Skip to main content Skip to Footer

ÚLTIMAS PUBLICACIONES


Achieving high performance in the retail grocery industry

Accenture’s industry-specific research has identified the shared characteristics of the high performers in the retail grocery industry.

Overview

Three of the 23 companies analyzed meet Accenture’s criteria as high-performance retail grocers. All have outstripped their peers in terms of consistently high revenue growth over an extended period. The simplicity and agility of their operating models and decisiveness of their leaders help explain their exceptional performance. So too do their strong and adaptable customer- and market-centric cultures. But what really distinguishes these high performers is an incessant focus on improving their propositions to customers whose demands keep escalating. Superior execution has helped make each company the retailer of choice in its respective market. Each actively shapes and dominates the strategic agenda for its market by constantly enhancing and refreshing its food offer and by undertaking major strategic initiatives to extend its reach to customers.

Background

The peer group for Accenture’s study of retail grocery high performance comprised 23 publicly traded companies from around the globe. All had revenues greater than US$2 billion, a significant proportion of which were generated from food sales. We applied Accenture’s High Performance Business methodology to identify those exceptional companies that:

  • Effectively balance current needs and future opportunities.

  • Consistently outperform peers in revenue growth, profitability and total returns to shareholders.

  • Sustain their superiority across time, business cycles, industry disruptions and changes in leadership.

Three companies emerged from this process as high-performance businesses. All three high-performance companies have distinguished themselves primarily through exceptional revenue growth—on average, nearly double the growth rates of their competitors over a five-year period.

Strong revenue growth generates the free cash flow that assures the marketplace that the company has the means to adjust quickly to changes in consumer demand.

The retail grocery industry’s three high performers are also more efficient at managing their current operating assets—particularly their inventory levels. In 2006, their inventory-to-revenue ratios were just 4.3 percent compared with 6.4 percent for the average performers. This effective cash management enables them to invest profitably in growth. The high performers’ outstanding growth is especially noteworthy given the overall low economic profitability of the retail grocery industry. Economic profitability in this industry is also quite volatile, rising and falling year by year over a five-year period.

Key Findings

Accenture’s research has determined that only three grocers worldwide consistently exhibit strategic thinking and have achieved high performance and created long-term shareholder value as a result. They owe their superior revenue growth to mastery of market focus and position, distinctive capabilities and performance anatomy—the three building blocks that Accenture’s extensive cross-industry research shows underpin high performance regardless of industry. Our industry-specific research has identified the shared characteristics of the high performers in the retail grocery industry across the three building blocks.

Market Focus and Position
Strategic thinking is critical to this building block, which in retail grocery means demonstrating an understanding of what will lead to market domination. Food is a local business where players with strong regional structures can respond quite quickly to local trends. Leading retail grocers understand the dynamics of their home markets better than their competitors do.

Distinctive Capabilities
Four distinctive and interdependent capabilities enable high performance in the retail grocery industry:

  • Acute market sensing skills—More attuned than their peers to reading market signs, high-performance retail grocers enjoy insights into both consumers and competitors—insights that give them both first-mover advantage and the ability to respond rapidly to threats and challenges with a steady stream of small-scale product and offer innovations.

  • Continuous innovation in the core offering—Leading companies make exceptionally effective use of customer and store feedback to enable continuous assessment of purchasing behavior and trends. As a result, they can make fast decisions on a small scale, pushing through the sorts of store-level incremental changes that respond most effectively to customer needs.

  • A consistent agenda of growth initiatives—Top retailers ensure that their initiatives are implemented by taking a disciplined approach to growth and portfolio management that weeds out less promising projects, prioritizes the best of them and uses a balanced scorecard to monitor efficiency.

  • A simple, highly effective yet agile operating model—Leading retail grocers optimize their business process design to achieve low costs to serve and high asset utilization. They make continuous incremental changes to their operating processes and periodically update their operating models. By using clearly defined and easily understood operating methods across the entire organization they also ensure operational excellence.

Performance Anatomy
This building block is a mix of the cultural, leadership and workforce factors that sustain both distinctive capabilities and market focus and position. In retail grocery, it describes a strong, highly cohesive, customer-focused organization that is very much oriented toward the right outcomes. This unique organization mindset, when combined with strong and decisive leadership, is a key differentiator in an industry where everyone tends to be paying the same for labor, land, transport and other fixed assets.

Analysis

The high performers in retail grocery are forces to be reckoned with. They set market trends, foresee changes in consumer demand and quickly innovate in their core business to meet emerging needs. By constantly pursuing new growth opportunities, achieving superior execution with clear and simple operating models and by nurturing cultures that embrace change, these high-performance businesses are strongly positioned for the road ahead. They must, however, constantly refine those distinguishing characteristics to keep pace with the market. The race is on... with plenty of potential for new winners to emerge along the way.

Contact us to find out more about how to achieve high performance in the retail grocery industry.