I’ve spent nearly half my life in the technology industry. In recent years, my focus has been solely on implementing technology for independent grocery stores.
As I talk with store owners, what continues to surprise me is how little automation technology is used for their day-to-day operations. Spreadsheets, manual price reduction processes, and old-fashioned reporting techniques are still very prevalent!
If you’re an independent grocer, you might be in the same position as many of the store owners I talk to. Your operations are extremely manual and to report on shrinkage or price changes , you have to thumb through rows of data. It takes more time than you’d like. But you know there has to be a better way to run your business, so you’re curious about investing in technology and learning what your options are.
So, should you invest in automation technology for your grocery store? Is it worth the time and investment?
Independent grocers typically see a 1-2% increase in their margins when they invest in grocery automation technology in less than a year . Most grocers even see immediate results within 60-days after implementation.
With the right technology, I’ve seen store owners increase overall store profits, help balance inventory, and uncover potential issues that might cause shrinkage.
Are you curious about implementing automation technology into your business and want to understand its benefits? If the answer is yes, keep on reading. We’ll share more in this post.
Technology for Grocery Store Owners: A Investment or Expense?
There’s romanticism around investing in technology these days. Some claim that they have found the tech silver bullet or that one piece of software that solves their litany of issues. Others have gone to the extreme by building actual robots that roam aisles in supermarkets distributing candy bars or counting spills.
On the flip side, some business owners question the existence of automation technology and argue it does more harm than good and it’s a waste of money.
I admit, technology has its downfalls. It’s honestly not clear what problem the chocolate distributing robot solves or how that increases a business’s margin. I also will confess that automation technology isn’t a fit for every single business out there.
Still, in my experience, automation technology works for store owners when outcomes are clearly understood. Problems occur, though, when store owners don’t thoroughly go through the technology evaluation process. They create unrealistic expectations in their head which leads to trivial outcomes. That or they come to the conclusion that it’s too complex for them to understand, therefore they stop caring and deem it unworthy of their time.
I get it, running an independent grocery store is really tough. Profit is made from razor-thin margins, government and workforce regulations won’t stop, and big-box retailers continue to pose a threat. So how would an extra expense in some business “automation” technology solve any problems?
The Real Benefit to Automation Technology
The benefit of automation technology is this: It can automate the mundane and complex tasks you and your team do every day. The technology can run 24/7, 365 days, and send you reports that overview your important metrics, all without you touching a button.
What does this mean? It means you can reallocate your team’s time to other customer-centered activities. You can make better decisions that impact your margin. You can reduce waste in your workforce. You can make more money.
Purchasing automation technology for your retail store absolutely impacts your bottom line and can make you money. If used correctly, it’s a great investment that you can expect to increase your margins by 1-2%. This means if your stores generate $50M/year, you can expect an increase in profit of $500k-$1M using automation software.
So what does this automation technology look like? What can it do?
Automation Software Built for Independent Grocers
There are hundreds of business “technologies” and software out there. From order tracking to inventory management, you can find almost anything you want. But problems occur when you try to locate software made for your industry and business.
I want to introduce you to business technology made for independent grocers. It’s a type of automation software that has been customized to the specific needs of store owners and built to achieve results that you value and track. It’s called Grocery Automation Software.
Grocery Automation Software: How It Works
Grocery Automation Software sits in the background of your business operations and connects to your point of sale to analyze every transaction that is purchased.
Its main job is to identify ways to increase your margins without necessarily increasing product prices. The software does this by focusing on three areas:
- Temporary Price Reductions (TPR): The software automatically suggests and changes product pricing based on the market, competitor stores, and historical customer data.
- Pricing Analysis: The technology suggests ways to reduce unnecessary workforce labor and predicts ways for your team to save time and increase margin. It will alert you of margin adjustments, potential out of stocks, and project movements to identify any gaps in your operations.
- Risk Reduction: You’ll be able to determine, at a glance, where to direct efforts and resources to improve your store operations, correct unwanted behaviors, and reduce loss and theft.
If you are unsure what type of technology you need, download our Technology Solution Worksheet to determine a course of action for when picking Grocery Automation Software or any technology project. It will help you determine if the project is a priority or not. Download the worksheet below.
A Business Owner Who Saw the Need for a Shift in Technology
I recently had a meeting with the owner of a multi-store grocer. He had grown immensely over the last 40 years bringing in over $700M in revenue. The young man took over his father's business and is starting to feel the need for better technology.
He expressed to me that he had about a dozen IT projects to deploy over the next 12-18 months, but he said he was taking a break from new meetings with tech vendors. His company did not have the capacity to ingest any new projects.
I’ve heard this many times before in my 20+ years of experience. So I asked him a few simple questions regarding his current “list” of IT projects:
- What’s the intended impact? (ex: greater profits, win back time, increase in operational efficiency)
- What’s the level of effort? (ex: number of people, length of time measured in hours, estimated costs)
He was not able to provide any answers to those specific questions, but he continued to say, “the internet age, dealing with more sophisticated competitors, increasing costs, and changing consumer behavior is forcing me to recognize that I have to do things differently than my dad and granddad.”
He expressed to me his concern for these “new forces” that have been hitting the market lately and how he is worried about the outcomes they could have on his business.
He’s right, there will be new forces that hit our business, no matter what industry we are in. Technology is one of those new forces and it pressures us to make changes quickly. Independent grocers are feeling these same effects. Without technology, store owners will be left behind as industry threats grow.
2 Threats Independent Grocers Are Facing in 2021 & Beyond
Online grocers like Hello Fresh or Home Chef are swooping consumers up left and right. These companies really took off when the pandemic started and people were not getting out and about to do their grocery shopping.
Now that people have had a taste of what it’s like, it’s hard for them to want to go back to the way it was before. These types of startup companies are a huge threat to small, independent grocery stores.
The 2 Types of Threats:
- Misfits which claims to sell produce and other products discounted by up to 40% compared to what you’d find in other grocery stores (in-person or online). They’re valued at $1B.
- Farmstead has built software to “re-orchestrate” warehouse operations, has raised $17M and can open a hub (their term for warehouse) in 4-6 weeks for $100k.
Independent’s can’t operate the same as they did in 2019 due to the pandemic. The threat of either losing ground to bigger competitors because of their technology investments or to other Misfits is real.
It’s the responsibility of the owner to make sure technological investments are methodically vetted. It's vital to start looking into your investments in order to keep your head above water. Better insights lead to better decisions.
How to Make Technology Simple: Hire Storewise
If you are wanting to take the next steps in your business with technology-based software to improve your profits, request a demo or give us a call at 913-222-5400.
We promise to provide you with empowering new tools and technologies to take to your market. We will meet you where you are at with your business and perform quality work within a respectful time manner.