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Thursday 21 October 2021

Chris Quin on Foodstuffs’ category reset and its ‘phygital’ future

10th September 2021 By Bridget O'Connell | | @foodtickernz

Foodstuffs North Island boss Chris Quin says a three-year project to rebuild the co-operative’s supply chain systems helped the group manage what was essentially four hours notice for a tripling of demand when last month’s snap lockdown was announced.

Foodstuffs is changing the reasons it displays products with around 20-25 out of 100 categories reset.

Speaking on a live webcast to A Few Quiet Yarns founder Ryan Ashton, Quin said the project had seen the group install a new fully digital capable platform that could better accommodate and respond to future shopping and consumer trends.

“We have rebuilt our supply chain physically and technically in the last three years and thank goodness,” Quin said.

“In the last two week we have gone from about 1.8 million cartons a week moving through our supply chain to 2.4 million and the system stands up and does it.

“Those investments are always tricky investments because you look for the business benefit and in the end you go ‘there will be some productivity benefit’. It is that classic ‘stay in business’ investment, which makes boards shift sideways in their seats a bit… but it has been brilliant to have been ready for this.

“Now [we have] a fully digital capable platform, we are increasing use of AI modelling in various parts of the supply chain to try and get ahead of ourselves, and increasing the ability to start modelling demand patterns back into stock ordering and supply patterns.

Quin said it was part of FSNI’s “biggest single project at the moment, our customer driven transformation”.

“Historically in the industry, the product that gets on shelf or on display or on an end was driven by margin and profitability. We are now resetting that, based on three years’ worth of customer data and insight, so that [the selection] is driven by the products that the customer is in love with, and the products the customer buys driven by price.”

He said FSNI had currently reset around 20-25 of its circa 100 categories, and gave the example of potato chips.

Chris Quin

“Proper Crisps and Wakachangi – you have got to have them because customers go ‘I need to see that product on shelf’. Then you have Bluebird and Eta and the customer says ‘whichever one is three for five bucks I will buy this week’.

“It is a simple example with no criticism of any brand, but it is about understanding how customers feel about the brand – whether they regard it as a brand purchase because they like the brand or identify with it or think the product is better. Whereas the others are substitutable and they buy based on deal.

“That changes the way you range every bay and every shelf and every category in the store.”

The process started three years ago to create a single chain of data, which has taken 12 months to process.

“It is now coming back to us category by category, and recommendations are being fed into a symphony tool that ranges the store and sets out shelves and right back to centralised buying of products so that we’ve got our supply and costing right,” Quin said.

The new platform had the ability to respond to future trends or ones that Covid might accelerate, such as more customers migrating to online shopping or the evolution of click and collect to ‘direct to boot’.

“Online shopping increases by a 3-4 multiple during alert levels and lockdowns and then falls back to around double,” Quin said.

He expected that same fall back to a permanently higher level after this lockdown, with the group investing to accommodate this trend, albeit the co-op structure meant there were “a lot of people to convince about executing it the right way”.

“We considered investments like dark stores, but we actually think there is a step beyond that which is micro fulfilment centres in the back of every store, and that is the bet we will place,” Quin said.

“There is no such thing as a purely digital shopper, most shoppers have a percentage of what they do digital, say 0% to the high 70% and then some physical, and what we are trying to do is capture the entire customer experience and deliver to it.

“We use the word phygital in the business, we try to think about every process as being physical or digital and being able to do it either way and being able to step between them in exactly the way a customer would chose.”

Looking ahead, Quin said the group was currently trialling drive-through pick-up at Pakn’Save Albany in Auckland, but he favoured the ‘deliver to boot’ model, which saw someone from the supermarket put groceries into a parked car’s boot, for both efficiency and to met the consumer trend for convenience.

FSNI’s new digital platform had licence plate recognition built in for this eventuality.

“Our initial rollout [of click and collect] was locker based, so we put the order in the locker, you turn up at a time you have a 15 minute or 30 minute window to take your product out of the locker. As we increase our capacity and volume it will be more efficient to go to deliver to boot. It is just like any time and motion study, you think about all the steps required to get through it and you try and sharpen those.”

The Yarn Live webcast event with Chris Quin took place on 3 September. Read part I of Chris Quin’s interview here.



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