Easter and high demand: technology as an ally to avoid stockouts in supermarkets

By Luiz Carlos Pereira de Pádua

Easter is always a busy time for retail, as there is a significant increase in consumption, especially of chocolates. Data from the Brazilian Association of the Chocolate, Peanut and Candy Industry (Abicab) indicates that the Easter period of 2022 registered a 13% growth in sales of chocolate eggs, compared to 2021. And for this year, the sector expects this percentage to continue growing.

However, such high demand can also have negative impacts on businesses, such as stockouts. This is a recurring problem that affects the profitability of many retail chains and can occur in various ways, whether due to lack of inventory control, damaged products, theft, or expired products.

The consequence of affected profitability leads to the dilemma of which came first: the chicken or the egg? In other words, is it necessary to invest in improvements to increase profits, or to increase profits to invest in improvements? To help resolve this dilemma, the study "Beyond the hype: Separating ambition from reality in enterprise AI" by the consulting firm McKinsey & Company, conducted in 2019, shows that supermarkets that invest in advanced technologies can gain a significant competitive advantage, potentially increasing their profit margins by up to 30%.

In this sense, there are some technologies that are already being adopted by supermarkets, such as ERPs, which, with a little optimization, can result in greater operational efficiency and increased profit margins.

ERP integrated with other existing systems  

As mentioned above, most retailers already have an ERP (Enterprise Resource Planning) system where they manage all aspects of loss prevention and stockout control. This includes managing all stages of inventory movement, such as purchases, goods receipts, inventories, real-time point-of-sale updates, automatic replenishments, emergency replenishments, and other daily operations. Furthermore, by its very nature, the ERP system already has native integration with several systems, such as sales, accounting, tax, finance, and asset management. 

However, outside of ERP systems, most retailers have POS (point-of-sale) systems, WMS (warehouse management systems), CRM (customer relationship management systems), HR (payroll and personnel management systems), e-commerce, delivery services, and others. In this case, integration platforms are necessary and important to optimize and ensure greater accuracy and speed in processes, in an automated and secure way.

Cloud migration: flexibility, agility, and much greater security 

It is characteristic of the retail sector to maintain its ERPs and systems on local servers; however, to support periods of seasonality and high demand, such as Easter, either the infrastructure needs to be designed anticipating the peak (which means high waste outside of this period) or only the day-to-day infrastructure is used, generating disruption and significant losses at times when profitability could be higher. 

Therefore, the safest and most accessible solution for retailers who rely on IT as a business ally is the public cloud. This adoption makes the environment scalable, allowing for parameter adjustments that keep pace with business growth, as well as providing the necessary security for the ERP and peripheral systems. But be careful: you need to understand the cloud so that it doesn't become a cost drain!

Investing in a good IT infrastructure in the retail sector avoids the need to play catch-up only during peak demand periods, when consumption is higher and demands more from the environment. In this way, by investing in the long term and adopting cutting-edge technologies, the supermarket segment will become increasingly scalable, competitive, and secure.

Luiz Carlos Pereira de Pádua is Head of Retail Sales at Skyone , a provider of technology platforms that simplify business and improve customer experience, seeking to evolve the way companies consume technology.

Check out the article published in the Novo Varejo publication.

Written by Skyone