On the surface, grocery stores seem fairly simple. You can easily find multiple varieties of your favorite fruit and have your choice between organic and conventional. But keeping those shelves stocked with the foods we love? That’s a much more complex task.
Fresh departments have to deal with a huge set of variables that make ordering nearly impossible to get right. But with today’s capabilities in artificial intelligence (AI) and machine learning, grocery retailers finally have the opportunity to invest in tech that doesn’t fail in fresh.
To give folks a taste of what it’s like to run a fresh department, we’re opening up the Fresh Files to see what happens when Beth discovers she’s completely out of mangos…and tropical fruit enthusiast Marsha is on her way to the store!
Fresh Files: The Case of the Missing Mangos
Beth, the produce manager at the local supermarket, has a big problem on her hands. All the organic mangos are gone from the shelf and she knows Marsha is coming in for her weekly organic produce purchase soon!
Beth does a quick check with her scan gun to see how much inventory the system thinks she has. According to the data, there should be three cases of organic mangos in the store. Instead, the organic space is glaringly empty while the conventional mangos are filled to the brim.
Beth thinks back on her morning. Is there an organized mango heist happening right under her nose? Probably not. She's been on the floor arranging displays since 7 am. And she's pretty sure she would have noticed someone walking away with 35 mangos in hand!
Puzzled by the empty shelf, Beth sets out to investigate.
- Is today’s produce shipment supposed to have mangos on it? The amount that should be on the shelf is calculated by subtracting store sales from incoming shipments, and then subtracting scan outs and weigh outs. If shipments, sales, or scan outs and weigh outs are inaccurate, then the inventory estimate will be as well. Many fresh departments use a perpetual inventory system and, unfortunately, that data is perpetually wrong. Based on Beth’s most recent order, no mangos are expected to arrive. Because there were supposed to be 35 mangos in stock, the perpetual inventory system didn’t order any for today.
Zero organic mangos are expected to arrive today.
- Did the deli grab them all for their mango salsa? Aside from purchases by customers, grocery retailers also have to account for the ingredients that go in that deli-crafted mango salsa customers love. Typically, when the deli team “buys” fruit from the produce department, someone has to remember to enter the transfer into the system, to be tracked in the monthly period end inventory (PEI). But it looks like the deli forgot to transfer them this time! Beth chats with the team and finds out they did pull 15 of Marsha’s mangos off the shelf for their salsa.
Fifteen organic mangos were used by the deli but not marked in the system.
- Did the person who stocked the floor put it in the wrong location? Turnover in grocery stores is remarkably high, especially since the COVID-19 pandemic began. And since then, hiring and retaining employees has become even more difficult. On top of that, store lack the expertise they need to run profitable and sustainable fresh departments. As it turns out, some of the mangos were not stocked correctly. Jared, the newest member of the produce team, restocked organic mangos where conventional ones belong, and that means most customers probably rang them up wrong, too. Unfortunately, the cost of organic mangos can be up to 2x more than conventional, and that’s a big hit to the store’s bottom line.
Twenty organic mangos were sold as conventional items.
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Beth feels proud that she's solved the missing mango mystery—thanks in no way to the data in her system! But still, she's still worried about the stockout. Regardless of what happened to them, the missing fruit cut into store profits. Plus, Marsha’s most certainly going to be walking through those doors in a matter of minutes, expecting at least four of her favorite fruit. Sidenote: Beth is so good at her job that she always makes sure the shelves are stocked when Marsha comes in.
But today? Today there are zero organic mangos on the shelf. It might not seem like a big deal to the average customer, but Beth’s been working in fresh for 15 years and he knows what turns customers away: empty shelves and low-quality food. To top it off, Marsha only buys organic produce so it’s unlikely she’ll make an exception today.
Marsha will probably spend her mango money elsewhere this time.
Fresh teams have a tough job. And the perpetual inventory systems they use make it even harder.
Every grocery retailer struggles with stockouts, but when your scan gun says there are -27 mangos in stock or that there should be 50 on the shelf but there are clearly zero, you know the solution you’re using is more of a problem than anything.