2024 Retail Innovation Outlook
There’s nothing like a new year to inspire fresh thinking. While there are differing views on how 2024 will turn out — depending on whom you ask, the economy could improve or the stock market will crash, and the Albertsons-Kroger merger could put many supermarkets out of business or independents will thrive — retailers have learned over the years that it’s smart to plan ahead and hope for the best while being prepared for anything.
So, as the new year begins, the country’s leading grocers are moving ahead with cautious optimism, planning as much as they can and focusing on where they should innovate in several key areas that are likely to provide growth or, at the very least, a better store experience. Just a few of the areas ripest for innovation are:
- Signage and promotions centered on value (including a focus on their own brands);
- Health-and-wellness-related initiatives, ranging from trends like plant-based foods and functional beverages to dietitian services and a return to the family meal;
- Better in-store dining and takeout options to attract the post-COVID shopper who’s tired of cooking;
- More sustainable store design and operations; and
- A renewed focus on labor, viewing the employee experience as the last mile of the customer experience.
Value Is King
Even though price inflation is expected to continue to moderate in 2024, smart retailers know that these days, a good deal goes a long way. Juan Romero, president and CEO of API(+), a retail design, branding and architectural firm based in Tampa, Fla., has observed a few retailers setting up at store entrances “dump tables” with deeply discounted items, along with more eye-catching promotional signage. He expects this trend to continue, especially among grocers that operate stores in more economically strained locations.
Private brands will also continue to play a starring role in providing better deals for shoppers, but at the same time, we’ll see leading grocers further developing their strategies to include bolder flavors and functional attributes such as gut health, mental health and immune health, predicts Jim Griffin, president of Stamford, Conn.-based Daymon North America. “Private brands continue to gain share and outpace national-brand performance, with nearly double the dollar growth of national brands from November 2022 to November 2023,” he observes. “With up to 98% of national-brand assortments the same across retailers, private brands are the strongest strategic lever to drive differentiation and loyalty, and better meet shopper needs — leading to widespread retailer focus and investment in 2024.”
Four particular trends that Griffin expects to see in regard to private label include a focus on program fundamentals, including long-term supplier relationships and best-in-class quality testing; further flavor development (think bolder flavors and new flavor combinations); more sustainable assortment options; and value-added functional products. “I believe the industry is just getting started in meeting demand for products that are functional in nature and target consumer ability to operate at peak performance,” he adds, noting that this trend extends across food and nonfood categories, from beauty and personal care to ready-to-drink beverages and snacks.
Health and Wellness Amplified
Indeed, with an aging Baby Boomer population and a 24/7 connected society that’s keenly aware of the impact of stress on health, the wellness trend isn’t going anywhere and will continue to broaden its reach in grocery retailing. In addition to new functional food and beverage introductions, plant-based foods are another trend that will likely continue their growth in 2024.
Julie Emmett, VP of marketplace development for the San Francisco-based Plant Based Foods Association (PBFA), notes that 79% of recently surveyed consumers say that they’re eating plant-based foods, and the sector now spans 30 major categories in grocery stores. The strongest-selling categories of late include plant-based eggs, seafood, ready-to-drink beverages, protein powders and creamers, but look for even more variety this year, such as an increase in bolder global flavors, plant-based prepared foods and frozen foods.
Austin, Texas-based Whole Foods Market included the plant-based trend in its list of Top 10 Food Trend Predictions for 2024, with one caveat: “Put the ‘plant’ back in plant-based.” It’s likely that several suppliers will comply with this request.
To maximize the success of plant-based foods, Emmett advises retailers to merchandise them alongside their conventional counterparts and incorporate them into storewide promotions. Grocers that have worked with PBFA on promotions in the past include Hannaford, which has run a successful Plantsgiving campaign to coincide with Thanksgiving for the past two Novembers. While PBFA declined to share specific details on retailer promotions for 2024, a spokeswoman notes that there are some new retailer shopper marketing activities on the horizon.
Another way that retailers can promote healthier living this year is by highlighting the importance of having meals together as a family. The recent winners of the FMI Foundation’s 2023 Gold Plate Awards demonstrate some innovative ideas: West Des Moines, Iowa-based Hy-Vee, the winner among retailers with 200-plus stores, was recognized for its expansive campaign tied into National Hispanic Heritage Month that focused on helping families find quality time together at meals. Incentives for Hy-Vee Kids Club members included a way to track family meals throughout the month, and a free cookbook featuring kid-friendly recipes received more than 1,000 downloads. Meanwhile, midsize winner K-VA-T Food Stores, based in Abingdon, Va., was lauded for its Stay Strong with Family Meals: Meals Made for Sharing campaign, which promoted USDA’s MyPlate for meal planning and used registered dietitians for messaging in TV segments and social media videos.
Let’s Eat at the Supermarket
Romero, of API(+), notes that most of the innovation he’s seeing in stores is related directly to the shopping experience — and nowhere is this more apparent than with in-store dining. “There’s lots of movement toward in-store dining and making that a more pleasurable experience than the old idea [of] ‘We’ll use the leftover space by the deli and put two tables and four chairs,’” he observes. Some independent retailers have thrived in this space, since they tend to have more flexibility than the big chains, adds Romero.
In just one example, Phoenix-based Sprouts Farmers Market has revealed plans to roll out four more in-store Press Coffee Roasters shops this February, following a yearlong pilot. Each coffee bar will feature a workspace area and a full drink menu, along with a selection of regular in-store retail items, including whole and ground coffee beans.
Romero points to Anaheim, Calif.-based Hispanic grocer Northgate González, where the prepared food presentation in its newest stores is like a “food hall” where you can taste something new at every turn, or Winston-Salem, N.C.-based Lowes Foods, whose latest locations feature such attractions as a Beer Den, a Smokehouse, and a “Community Table” where shoppers can gather and try something new.
Romero says that he expects to see more of these foodservice innovations, especially now that the COVID-19 pandemic is further behind us and people are looking to enjoy a more social experience when they shop. Salad bars and other to-go meal solutions will also continue to pop up at a rate more akin to pre-COVID times, and savvy retailers may look to brand their to-go offerings, he adds. The Kroger Co., for one, is clearly focused on this trend, as the Cincinnati-based company recently revamped its Home Chef Fried Chicken to be crispier and more flavorful than before.
‘Cleaner’ Operations
On the operations side, many retailers will aim to be “cleaner,” whether that’s through more sustainable sourcing practices, or literally by offering cleaner stores, which is yet another way to differentiate, notes Romero.
He also expects more grocers to focus on store safety and security, whether that’s by using technology, rethinking store layout or just having more employees on hand to eyeball what’s happening. “We may see architecture that’s more open, as well as more natural light in stores, which will help associates feel safer, too,” he notes.
As for sustainability, Washington, D.C.-based Fairtrade America cites several sustainability-focused trends in its forecast for the food and beverage sectors in 2024, including sustainable and ethical sourcing, brand transparency and accountability, private label brand growth, and the continued rise of regenerative agriculture.
Fairtrade points out that while “regenerative” will continue to be a buzzword in the food industry, there’s no clear consensus on what the term really means. The group challenges businesses, producers and retailers to define and implement such practices, letting farmers take the lead.
Whole Foods, for its part, called out water stewardship (one area related to regenerative agriculture) in its top 10 trend list for 2024, noting that “brands across the aisles are promoting water conservation, and consumers are listening.”
Ben Kuethe, VP of customer solutions at Divert, a Concord, Mass.-based solutions provider that creates advanced technology and sustainable infrastructure to prevent wasted food, shares his view that as retailers’ 2030 ESG goals close in and mandates take hold, “it’s time to transition from evaluating and piloting to implementation.” He observes: “We often get caught up in not doing anything because we are waiting for the ‘perfect’ solution. The reality is, it doesn’t exist. It’s a suite of integrated solutions that create a system. Let’s not get caught up with perfection, but focus on getting started.”
Employee Experience as the Last Mile
As retailers look for new ways to make the shopping experience better this year, they’ll also need to focus on their labor force, perhaps even more so than in the past, according to Will Eadie, chief revenue officer at global digital workplace solutions provider WorkJam. Eadie says that retailers are now looking at their employees’ experiences as the last mile of customer experience. “We’ve already seen where retailers have spent 20 years investing in the customer experience, and rightfully so,” he notes. “What they’re realizing now is that in order to continue getting value out of that, or even increase the basis points of the ROI on customer experience, you have to bring employees into that loop. So you’re going to start seeing things like workflows happening with all the pieces of labor solutions living together — things like communications, tasks and flexible scheduling, with front-line learning thrown in.”
Real-time digital collaboration between headquarters and stores will be a big trend in 2024, he predicts. “Retailers need to be able to get new information down to the front line,” he explains. “For example, if they’re rolling out self-checkout, they need to better engage all the front-line associates in all their stores by properly training and staffing them.”
Meanwhile, providing work-life balance with more flexible scheduling, better communication and empowerment will be paramount with the younger workers whom grocers need to attract, observes Eadie. “For Millennials and Gen Z, communication isn’t just something they’d like to have at a job; it’s an absolute must-have,” he asserts. “I’ve heard it said best: ‘Hey, communication is respect. Don’t just tell me what I’m expected to do in my role. Tell me what the company is about and what you’re doing to make the world a better place, and to make our workplace better.’”
- A ‘Beast’ of a Collaboration
Albertsons’ Safeway banner recently demonstrated innovation in another up-and-coming area — social media marketing — when it took part in a clever collaboration with digital creator and philanthropist Jimmy Donaldson, known on social media as “MrBeast.” Safeway was featured in a challenge called “Survive in a Grocery Store,” in which contestants won $10,000 for each day they continued living inside a Safeway store, provided they chose $10,000 worth of products to give to a local charity.
After being approached by MrBeast, Boise, Idaho-based Albertsons and the Safeway team worked to create a functioning store site for the challenge. The space included seasonal areas and specialty sections centered on special occasions. Several CPG companies and solution providers got in on the challenge, too.
“Safeway has a longstanding history of giving back to the community, so when we learned of this incredibly fun and unique opportunity to partner with MrBeast and help our neighbors in need, we were thrilled,” explained Jennifer Saenz, EVP and chief merchandising officer at Albertsons, early last December. “Our collaboration with MrBeast furthers our mission to break the cycle of hunger as part of our Recipe for Change environmental, social and governance framework. We’re also introducing MrBeast’s fanbase to the extensive assortment of popular products they can find in their local Safeway store.”
