Mark Jackley | Content Strategist | April 12, 2023
As 2023 unfolds, the disruptions of COVID-19 are starting to fade for grocery retailers, though price inflation and shortages of some supplies persist. While the pandemic turned the grocery industry upside down, it also accelerated innovations, such as online shopping and home/curbside delivery, as well as interest in sustainable foods and business practices and healthier diets. Technology advances are automating key parts of the grocery business, such as inventory management, customer marketing, in-store checkout, and delivery options. These changes promise to reduce grocers’ costs, boost revenues, and improve product availability and the overall customer experience.
Consumers are exploring new ways to shop for groceries as they watch their pennies and seek the convenience of digital ordering and home delivery. But make no mistake: Shoppers are back in stores, where they’re embracing a new array of smart retail experiences, such as shopping carts that automatically scan items for payment; apps that help shoppers navigate the store and find deals; and electronic shelf labels with additional information on product sustainability. Grocery retailers are giving shoppers the best of the physical and online worlds, combining an upgraded in-store experience with more ecommerce options. Below are 10 major grocery retail trends.
The highest price inflation in nearly 40 years is prompting grocery shoppers to trim their budgets. In a Harris Poll conducted for Alpha Foods in 2022, 90% of Americans said they were concerned about food prices, which have overtaken gas prices as their top inflation worry. Although the price of food isn’t rising as fast as it did in 2022, sticker-shocked consumers are buying more carefully, purchasing less, and seeking value. It’s not easy to save. Since May 2022, online grocery prices have risen 13.4%, faster than those in any other ecommerce category, according to Adobe’s Digital Price Index.
Oracle research reveals that 75% of consumers are comparing online and in-store prices. Many are seeking deals with promotional pricing and are willing to buy from new places if it saves money. For example, more than half of respondents to the 2022 Harris poll said rising meat prices made them think about trying plant-based alternatives. Others are replacing traditional brands with private-label offers. There are also those who are investigating subscription services such as ButcherBox, a supplier of meat and fish, whereby subscribers pay a fee to have their favorite foods delivered.
Continued supply chain disruptions caused by numerous factors (including crop failures, trucker strikes, and geopolitical upheaval) are forcing grocery retailers to rethink their fulfillment models and product assortments to meet consumer demand. Grocers will increasingly align their planning decisions with demand forecasting, inventory management, and goods receipt flow (checking items received against purchase orders).
Now back in stores in force, shoppers are taking advantage of tech-driven improvements. For instance, customers can check out faster using scanners that let them ring up items as they walk the store, then pay without going through busy checkout areas. Going one better, AI-powered smart carts automatically handle scanning and payment.
Some 25% of consumers now use grocery shopping apps, according to payment systems provider Ingenico. Such apps hold shopping lists, display store maps, offer digital coupons, and integrate with loyalty programs. At some stores, shoppers can preorder deli and bakery items online instead of standing in the queue clutching a paper order number. Digital kiosks promoting the latest deals are popping up as well.
“Seamless omnichannel tactics” are the talk of the grocery industry—marketing-speak for giving consumers the choice of shopping on both online and offline channels. Grocery retailers are fusing the physical and digital to offer delivery options and lower prices for loyal customers.
In stores, electronic shelf labels cut down on manual labor as prices change, give additional product information, and sometimes offer recipes via QR codes. Some grocery retailers use robots that roam the aisles to check shelves and restock products. Technology is bringing new efficiencies to the back office, too. AI algorithms built into a variety of systems help retailers cut food waste, improve their circular ads, and enhance demand forecasting.
Bigger isn’t always better. Smaller grocery retailers are succeeding with cozier spaces, personal service, and unique offerings. Dom’s Kitchen & Market, which opened in Chicago in 2021, features meal stations at the center of the retail floor, with a selection of packaged goods off to the side.
Larger grocery chains are getting in on the action by spinning off smaller brands. Publix, which operates more than 1,300 supermarkets in the US Southeast, has rolled out GreenWise Market, a small-format store mixing organic produce and meats with grocery staples. As foot traffic declined last year in conventional Publix stores, traffic rose steadily at GreenWise stores, where patrons also spent more time shopping. Like Dom’s, some smaller stores are destinations for meals, fresh food, and fun activities. Schnucks, a family-owned chain in the US Midwest, opened Eatwell Market, a natural foods store. Sprouts Farmers Market is planning to open dozens of smaller stores that it says will offer a “treasure hunt shopping experience.”
The ESG (environmental, social, and governance) movement and increasing demand for healthier foods are changing consumers’ grocery lists. Research firm Mintel reports that 27% of US shoppers are reducing their meat consumption and 17% are lowering their dairy intake. Meantime, grocers are offering more choices of foods that are both ethically sourced and healthier. For instance, Swiss grocery chain Migros is partnering with SuperMeat, a food technology company that grows meat from animal cells. Such cultivated meats lower the amount of methane gas generated by livestock. They also allay consumer concerns about animal cruelty and the health risks posed by growth hormones.
Some 71% of grocers cite sustainability as a key priority for 2023, according to a Grocery Doppio report, with 43% saying a senior executive will lead the effort. The same report says 61% of shoppers are aware of sustainability efforts their preferred grocers are making and that 37% are willing to pay a premium of up to 17% for sustainable choices. Increasingly, grocery shoppers want to see product information related to sustainability efforts on shelf labels and digital channels.
While consumers still shop for most of their groceries in stores—brick-and-mortar stores account for 85% of US grocery sales—online grocery shopping is here to stay. A 2022 study by Statista reported that US digital grocery sales rose to $100.7 billion in 2021, compared with $80.3 billion the previous year. The same study estimated that online grocery sales will reach $366.1 billion by 2027. Walmart (including Sam’s Club) is the largest US online grocer, with over 25% of the market. Other large grocery e-tailers include Amazon Fresh, Kroger, Costco, Target, and Albertsons. Smaller brands Vitacost and Thrive specialize in natural foods while Weee! specializes in Asian and Latin fare.
Grocers are starting to blend their online and in-store experiences. For example, grocers personalize offers to online shoppers that they can redeem during their next store visit. Some supermarkets let shoppers order specialty products online for pickup in-store, where people often duck inside to make additional purchases. There are even apps that make it easier to impulse buy candy and gum, whether people are shopping from home or perusing grocery store shelves.
Oracle research shows that nearly 30% of consumers want grocery delivery options, typically curbside pickup, home delivery, and in-store pickup when purchasing online. Grocery industry trends show that delivery models are becoming more sophisticated. Grocers such as Walmart and Albertsons now offer coupons, shopping lists, product suggestions, and special offers as part of their delivery services, on top of flexible scheduling and delivery notifications. Besides competing with each other, grocery retailers contend with delivery-first competitors such as Instacart, Grubhub, Shipt, DoorDash, and Uber Eats.
During the pandemic, consumers warmed to meal kits—subscription services that send partially prepared meals to the home. The global meal-kit market is expected to reach $29.63 billion by 2028. A monthly subscription to ButcherBox, covering shipping, runs $146 to $306, depending on what you buy and the size of your orders. Customers can choose their mix of meat and fish or let ButcherBox curate it for them. The service is popular in areas with little access to grass-fed meat and seafood choices.
Misfits Market ships excess produce, meat, and more from producers that otherwise would throw the food away. Customers order weekly, starting with a selection that Misfits recommends, which shoppers can change to suit their tastes. Misfits advertises savings of up 40% compared with grocery store prices, along with the satisfaction of helping reduce food waste.
AI, machine learning, and automation in general promise to make grocers more efficient in many areas, including customer care, quality control, inventory management, pricing, and fraud detection. Walmart has used cameras and real-time data to increase shelf-stocking efficiency by 90% and sales in meat aisles by 30%. Increasingly, AI-based data analytics give grocers details on buyers’ meal preferences, food allergies, and motives for purchasing items, enabling them to craft pricing and promotions more precisely. With “dynamic pricing” of grocery items, retailers can use AI algorithms to analyze data on competitors’ prices, their own stock levels, pricing history, and from other sources to determine the most profitable prices for items.
Dark stores, also called micro-fulfillment centers, are devoted exclusively to online grocery orders. Customers never enter the outlet, instead scheduling home delivery or curbside pickup. Using apps, customers place their orders on items currently on shelves, which are fulfilled within minutes. Speedy, accurate orders are a win for consumers, while these retailers save on store design and point-of-sale service.
The long-established dark-store concept is gaining even more momentum, with startups raising big money: $380 million by US company Gopuff and $44 million by German dark-grocer Gorillas.
As the grocery industry evolves, retailers are using Oracle Cloud technology to stay ahead of the curve. Oracle Retail grocery solutions help supermarket chains and individual stores forecast demand, precisely manage their inventories, make it easier for shoppers to find and pay for items in-store and online, and improve the overall customer experience. Stores also use Oracle Retail grocery solutions to manage procurement, improve supply chain efficiency and reduce risk, segment and target consumers, and grow their businesses.
The grocery industry sees positive signs in 2023. Though uneven supply is still inflating the price of food and other items, causing shoppers to buy fewer groceries, consumers are once again filling stores as well as buying online. Technology is changing the game. Grocery retailers are investing in providing hybrid online and in-store shopping experiences, as well as using smart technologies that save shoppers time (and sometimes money) as they cruise the aisles. It’s an exciting time to be in one of the world’s essential industries.
How is technology changing the way people shop for groceries?
A range of technologies are improving digital and in-store shopping. For example, smart shopping carts automatically scan and ring up items, letting shoppers skip the checkout line.
What are the most popular products in the grocery industry?
The most popular products vary by grocery chain and region, but soda pop, bread, eggs, milk, chips, and breakfast cereal are always near the top of the list.
What sustainable practices can grocers invest in for 2023?
Grocers can offer more sustainable items, such as meat made from plants or animal cells. Retailers can also give shoppers more ESG (environmental, social, and governance) information about each product on their shelves and digital channels.