6 Business Imperatives for Grocers in 2023

OPINION: EDITOR'S NOTE

How much can you cram into your brain after attending three of the retail industry’s biggest trade events in 12 days?

It turns out, quite a lot, especially if you drink pints of coffee, walk 10 miles a day and talk to as many leaders in food retail as possible.

Instead of feeling sleepy from travel, my time at CES in Las Vegas, NRF’s Big Show in New York City and FMI’s Midwinter Executive Conference in Orlando, Fla., over a span of 12 days felt like an awakening. We’ve all been a little asleep since 2020, muddling through, waiting to get back to normal. Well, it’s back to normal for in-person events, and for the grocery industry, it’s back to “the never normal,” a theme that technologist and MIT professor Peter Hinssen so eloquently introduced during his keynote to 1,220 attendees at FMI Midwinter.

[Read more: "FMI Honors 7 Food Industry Executives"]

FMI Chief Collaboration and Commercial Officer Mark Baum moderated a panel discussion at Midwinter, which reported its biggest attendance since 2008, with H-E-B President Craig Boyan; UNFI CEO Sandy Douglas; Unilever Global Chief Customer Officer/Personal Care Terry Thomas; and Hunter Williams, partner in Oliver Wyman’s retail and consumer goods practices. The speakers outlined six business imperatives that will shape grocers’ and manufacturers’ priorities in 2023: workforce challenges, technology transformation, changing macro-economic conditions, evolving consumer behaviors, rising ESG expectations and supply chain disruption. Douglas stressed the importance of finding alternative ways to solve the labor crisis in grocery.

“I think there's a public policy opportunity for all of us to work on, which is basically workforce supply,” Douglas said. “How do we try to de-politicize the issue of immigration so that we widen the labor pool?”

Boyan expressed concerns about the American consumer “running out of fuel,” trying to absorb sticker shock at the grocery store. He mentioned that savings rates are at a 17-year low, and credit card and household debt are growing at the fastest rate in 15 years. So what happens when the consumer runs out of money?

“We know that high inflation, while it helps our sales and helps some part of this industry, is basically a tax on households — and especially on low-income households," commented Boyan. "And so when we think about the state of the U.S. household, the high inflation and spending that has drained their savings, the impact on the average household is going to be severe. We have to assume that growth and consumer spending in 2023 and beyond is going to slow. And I think endemic on everybody in this room, in this industry, is to find ways to help the average household that's under massive economic pressure, especially low income.”

He also expressed some "hard truths" about grocers' investments in technology: "The truth is we all need to be tech companies. The battle that we're all about to face is how can we all become great tech companies before tech companies become great retailers? How do we become truly integrated commerce? I think we've all learned that you can build a nice front end tool but then you've got massive tech debt and lots of infrastructure investment for your old legacy plumbing. That's going to be the most fundamental thing companies need to do in the next three or four years: Not only build great new customer facing tools but also figure out how to upgrade the old house to have really strong infrastructure under it?"

Yet despite the doom and gloom about inflation, labor shortages and legacy systems, grocery leaders have much to look forward to. Food-at-home consumption keeps rising. The supermarket channel has become agile, innovative and more efficient. And opportunity abounds when it comes to automation, loyalty, private label, foodservice, retail media, data analytics, social commerce and new tech platforms.

“There are retailers positioned very effectively all over the marketplace,” Douglas concluded. “So if we pivot into this year of uncertainty, we have an opportunity to collaborate and tackle problems in a much more boundary-less way, so that the richness of the customer base continues to be strong and grows.”