What’s Next For America’s Grocers: Progressive Grocer’s 88th Annual Report
The food and consumables industry enjoyed record sales growth in 2020 as consumer behavior shifted dramatically due to the pandemic. The effect of COVID-19 is evident in the performance of every company on this year’s PG 100 ranking. What’s next for America’s grocers is less clear, however. As the pandemic begins to wane and vaccination rates move well past 50% this summer, a great reopening of the world’s largest economy will unfurl, bringing known and unknown changes to the world of food and consumables. As this era of uncertainty arrives in the second half of 2021, it brings new challenges and opportunities, blended with intensifying trends, all of which is overlaid by the rapid advancement of technology and shifting shopper behaviors and product preferences. These themes are explored in Progressive Grocer’s 88th Annual Report.
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Pandemic-Fueled Record Growth in 2020: The PG 100
Retailers found ways to maintain operations, despite the unprecedented circumstances, and displayed tremendous ingenuity to keep customers and workers safe while working closely with suppliers to ensure the availability of products. It wasn’t pretty at times, but grocers got the job done as the pandemic increased its grip on the nation.
It was against this backdrop of swirling chaos, barely a month into the pandemic, that Progressive Grocer published its 87th Annual Report in April 2020. The goal at the time was to embrace our mantle of leadership by peering into the future and identifying key ways that the world of food retailing would change forever.
It was a challenging exercise, given that many issues related to COVID-19 were still in flux, most notably the severity and duration of the pandemic. Despite this handicap, some of the prognostications made at the time proved more accurate than we could have imagined as the pandemic dragged on. They’re worth revisiting, because many are still relevant.
For example, we described the advent of touchless commerce and the acceleration of e-commerce. “Every aspect of food retailers’ operations will be impacted by this aversion to surfaces, ushering in the age of touchless commerce,” we wrote of this emerging new reality. As for e-commerce, we noted that “COVID-19 has served as the ultimate catalyst to accelerate innovation around the shopping experience of the future.”
Other predictions of enduring change related to heightened interest in supply chain efficiency and enhanced sanitation protocols, the death of self-service, and a sustained shift to at-home cooking. Perhaps the most prescient of the lasting changes highlighted in the prior year’s Annual Report related to labor issues and the need to revamp hiring and training. We opined: “Grocers will need to accelerate investments in automation as labor becomes more expensive and consumers demand pickup and delivery options that drain profits. Operating costs will remain under pressure for a long time.”
The ESG Enterprise
Environmental, social and governance (ESG) considerations have been foundational aspects of food retailing long before anyone knew to apply the ESG label to such efforts. Indeed, the business models of some retailers were founded on one or more aspects of ESG. However, the past year saw matters related to ESG become elevated to unprecedented levels, especially when it comes to racial equity and climate issues. Companies are being far more aggressive in regard to sharing details about policies established and actions taken to advance racial equity and overall diversity and inclusion. The same is true regarding climate change, an issue often described in the direst of terms, including emergency, crisis or existential threat.
What’s Next: Being a regenerative retailer is the next big thing in the ESG world. It used to be enough for a retailer or a supplier to focus on sustainability with initiatives on reducing or avoiding the usage of certain types of materials, or embracing alternative energy sources. Sustainability gave way to the more expansive concept of ESG. In a new shift, the focus has now turned to becoming a regenerative enterprise. Major retailers and suppliers whose operations have a larger environmental footprint have moved from simply doing less harm, to regenerative actions deemed to have a positive impact on people and the planet.