Why Retailers and CPGs Are Embracing Shelf Intelligence

What it is, how to get it, and why you need it to win

Store execution has always mattered in retail, but in 2022 and beyond it will matter even more as the grocery industry becomes increasingly complex.

We saw this increased complexity even prior to the pandemic. Retailers and CPGs faced challenges to create assortments that resonated with increasingly fragmented shoppers whose spending patterns were driven by new sensibilities and alternative sources of supply. Then there were familiar challenges related to new product introductions, line extensions and promotions that leveraged online channels and social media against a backdrop of digitally enabled transparency. The pandemic intensified challenges, from surging e-commerce sales, to wild fluctuations in store traffic to supply disruptions which tested even those known for their logistical prowess.

The other thing the pandemic did was amplify the importance of shelf intelligence as a source of competitive advantage. (My colleagues recently had a great discussion of this topic in detail at a recent webinar, and I invite you to view the replay if you missed it.) We saw retailers and CPG companies who possessed superior visibility into shelf edge conditions better able to satisfy shoppers, improve operations, optimize supply planning and grow sales. The other thing we saw, and where we expect to see major advances this year and beyond, can be grouped in two areas: real-time visibility of shelf-edge conditions and the use of artificial intelligence to make optimal decisions. The grocery industry has entered a new frontier of data-driven decision-making at a time when the business is exponentially more complex than it was just five or 10 years ago.

While various new Internet of Things (IoT) technologies offer a clear view of on-shelf availability in a way that seemed a fantasy just a few years ago, this newfound visibility is only the beginning. That’s because an increased volume of data is of little value without the technological horsepower to unify, cleanse and combine it with other sources of information to make it actionable.

A New Version of the Truth

Shelf intelligence is a retail-game changer on many levels, but especially when it comes to retailer and supplier collaboration informed by an accurate view of shelf-edge conditions. Stores are becoming increasingly digital and this shift has huge implications for category management and data sharing among trading partners. The shelf-edge intelligence movement means retailers and suppliers have a new version of the truth beyond merchandise quantities that arrived at the loading dock or sold through at the register.

Shelf-edge visibility has ushered in an era we at Symphony RetailAI have coined as “real-time retailing.” Suddenly, retailer and supplier conversations can take on a new dimension, one based on data around planogram and promotional display compliance, pricing integrity and associate labor productivity. Shelf-edge intelligence can even inform decisions about package design and label readability. Perhaps the greatest use case for shelf intelligence is to reduce out-of-stock issues by identifying the stockout in real time, as well as the source of the issue and how to remedy.

Of course, all of these benefits presume that retailers and CPGs recognize and embrace the power of AI to aid in the process of making optimal decisions. These are dynamic times for the grocery industry and operations will only become more complex as shoppers become more demanding. Our view is that shelf intelligence powered by AI, combined with other hallmarks of successful retail operations, offers retailers a great opportunity to increase their odds of success. We also believe this combination will transform the grocery industry in ways as profound as when point-of-sale scanning arrived on the retail scene 50 years ago. To hear more insights, view our recent webinar, Know Your Shelf: Getting Store Execution Right in 2022.

Want to learn more? Contact us today!

 

 

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