Can AI help German grocers serve up a tastier e-commerce dish?
Posted in Digital Transformation, Retail
By Marketing on October 21, 2019
German shoppers are far from enamoured with online grocery shopping in 2019. Our exclusive survey reveals that over half – 52% – have never ordered their weekly shop online, and only 7% ‘always’ shop for groceries in this way (rising to 13% in Berlin) compared to 21% of UK consumers.
This begs the question: can German food retailers offer what is required to convince them to commit? The German e-commerce association, BEVH, predicts that the national online grocery market could expand to be worth 3.6 billion euros by 2023, almost triple what it is now. One obvious risk to existing German supermarkets is that newcomers with operational efficiencies and dedicated supply chain systems will muscle in and grab a slice of this tasty e-commerce pie.
Why are German consumers not yet buying groceries online?
The Rubikloud survey of over 3,000 consumers in the UK, France and Germany found that 50% of Germans questioned thought the high cost of delivery was a major annoyance of online grocery shopping, while only 36% of French and British shoppers thought this.
Those who do shop online have reservations about the freshness of the food they receive, as 72% agree that food is fresher instore than when it is delivered. It’s widely understood that German shoppers love to touch and feel produce before buying. There are also concerns about the consistency of the price promotions available, and the amount of extra packaging and food waste being generated. Over a third (35%) of Germans think the pricing is not consistent across online and in-store, compared to just 11% of Brits.
Supply chain efficiency can propel growth
There is everything to play for it seems, if only trustworthy, affordable, sustainable grocery delivery services were put before discerning German food shoppers. It’s true that Germany, like the rest of Europe, is bearing high operational costs. Supermarket groups are up against fierce competition from the discounters and digital start-ups. The expense of renting space and maintaining a delivery infrastructure have been the primary reasons behind the withdrawal of key players from the online market in the past. Now, companies are focusing on ways to reduce fulfilment costs and streamline their multichannel operations so that margins are protected, and shoppers enticed with satisfactory customer experience.
How harnessing AI boosts forecast accuracy
Retailers and CPGs acknowledge they need to start working together to become more data-centric and start sharing their data in order to forecast more accurately to meet ever-growing customer expectations. An AI engine will deliver forecasts on general stock and promotions up to 30% more accurate, based on our work with grocery clients. Fewer stock-outs and overstocks mean margins can be vastly improved, giving the retailer a window of opportunity to grow profitably – ideally cementing a multichannel model that is attractive and affordable for all parties.
Supply chain complexities won’t go away
With an AI engine, the challenges of operating a complex multichannel supply chain can also be addressed. It’s vital to develop a feedback loop between all the omnichannel delivery systems — including third-party delivery services — that captures all the online and offline data. This then plugs into an AI engine that takes a joined-up approach to predict things like demand, replenishment, promotions, pricing and safety stock.
The key message to German grocers is: If you aren’t addressing forecast accuracy, costs and service consistency in your stores and online, you’re risking your brand reputation, losing valuable margin due to inefficiencies, and facing extinction even in a promising growth market.
A profitable multichannel model is within reach
An essential objective for current German grocery players is to be highly productive, generate economies of scale and be able to present a more palatable offer for online grocery shopping to German audiences.
AI-enhanced forecasting can provide simple solutions to reduce the chances of shrinkage and waste – protecting margin and ultimately giving consumers a reason to embrace rewarding new ways to shop.
Download our report today to find out more.
Rubikloud’s AI platform allows retailers to consider all necessary factors to improve forecast accuracy and drive profitable sales – at scale, across any channel, globally.