliance,” which he describes as “not doing just the minimum to pass, but rather to achieve the higher goal of ensuring that the food is safe from farm to fork”—something especially important when a recall occurs.
“You’ll have to have correct tracking, and be able to show FDA where the product left from, the temperature it maintained, where it stopped, how often the doors were open,” Klein says.
Collaborating with supply chain partners and communicating with customers are steps toward successfully managing these changes that are occurring so quickly.
“We’re starting to see true collaboration between retailers, suppliers and transportation companies—suppliers and retailers are having full discussions about what their needs and wants are,” Klein says.
Retailers also are letting their customers know as much as possible about the fresh supply in their stores.
“For example, during the Fourth of July time frame, ‘local’ is a major trend,” Klein says. “They may have been doing local products all along, but now retailers are separating what has been bought locally and communicating that to consumers at the point of sale.”
While issues in the fresh supply chain will continue to evolve, taking the types of steps Klein describes will help ensure that customers have access to the freshest products possible while maximizing profitability for grocery retailers.