Grocery Operations: Your Questions Answered

Grocery Operations: Your Questions Answered

By Joanne Heyob

The impact of COVID-19 has thrown an already turbulent grocery market into a flurry of activity. From safety measures, to empty shelves, to reduced store hours and all the missing toilet paper, grocers are being forced to respond and react quickly to the changing and demanding needs of their associates and customers.

The majority of the issues facing grocers in this ever-changing time, are operational in nature. Today we’re sitting down with Joanne Heyob, SVP, Operations Strategy & Design, to get her take on the challenges faced by grocers and how they can respond.

Q: How important is operations strategy for grocery stores in a crisis situation like this?

A: Extremely important! Right now grocery stores are operating beyond their existing peak period guidelines—it’s like every day is the day before Thanksgiving but on steroids during a pandemic and you’re out of everything!! They have been thrown a huge curveball and are now on the frontlines. Almost overnight, they have had to ramp up the basic fundamentals like labor scheduling, replenishment, staffing and training and safety. Ensuring they are communicating their POV on keeping their employees and customers safe is a top priority.

Having an ops strategy is critical—right people, right place, right time. Online orders and overall order sizes have increased significantly. There needs to be a quick ramp up of associates to train to pick and pack orders with accuracy. Along with this, goes an increase in packaging and equipment to be able to process the orders. Orders need to be picked when store traffic is lower to decrease the amount of human contact there is in each aisle.

Supply chain logistics and restocking are critical. Distribution centers are working feverishly to get product out and to stores. Grocery chains that have shortened hours to replenish empty shelves are making some progress, but it is not enough to meet the demand.

Rolling out quick and efficient safety measures is key to keep everyone safe.

Q: Which stores have adapted quickly and strategically?

I would have to say initially, that H.E.B. is leading the way with a well thought out plan and have been the most proactive of anyone. They started taking steps in January/February to prepare their stores for the spread of the virus including limiting quantities on items well before the stock-up madness began. They’ve really had their associates are the core of their efforts as they did things like extending their sick leave policy, adding a coronavirus hotline for employees in need of assistance or information; and giving employees a $2 an hour raise early on.

Second would be Trader Joe’s. While they just started getting a little negative press, I’ve been impressed by their quick responses like limiting their store hours, adding a senior shopping hour and putting a cap on how many people could be in the store at one time.

Recently, Kroger published a “Blueprint for Businesses” to share what they have learned with others on opening businesses safely. It’s really well done. All three companies adapted quickly and got their operations up to speed with the customer and associates in mind.

Q: I saw one Kroger store set itself up as a pickup store only with no shoppers allowed in the store. What are the key operations considerations for setting something like this up?

Yes—A Kroger in Cincinnati. I think it is a brilliant idea and it is something we have being talking about at WD. Logistics and technology are two critical considerations in getting this up and running. It is more than just shutting the door and fulfilling orders—there is a complete art and science to having separate teams with clear role clarity doing their part. Things to consider—in-house layout of product on sales floor and back room, delivery frequencies, parking lot logistics, timing of deliveries syncing up to when customers arrive, pickers, packers, runners, replenishers. The store needs to transform into a warehouse model on the inside with a strategic flow of traffic and customer service on the outside.

Q: Do you think innovations like this will continue as part of the new normal for grocery stores after the crisis?

Grocery operations have changed dramatically in the past two months forcing grocers to test and learn quickly to see what works. Those brands that didn’t have a strong curbside program pre-COVID 19 will need to ramp up quickly, so they stay relevant with the changing consumer trends in online shopping.

Q: Can we expect innovations like this to crossover to other areas of retail beyond grocery? Which would make the most sense?

100%. QSR and fast casual make the most sense.

Q: What happens to grocery after Covid-19? Where do you see the industry headed?

Other than they will finally have full shelves again, I think more consumers will adopt online shopping and curbside pick-up than ever before. I think consumers will continue to be cautious about their health and safety and will leverage the online ordering as another way to keep their families healthy.

The industry should learn a lot about where they have gaps and how they can improve—order accuracy, speed of service, product availability and overall flow. I think we will see grocery stores having larger back of houses that they can convert into an area where they can fulfill orders from—keeping those team members away from shoppers. This will lead to more efficiencies and a better experience for shoppers.

Lastly, I see more grocers exploring Micro Fulfillment Centers to keep up with the demand in order to increase margin rates. The amount of labor they are spending in the current model of pickers going down aisles, will not be sustainable if the online ordering trend continues to increase.

Q: How do you see the role of digital coming into play for grocers? Thoughts on how it can be incorporated successfully and in a meaningful way for their associates and customers?

I think we will continue to see digital integration evolve in stores with labor-saving solutions, like programmable and self-cleaning equipment, shifting to electronic shelf labels (ESL’s), cashier-less stores and leveraging robotics to scan for out of stocks to increase replenishment frequencies. Apps will be more intuitive creating lists in advance on frequently ordered items and placing orders for customers. Anything that can help consumers save time and feel good about their purchase will be driven through advancements in technology.

Joanne Heyob
Joanne Heyob
Senior Vice President, Operations Strategy & Design
WD Partners

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