Food Retailers Get Real About Investments, Outlook

FMI is out with its 75th annual report featuring the latest retailer and supplier sentiments.

Those in the food retailing businesses have had their proverbial noses to the grindstone chasing market share and margins in an often challenging marketplace, but many recently took a beat to assess the industry at large. Their insights are shared in the new report, "The Food Retailing Industry Speaks 2024," released by FMI - The Food Industry Association.

It’s a milestone year for the report, as it is the 75^th edition. This year’s survey underscores both the resilience and innovation of the industry, as grocers and suppliers are striving to modernize the grocery shopping experience while contending with such headwinds as inflation and asset protection.

“The food industry continues to demonstrate its collective resilience and adaptability in solving persistent transportation and employee turnover issues so it can focus on operational efficiencies,” said FMI President and CEO Leslie G. Sarasin. “Inflationary pressures and other challenges continue to squeeze profit margins, but even these obstacles do not stop the industry from its investment commitments to sustainability, emerging technologies, and marketing and modernization strategies that improve the in-store shopping experience.”

Some highlights of The Food Retailing Industry Speaks 2024 include the following trends and insights:

Macroeconomic conditions like inflation and regulations on profits remain a thorn in the side of many in the industry. Retailers and suppliers expect that operating costs will increase this year; only 13% of food retailers anticipate that their profits will rise in 2024. More than two-thirds (65%) of retailers believe that inflation and economic challenges will change shopper behaviors.
On the plus side, supply chains are smoothing out, as the percentage of retailers emphasizing negative impacts from trucking/transportation challenges declined from 79% to 35%. Suppliers likewise reported a decline, from 72% to 58%. Meanwhile, on the ground at retail, out-of-stock rates fell from 10.7% in 2022 to 6.5% in 2023.
On the labor front, average turnover rates for food retail workers went down from a record high of 65% in 2022 to 58% in 2023.

Asset protection remains an issue and a high priority in this business, with an overwhelming 85% of food retailers agreeing that increasing theft and fraud are the biggest problems negatively affecting business. More than two-thirds (64%) indicated that other societal challenges are a problem, such as a lack of civility, drug use and violence, as issues that negatively affect operations. That said, FMI’s recent Asset Protection Survey found that more than 80% of retailers have plans in place to address many of these challenges.
Food retailer and suppliers have a host of other plans in place to lift their businesses, even amid shifting and uncertain conditions. According to the FMI survey, 81% of respondents are experimenting with in-store technologies to improve the shopping experience; 41% of retailers and 69% of suppliers are using artificial intelligence for parts of their business. Meanwhile, 79% of retailers are adapting their stores to include more space for freshly prepared grab-and-go items, and 67% are adding more private label products.