A study of the supermarket industry and its growing logistics capabilities

Abstract

PurposeThis paper aims to analyze and identify commonalities and differences between the supermarket industry and its logistics capabilities in developed economies such as North America, the European Union and Japan, as well as the emerging Asian economy of India.Design/methodology/approachA qualitative analysis, based on data, other pertinent information gathered from reports on various economies within the supermarket industry and personal interactions with a few supermarket chains managers, is used to derive various insights of strategic value in retailing and distribution. Major industry practices and logistics trends are examined and answers are sought to important business questions.FindingsThe results of analysis show that the supermarket industry is customizing operating strategies. Efficient consumer response (ECR) standards are becoming a common method used to increase the supermarket supply chain efficiencies that are driving logistics trends within the industry. The trends include expanded service requirements, mass customization, customer loyalty and private labeling, delivery options and increased challenges in diverse markets. Reverse logistics, electronic point of sale data collection and management of supply chain by third‐ and fourth‐party logistics providers are also becoming increasingly important for the supermarket industry.Practical implicationsAdvancements in transportation and storage technologies, including breakthrough technologies to improve supermarket operation to the level of leading automobile manufacturers, present increased challenges and opportunities to the supermarket industry. In addition, changing consumer tastes offer companies in developed countries as well as developing countries like India, the chance to garner increased revenues. It is imperative for supermarkets to heed changing buying habits, particularly in developed countries, which have highly mature/competitive markets. Although supermarkets within developed and developing countries may face different challenges, consumers everywhere still focus on value, convenience, variety and a better shopping experience.Originality/valueThis paper provides increased understanding of the strategic retailing and distribution issues present in the supermarket industry and examines a number of significant business questions pertaining to logistical trends. A unique juxtaposition of the supermarket industry within developed and developing economies provides various insights into the commonalities and differences within various countries studied.