As consumers spend more time online, their shopping experience expectations are changing. Digital devices play an increasingly central role in shopping and have become consumers’ go-to source for product knowledge. This is the age of digital and physical convergence. More people are researching a product prior to purchase and shopping via multiple channels to get the products they need, whenever and wherever they want them. From click-and-collect models to delivered gourmet meals, shoppers are taking advantage of multi-channel offerings and are demanding food companies to go a step further to provide information on food origins, preparation, and ingredients.
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Explore This IssueAugust/September 2016
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While many factors contribute to the blurred lines between real and virtual marketplaces, the smartphone has been the top catalyst. A recent NinthDecimal Mobile Audience Insight Report found that 59 percent of consumers use their mobile device while grocery shopping—an increase of 16 percent from the previous year. Consumers use them to review shopping lists, search for discounts, learn more about products, and to make purchases.
Moreover, a recent report from The Boston Consulting Group and the Grocery Manufacturers Association found that consumer packaged goods companies (CPG) are facing a winner-take-all world in which about half of sales growth is coming from digital channels. According to the study, CPG companies today face a fundamentally different set of competitors than in years past, and even small companies or apps can be massive disruptors.
With a focus on the empowered consumer, it has become clear that the ability to harness and present product information for digital consumption is a key innovation for the food industry. Grocery industry suppliers, distributors, retailers, trade associations, academic institutions, and solution providers that are part of the GS1 US Retail Grocery Initiative are working to further define and use a standards-based approach to delivering on the consumer’s call for greater supply chain transparency through the development of best practices and guidelines. They are asking themselves: How can we help consumers get accurate and consistent information about the food they eat, and deliver the product safely and efficiently?
Grocery supply chain partners are leveraging standards in four important ways that will help their capabilities better align with consumer priorities. They are focusing on data quality, product availability, product images, and product authentication to become more in tune with the emerging trend of omni-channel grocery shopping.
Today, huge amounts of data are being created and consumed. Researchers from EMC/IDC predict the total size of the digital universe will double every two years to reach between 40-44 zettabytes by 2020. To put that into perspective, 40-44 zettabytes of data is the equivalent of 6.6 stacks of 128 gigabyte tablets extending from Earth to the moon.
Consumers rely on online information to make purchase decisions—this includes product descriptions from suppliers, distributors, and retailers. Companies are challenged to keep product information consistent across all platforms simply because of the time, resources, and know-how that have not been traditionally dedicated to safeguarding data quality.
Until the online data explosion, data inaccuracies were considered a cost of doing business. Little attention had been paid to product listings that were typically only exchanged between trading partners. Now, forward-thinking companies realize that accurate product data is a powerful tool in today’s marketplace.
To address data quality challenges, supply chain partners from both the supply and demand side of the grocery business provided input to develop the GS1 US National Data Quality Program, which helps companies across various industries ensure accurate and timely product information.
Companies that leverage the guidance of the GS1 U.S. program for their own internal data quality initiatives focus on data governance processes to support continual, effective product data management. These companies understand the integrity of product data must be maintained throughout the product’s lifecycle and at any point during the supply chain.
Through good quality data, consumers are provided with the right tools to validate product purchases. When product descriptions, ingredients, nutritionals, or allergens are not transparent, sales and consumer satisfaction can suffer.
After years of slow growth, analysts and experts are predicting grocery e-commerce sales to pick up significantly within the next two years. By anticipating this change, the grocery industry has the opportunity to think holistically about how consumers shop and evaluate how to get the right product into the hands of the consumer fast and efficiently.
Originally implemented in the grocery industry for efficient checkout purposes, GS1 Standards—including the UPC barcode—are now being leveraged to meet various supply chain visibility needs across all retail categories. The foundation GS1 Standards provide consists of three layers: the standardized identification for products and locations, standardized data carriers (like barcodes) that capture essential product information, and standardized data exchange to share through an electronic network. Each layer plays an important role in efficiently moving a product from the source to the consumer.
To reap the benefits of standardization, the industry must have uniform adoption. GS1 Standards drive automatic data capture so that companies can share information about a product as it moves through the supply chain. Applying a barcode that contains a Global Trade Item Number (GTIN) allows for more consistent information and the ability to track and trace a product—which is particularly helpful in the event of a recall, or if the quality of a product has come into question.
Once products have been identified with GTINs and barcodes for global uniqueness, electronic commerce can be achieved. With the exchange of standardized product information, it becomes possible to move away from sending faxes and paper copies for orders, invoices, or advance shipping notices. Business transactions become seamless, especially with the ability to link internal systems to an external system all trading partners can utilize. Standards lead not only to improved data for the consumer, but also help retailers improve inventory management to meet multi-channel consumer requests and decrease out-of-stocks.
Images now play an increasingly significant role in purchasing decisions, and suppliers see this as a big opportunity to create a more engaging online experience. However, product images can be a shortcoming when consumers are regularly frustrated with inconsistent or unclear product photos.
Sharing images between trading partners can be challenging due to conflicting requirements among partners. To reduce inefficiencies and provide consumers with much needed product image consistency, GS1 US brought industry stakeholders and experts together to develop recommendations for standardizing retail grocery digital product images.
The guideline, titled “Product Images Application Guideline for the Retail Grocery Industry,” is a resource for standardizing image capture, naming, and sharing across multiple platforms. It provides general best practices, a style guide, and instructions for publishing images in the Global Data Synchronization Network (GDSN), a central repository of continuously updated product information. Industry stakeholders are now provided with collective definitions, business process standards, real-world examples of use, and step-by-step guidance on image preparation for upload to the GDSN.
For example, the guideline’s style guide shares best practices for consistently featuring a product’s front, left, right, back, top, and bottom image angles. It also provides improper usage examples, such as super-imposed images, watermarked images and improperly cropped images. Categories covered in the guidelines include meat, poultry, seafood, produce, and more.
An additional benefit of using GS1 Standards in the new age of digital and physical convergence is the verification that a product truly is what it says it is, particularly when the consumer may be aware of past food fraud cases involving fish, olive oil, milk, and pet food.
The online shopping explosion has swung the door wide open for counterfeiters to sneak false products into the supply chain. This counterfeit issue is particularly systemic within the online marketplaces, which may have different operating models than their brick-and-mortar counterparts. In many cases, the online retailer does not take actual ownership of the inventory—it simply facilitates the transaction, fueling the opportunity for counterfeiters to expand their operations.
Counterfeiters combine legitimate photos with enticing low prices to lure online shoppers into buying false products, all while they maintain anonymity.
When supply chain partners commit to product identification using GTINs, the incidence of counterfeit products significantly goes down. Online marketplaces have begun requiring valid GTINs for sellers to list their products and will not post the product listing if this is not in place.
Looking to the Future
Several years ago, many members of the industry did not think consumers would be interested in online grocery shopping. However, today’s consumer is proving that assumption incorrect. Analysts predict massive growth in the next three to five years in online grocery shopping, and retailers that embrace food transparency can grow sales up to 25 percent faster than their peers, according to IRI.
Attitudes and paths to purchase are changing and food companies recognize that they need to put the consumer’s concerns first or risk losing sales. New commerce options should not compete with traditional success—it is not “in-store versus online.” Those with a holistic and standardized approach will be able to capitalize on consumers’ interest in grocery shopping online.
Fernandez is vice president of Retail Grocery and Foodservice at GS1 US. Reach her at email@example.com.