POOR DATA MANAGEMENT COSTING GROCERY SUPPLIERS UP TO £21BN EACH YEAR
· Problems in data management holding back grocery supplier sales by between 1% and 3%
· GS1 UK’s research finds 80% of product data is inconsistent – data is missing or incomplete
· Consumers and retailers are placing more importance on ingredients and nutritional data for comparison
London, 28th February 2017 – Grocery Suppliers are losing out on up £21bn every year due to inconsistent product data, according to research conducted by barcode standards organisation GS1 UK.
The research in their new report, How Suppliers Can Drive Profits by Addressing Problems with Product Data, shows poor data management is restricting sales by between 1% and 3% across the grocery supplier sector and adding 5% to the cost of sales. If these data problems were solved, analysis of other countries shows UK suppliers would receive a benefit of between £17bn and £21bn each year.
The report, available for download [https://www.gs1uk.org/productdnahub/how-suppliers-can-drive-profits-by-addressing-problems-with-product-data] highlights that provenance – along with ingredients and nutritional information – is increasingly important to British consumers who want to know where their food comes from, when it was made, and how long it’s been on the shelf. A groundswell of consumer demand and tighter regulations mean the onus is now food manufacturers to provide this data in a way that is easily comparable with other products.
But GS1 UK’s research has found that 80% of product content is inconsistent. Either the data is missing or it’s unreliable – and there isn’t an industry-wide mechanism for sharing it accurately or in a standardised format.
The report shows producing accurate and consistent data for hundreds or even thousands of items is a considerable undertaking for large suppliers. When GS1 UK interviewed representatives from the largest manufacturers, they found that, on average, they were introducing between 900 and 1,000 new SKUs every year each – with some introducing thousands a year. And this is complicated further by the lack of agreed format and standardisation across the board in the retail grocery sector.
From the interviews with representatives from a sample of the largest 55 multinational suppliers to the UK grocery trade, GS1 UK’s research highlighted how unwieldy and complicated the current New Product Introduction (NPI) cycle is and how costly and time consuming it is. Roughly three quarters of GS1 UK’s sample described the current NPI cycle as either “far too costly and time consuming” or “too costly and time consuming”. Only a quarter were prepared to say it was satisfactory and none of the suppliers GS1 UK spoke to thought it was particularly efficient.
A major problem with the current system is that every new product requires up to six samples to be sent to each retailer or wholesaler. Reviewing product samples is a standard step in the product discovery process for retailers but with different parties within retail organisations needing to check different information and data, the requests for samples soon add up. Given multiple samples are being sent to approximately 55 retailers and wholesalers by each supplier – this is a significantly cost manufacturers in the UK’s grocery industry.
Jim Dickson, head of retail at GS1 UK, said: “The UK’s grocery sector clearly has a massive problem with product data. It’s costing the entire industry dearly in terms of cash, additional resources and in terms of lost sales. This is why GS1 UK has been working with grocery retailers and suppliers to create an industry standard for the management of product information and images. The industry group has specified and launched a new service, productDNA:hub, which providers a single catalogue of high quality, independently verified product information. The truth is that even the multinationals know that they can’t thrive in the new world of smart integrated ecommerce in the grocery sector without better product data. Data – reliable data – has become a fundamental element for the sector.”