I think we will see sustained growth in both the expensive (healthy, organic, sustainable) categories and in the value categories (thanks to continued inflation and economic bifurcation). As such, the more targeted offers with promotions that have strong “gravitational pull” on other items will be an important part of the future of grocery operations. As will last-mile execution (even if not cited in the McKinsey study). I suspect there is a major shakeup coming in the grocery delivery space, as grocers tire of the premiums paid to Instacart and their ilk, and those who execute the best will find both share and margin opportunities.

For grocers, multichannel has become essential. Those who are getting the logistics right—and the tech that supports it—will continue to win. MFCs (micro-fulfillment centers) have become essential to filling orders coming in from all angles. On a brand loyalty note, research has shown that consumers are most likely to switch brands after a move. Will the “move” to online, BOPIS, and home delivery mean customers are more likely to at least try other local grocery chains they had never stepped foot in before? One thing’s for sure, the old line “You gotta eat” is still true. Like it or not, grocers have had to figure out how to keep shoppers connected with the foods and beverages they need. And as online groceries have taken hold, many shoppers no longer think local when they need to restock—or splurge.

Automation and speed will have the strongest impact on grocery operations.

Retailers will automate fulfillment and source products online for efficiency. They will rely on data to monitor and protect product availability. In stores, expect to see more cashierless tech and smart carts.

Rapid delivery will intensify, as grocers, convenience stores and food apps race to our doorsteps. Ghost kitchens and dark stores will fill real estate vacancies to meet tight delivery timelines. Also, local sourcing will shorten the supply chain for speed to market.

Collaborating with trading partners to digitize retail processes can make grocers’ supply chains agile and efficient.

We have created savvy customers over the past 2 years. Frozen food appliances have sold heavily. People bought frozen foods, and purchased more foods they can freeze. This mentality creates challenges to the food industry. People will be price sensitive on the whole. In other words, “Grocers must stay prepared for tomorrow’s new and unexpected challenges” There again, all retail is going back to school.

What’s also missing is the innovation CPG partners will bring to the table. My colleague at Kantar, Amar Sing talks about vendors who are creating integrated ecosystems of automation tools, interactive digital shelves, and AI solutions to drive operational efficiencies and shopper engagement. There is also the integration of predictive analytics and data capture within store environments that will improve inventory levels and in turn shopper satisfaction.

Whilst it is true that eating in massively increased during the pandemic, that is not exactly an earth shattering discovery as people were not allowed to eat out. Will it continue or more importantly, how long will it take for the balance to return is a different matter. People have found a new interest in cooking and that is good for grocers as not only will it maintain the ground they gained in lockdown it is likely to also increase the average spend as consumers take more interest in what they buy and more variety. However, shopping local and consumers wanting to be more aware of where their food comes from is likely to have just as big an impact on grocers as they need to consider local sourcing and meeting the customer drive for more local product. There is also a greater interest in the reduction of food waste, vegetarianism and vegan diets, which will further change the landscape of ranging at grocers. Numbers may still be relatively small but more people are reducing… Read more »

Mr. Kohli brings up some great points and does a thorough analysis of the retail food ecosystem, but he also suggested in a presentation at FMI about a year ago that grocers need to reduce personnel costs by 20-30%. This can’t be achieved without some important steps. He brought up some great ideas on being bold, and many of them resonate with the industry — personalization, ecommerce/digital, supply chain optimization — all of these are good steps, but a more intrinsic theme runs through all of these. What resonated with me was his thoughts on automation — in the back office and in the store. Grocery is undergoing the “Great Automation” as we speak with new engagement towards intelligent retail (both AI powered as well as data-based decision making). This means automated warehouses, shipping routes, supply sources. This means autonomous checkouts, self-checkouts, automated kiosks and store engagement. This means automated merchandising, product selection, reordering, and planogramming. This means automated delivery, simplified fulfillment, and optimized last mile options. This means digital optimization of customer engagement, personalized… Read more »

Collaboration will be a critical theme between the grocers and their wholesale distribution partners. The great digital acceleration spurred on the pandemic has required grocers and wholesale distributors to take a more progressive approach with digital transformation efforts, merchandising, assortment optimization, pricing optimization, BOPIS, and micro-fulfillment strategies.

With these digital imperatives, sustainability, transparency, and holistic living trends will be the prevailing themes in the grocery industry throughout 2022. We should expect grocers and their wholesale distributor partners to take the necessary steps to offer more localized assortments. Consumers also expect a greater level of transparency in the sourcing processes. The rise of conscious consumerism extends into the grocery space, as the consumers are more interested in product sourcing and ingredients. Holistic living and organic foods will be a crucial differentiator for grocers in 2022 and beyond.

Sajal is correct — grocers have a huge challenge ahead. Adapting their business to evolving consumer needs. Stores also need to be re-optimised to reflect their evolving purpose — they need to become hubs for omnichannel retail — pick-up, distribution as well as “traditional shopping.” Technology will need to play a significant part in automating, but also helping in-store teams adapt to their new expanded roles and responsibilities. Very difficult times, but also very exciting.