Running a food retail business may seem simple. After all, such a business is usually set up to sell edible food products to its customers at a retail basis, which is in itself is a relatively uncomplicated and straightforward transaction.
However, this is a very common misconception that is quite far from the truth. Not only is the food retail industry more complex than it seems at first, especially when it comes to crucial backend operations, but it also faces certain major challenges. Some of these challenges are unique to the food industry itself, while others are inherently experienced across all industries. Businesses in the food retail industry must tackle and address these challenges head on, or they will prove to be quite a hurdle towards the company’s growth, especially in today’s hypercompetitive business world.
To help potential newcomers in this particular industry, the following is the list of the biggest challenges they face, as well as how to adequately solve them.
Any business, no matter its size or industry, has to deal with issues related to accounting. From balancing employee wages and product pricing to ensuring that taxes and costs are adequately taken into consideration, a business must reliably handle all accounting matters. Otherwise, it not only risks potential financial problems in the long run, but may also invite stiff penalties and litigation from legal authorities.
Thankfully, there are many solutions at the business owner’s disposal in regard to this particular challenge. One is to hire a professional accountant, or a team of accountants, to handle the company’s finances. Another is by utilizing reliable accounting software to automate and simplify such tasks, so that tedious, manpower-intensive tasks can be done much more accurately and efficiently.
Another challenge inherent in many industries, especially in the retail sector, involves keeping adequate track of inventory. Failure to do so can result not just in overstocking or understocking”both of which can result in lost business opportunities”but it can also result in perishables being stored past their expiry dates. This ultimately ends in the business’s stock being completely written off as a complete loss, causing further financial loss. It is imperative that food retail businesses invest in adequate inventory management in order to prevent against this.
One definitive way to do so is to once again rely on digital solutions to automate and simplify the entire process. By investing in enterprise resource planning (ERP) solutions such as SAP Business One, a food retail business can keep track of and manage all of its resources much more easily and efficiently, even with a limited amount of manpower. The fact that SAP Business One is also designed specifically for small businesses also means that utilizing it is more affordable than an ERP originally meant for bigger enterprises.
We recommend that small-to-medium food retail businesses seek this particular solution out. The first step, as always, is by choosing a trustworthy SAP partner to get them started. This will ensure that they will be adequately informed as to whether SAP Business One is the right solution for them, or if they will be better served by other solutions.
The arrival of the internet has made the average food consumer a bit more knowledgeable when it comes to their dietary habits, specifically when it comes to the harmful and negative effects of certain elements to their health such as sugar and cholesterol. This has helped give rise to the current fad of a large chunk of industry customers looking for healthier food options in the form of low-fat, low-sugar, or organic products. While there will always be consumers of the food products being excluded by such a trend, the demand for healthier alternatives means that food retail businesses will have to decide on whether to ignore a potential new market or risk alienating their current loyal customers.
One way that food retail outlets can resolve this particular challenge is to simply try selling healthier options at their stores for a short period of time. A brief trial run with a limited stock may be all that they need to see if their current customer base is open to the idea of such food options. If the trial run is well-received, then the business can formally adopt these healthier choices into their product line. If not, then they can be phased out right away.
Another way is to perform customer interviews, either through solicited feedback forms or just through simple word-of-mouth inquiries. If enough customers vocalize their demand, then a trial period, such as discussed previously, can then be carried out. This may take a bit longer than simply going into the trial period phase right out, but it also provides another level of verification that may help the business owner make a better decision regarding this particular challenge.
Lack of employees
Smaller food retail outlets, especially those in the short order or restaurant sector, may find themselves unable to take more employees to help with peak periods, either due to a lack of qualified employees or rising employee wage demands. Letting this challenge go unresolved could once more result in lost business as well as risk negative reviews or perception from customers.
There are a handful of ways to handle this issue. One is to adopt a self-service system commonly used in fast food businesses, where customers line up and request for specific dishes on a menu by the counter. Their chosen food items would be placed on their tray, which they can then carry to their own tables. This removes the need for servers, allowing businesses to cut down on salary costs.
Yet another is to adopt automated order kiosks. Instead of dictating their order to a human cashier or employee, the customer only needs to pick out their desired menu item through a kiosk with an active touchscreen. This kiosk would relay the order to the kitchen, which will complete said order and then deliver it to the awaiting customer on the counter. This would result in even higher savings when it comes to wages, allowing the business to devote more of its limited resources to more critical areas.
Meeting the challenges inherent to the food retail industry is necessary for success
Entering the food retail industry as a business may seem simple and uncomplicated, but such an industry carries with it challenges and obstacles that must be resolved in order to achieve profitability. Through judicious use of digital solutions in regard to consumer behavior and resource management, even small startups can find their foothold in this hypercompetitive market.