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UK grocery sector identifies opportunity to better serve 21st century consumers

Report highlights golden opportunity to enhance consumer experience through improved product information

GENERAL MERCHANDISE

UK grocery sector identifies opportunity to better serve 21st century consumers

A major new report released today by the not-for-profit supply chain standards and solutions organisation, GS1 UK, reveals the sizeable opportunity which Britain’s retail sector can realise through improving data practices in the supply chain.

GS1 UK’s ‘Data Crunch’ report estimates that UK grocery retailers and suppliers can realise savings of at least £1 billion over the next five years as data inconsistencies are ironed out across the industry and pass the benefits to consumers through better informed choices and improved shopper experience.  The report also reveals the existing business opportunity for retailers and suppliers to address the issue of increased demand for better product information from consumers, governments, regulators and pressure groups.

The grocery sector recognised the need to review its product data and worked closely with GS1 UK to develop the report.  In collaboration with the country’s four largest supermarkets, Tesco, Sainsbury’s, Asda and Morrisons, and four of the largest product suppliers, Nestle, Unilever, Proctor & Gamble and Mars,  GS1 UK used IBM's analytics capability to assess the ‘Data Crunch’ product data, which included more than one million records from the participating retailers and suppliers.

By comparing the product data held by suppliers with that stored on the supermarkets’ systems, the research uncovered inconsistencies in what should have been identical information in over 80 per cent of cases.  After calculating the impact this has in terms of lost or late deliveries, inaccurate orders, surplus transport costs and duplicated work, GS1 UK found the savings opportunity for the retail industry was more than £700 million and a further £300 million opportunity for new sales.

Commenting on the findings, GS1 UK chief executive Gary Lynch, said: “The ‘Data Crunch’ report highlights the significant benefits for both retailers and suppliers in adopting data standards across the industry.  We’ve been very encouraged by the collaborative action the industry has taken to date in helping us develop this report and are confident this joint work will continue apace as the issue is addressed across the UK grocery industry. By working together to improve their supply chain systems, both retailers and suppliers stand to benefit considerably from reduced costs and greater productivity.”

Mike Coupe, Trading Director at J Sainsbury, added: “It’s in everyone’s interests for the industry to work together towards building smarter supply chains. From a retailer’s perspective, we’re constantly exploring ways to provide greater business insight to help drive improved decision making and operational efficiencies.  We must all work with our suppliers to ensure a reliable flow of information and product data to make this happen. We’ll be closely examining the report’s findings to see how GS1 standards can enhance our processes.”

The estimated opportunity for the industry to realise over £700 million in savings were found to fall into two main areas: avoiding shrinkage and eliminating workaround processes (such as manual investigations to cross check the accuracy of the data).  The total savings from eliminating workarounds and corrections was estimated at £135 million for retailers and £100 million for suppliers.  Additionally, the total savings from avoiding shrinkage were placed at £250 million and £225 million for retailers and suppliers respectively.

Consumers and regulatory bodies are continually demanding better product information and labelling for nutrition, health and lifestyle, as well as information related to packaging and the environment. Combined with the industry predicting a 400 per cent increase in the amount of data retailers need to hold about products, the joint industry action to investigate and adopt data standards is timely.

Justin Suter, Retail Supply Chain Leader, IBM Global Business Services, commented: “As the world becomes more interconnected, retailers and suppliers are discovering they have access to more data than ever before.  To make more intelligent business decisions, applying business analytics to accurate data is crucial. It’s encouraging to see retailers and their trading partners working together to investigate these issues and develop smarter systems for the future.”

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