HOW CONSUMERS’ FOOD-BUYING HABITS ALTERED THE SUPPLY CHAIN
How food reaches consumers looks different than it did before the pandemic— and the change is transforming the supply chain. Grocery stores are adjusting floor layouts to accommodate both curbside pickup and in-store shoppers. At the same time, food production companies are reconfiguring transportation lanes to distribute to both wholesale and retail outlets. The reset that’s happening in the food industry is a big deal because the supply chain must accommodate changes in distribution and be nimble to respond to future shifts. In response to these demands on the supply chain, food retailers are investing in technology that provides them with real-time visibility into shipments, information that they can then relay to consumers. How Consumers Have Changed For years, the food industry has lagged behind other retail sectors in its use of e-commerce. But the pandemic has “forced the issue,” said Ray Tharpe, Group Director of Strategic Planning at Ryder. When going out to buy groceries at a supermarket felt less safe, consumers turned to mobile apps for home delivery of groceries or resorted to curbside pickups from stores. In 2020 alone, the online sector of food retail jumped by a whopping $60 billion, according to Mercatus. This data point and others made clear what was happening across America: We were eating more meals at home and far fewer inside restaurants. While some of these changes in habits might reset to pre-pandemic models once Covid-19 is behind us, others are expected to stay. Even after the pandemic wanes, Tharpe sees more consumers preferring the Buy Online, Pick Up in Store (BOPUS) model for food shopping. The numbers support his prediction: Online grocery sales are estimated to increase to $250.26 billion by 2025, according to Mercatus. It stands at $106 billion today. Effects On The Supply Chain To meet changing consumer behaviors during the pandemic, Tharpe saw stores reconfiguring their back-end processes. Dark stores, places that are closed to the public and used primarily for order fulfillment, became more common. The pandemic didn’t just change consumer habits. It wreaked havoc up and down the supply chain. “There were disruptions coming from every angle and all day long,” said Kendra Phillips, Chief Technology Officer and Vice President of New Products at Ryder. An Appetite For Greater Visibility Phillips said the pandemic “really pointed to the need to have visibility into your supply chain, to be nimble, to react quickly and adjust.” By digitizing transactions and processes up and down the food supply chain, RyderShare™ offers that visibility, she added. The technology moves opaque pen-and-paper trails into the digital world and allows food retailers to seamlessly share real-time information to all the players in their supply chain. Such visibility leads to improved collaboration. “Now you can communicate with your partners. We can take something that’s not predictable and make it more predictable for everyone,” Phillips said. She cited an example of a Ryder customer that supplies goods to hardware stores. The wholesaler saw a sudden spike in demand in the wake of the pandemic and was able to manage it well through the RyderShare™ platform. Digitizing the supply chain to improve visibility also allows retailers to focus on the customer. A more transparent supply chain means you can put out fires while elevating the customer experience, Phillips said. In an industry skating on razor-thin margins, that can make a world of difference. “The pandemic was a big shock, and it invited change,” Tharpe said. Another shock is likely, he added, but the right technology will help cushion it.