As we wrap up 2023, it’s time to reflect on a year that was a transformative time for the grocery industry.
OPINION: EDITOR'S NOTE
'Tis the season to be jolly!
As we wrap up 2023, it’s time to reflect on a year that was a transformative time for the grocery industry — and not just because generative AI and retail media unlocked the potential for food retailers to squeeze more profit out of their businesses.
After several years of extreme volatility, uncertainty and growth, the past 12 months have been a level set. The good news is that we have returned to a more normal time. The bad news is that normal is never normal, and grocery retailers will be under more pressure than ever before to make the right bets on where to invest as they embrace new ways to create value and sustained growth.
[Read more: "How Retail Media Is Becoming a Circular Movement"]
Even amid the pressure, retailers that aggressively focus on getting the next 12 trends right may be best positioned to thrive in 2024’s never normal, whatever the new year may bring:
- Loyalty: What have you done for me lately? That’s what your shoppers are thinking about outdated circulars, apps and promotions that don’t really solve their problems. As Giant Food’s loyalty guru, Ryan Draude, suggested during a recent Progressive Grocer webinar, perhaps it’s time to design loyalty programs like those of airlines and hotels. Give shoppers a reason to come to the store more often to rack up those points!
- Retail media: The next year will bring more growth for this channel, but it will also bring a reckoning. Simplification, standardization, in-store executions and ROI will be top of mind as suppliers demand more from retailer media networks. Highly recommend PG's recent retail media webinars, with NIQ, Coresight Research and Turbyne, for more context on the next evolution for RMNs.
- AI: The integration of artificial intelligence across the business will continue to accelerate, and the first grocery retailer to launch a “killer AI” app will likely be Walmart.
- Inflation: Inflation may be subsiding, but we’re starting to see the effects of the end of SNAP dollars, the start of student loan repayments, ever-rising debt and dwindling savings on retailer bottom lines. Consumers choosing value (and private brands) above all else isn’t going away anytime soon.
- M&A: The proposed merger between The Kroger Co. and Albertsons Cos. is slated to close on Jan. 13, and all indications are that it’s going to happen. Industry consolidation will continue in the new year, presenting new opps (and challenges) for retailers.
- Sustainability: Putting aside robust retailer environmental, social and governance (ESG) initiatives and increasing consumer preferences for sustainable practices, the regulatory (and operating) environment for grocers is poised to become a lot more complex in the next year, due to new rules regarding food waste, refrigerants and more. Check out my interview with Whole Foods Market CEO Jason Buechel for insights on climate-smart ag and retailing.
- Profitability: Grocers will continue to face downward margin pressure in 2024 and will be forced to make some very tough choices when it comes to spending, all while trying to guess how shoppers are going to behave for the next few quarters.
- Theft: Shoppers are unhappy about product being locked up in cases, and retailers are unhappy about product being stolen. The answer might be to invest in more employees in the aisles as a deterrent to theft.
- Social commerce: Tik Tok-viral recipes will keep triggering out-of-stocks, so now’s the time to invest in some better forecasting solutions to predict demand based on social media and other trends.
- Storytelling: Speaking of Tik Tok, there's a few vids going viral in which Tik Tokers are putting grocery retailers on blast over high prices. Grocers that want to retain their shoppers and acquire new ones need to do a better job of telling their stories, whether in-store or online. The store is the heart and soul of the community. It's way past time to shout it from the rooftops.
- Self-checkout: The expansion of self-checkout has solved some problems for retailers but introduced many new ones, including increased shrink, labor issues, and customer frustration over the technology. AI may help solve some of these problems in the new year.
- Small brands: Now that supply chains are mostly back to “normal,” smaller brands have an opportunity to win space on the shelf again — as long as they’re value-priced, of course.