April 24, 2018

Gearing Up for the Digital Transformation in Grocery

By Pat Walsh, Chief Business Development Officer and Vice President, Industry Relations, Food Marketing Institute

Companies up and down the supply chain are realizing a key fact about dealing with the digital transformation in grocery: You can’t just wing it.

Organizations are faced with regular, daunting reminders of the quickening pace of transformation, from the growth of ecommerce to the impact of digitally engaged shoppers.

Manufacturers and retailers have discovered the need to proactively reorganize their operations for this ongoing disruption. That was an important topic of discussion at Grocerytalk.

Breaking Out: Sometimes reorganization requires a dramatic separation of a part of the business. That was the case when global baking goods company Bimbo Bakeries/Grupo Bimbo launched a standalone group, Acelerada, to address new growth opportunities, explained Omar N. Haque, vice president, general manager, and head of ecommerce.  The new group:

  • Made a dramatic break as a separate organization.
  • Relocated out of headquarters.
  • Created its own P&L, marketing, product development, pricing and mindset.

One of the biggest benefits was faster speed to market compared to traditional situations.

Becoming A Pioneer: Companies across the industry are discovering that reaching new digital frontiers requires a pioneering spirit. That’s exactly how some 200 digital associates at Mars Wrigley Confectionery refer to themselves — as “digital pioneers.” They were brought together under Heather Kang, global vice president, Digital Commerce, to accelerate the organization’s transformation. This involved ambitious goals that included setting strategic direction and building digital capabilities.

Mars is far from alone in dealing with digital transformation, especially in the mobile space.

“Every CPG organization is dealing with this,” she emphasized.

“We’re investing in our digital demand to make sure brands are visible and relevant in the consumer space,” Kang said.

Making all this happen requires not only focus, but also balance. Mars, for example, balances the need to find external hires for its digital requirements with the importance of fostering internal talent as well.

 

In-Store Imperatives: Digital transformation has been no less swift at retail, where it seems every week brings new developments. Retailers are heavily focused on developing optimal strategies for e-commerce, but they are fixated on the digital future of the physical store as well.

“Grocery has to become more digital inside the store,” said John D’Anna, executive vice president, chief strategic officer, Brookshire Grocery Co.

There isn’t just a single way to do this. Whether it’s virtual reality, touch screens, or something else, it’s about a more enhanced in-store digital experience.

These strategies will help guarantee a future for physical stores in the digital era.

“Our digital strategy needs to engage them back into the store,” D’Anna emphasized.

The digital future also places new responsibilities on trading partners in how they work with eachother.

Historically there was resistance to sharing data, but new imperatives require a change of mindset and more collaboration.

Consumers want more information than ever about products, and trading partners need to work together to make this happen. SmartLabel is a good example of an industry initiative that helps bring key information to consumers, D’Anna said.

Consumer Realities: There’s no shortage of data points that emphasize how quickly things are changing. Executives point to the swift growth of online buying and the lack of brand loyalty among younger generations.

However, consider this factoid from Mars’ Kang: “Globally, more consumers own cellphones than toothbrushes.”

That’s a striking data point that should make clear why companies need to organize for the accelerating digital transformation.