Grocers can’t get away with old practices in 2022- RETHINK
Trends & Forecasts

Grocers Can’t Get Away With Old Practices in 2022

Just as other industries felt the effects of COVID-19 in full force, so did grocers. Grocers across the globe served as essential businesses during the worst of the pandemic while making sure the public had access to a steady food supply. 

Over the last 18 months, consumer behaviors have shifted and that’s forced grocers to react and redefine themselves. Grocery trends that worked for years prior to 2020 can no longer be relied on and industry leaders are coming to terms with a new industry baseline. 

Furthermore, consumer preferences shaped by the pandemic and subsequent e-commerce boom must be met with new standards. To prepare for 2022 and the years ahead, grocers will need to engage with consumers to understand the nuances of these changes and what’s expected of them.  

 

Grocers adapt to an e-commerce explosion

The difference in e-commerce sales from late 2019 to spring 2020 is stark. E-commerce penetration made up roughly 4% of sales in Q4 of 2019, but that rose to 10-15% by late spring 2020. For a long time, e-commerce channels were most popular with younger, urban consumers who understood tech differently than older generations, but that’s changed. 

The pandemic accelerated the adoption of e-commerce channels with demographics not usually assigned the term ‘tech-savvy.’ Baby boomers make up much of this population, and their shift in behavior appears to extend well beyond the height of COVID-19. 

Of the online shopping preferences made by both new and existing e-commerce adopters, delivery and click-and-collect solutions are proving more popular than ever. And these preferences extend to food categories, too.  

Consumers indicate that they are willing to purchase hard-to-crack goods like produce and fresh meat via online grocers and third-party apps. Additionally, an online grocer’s digital user interface says a lot about what their customers will purchase and their overall experience. 

Whether it’s providing customers with quick access to prior orders, ease of product selection and checkout, or transparency regarding in-stock vs out-of-stock goods, grocers must streamline the customer experience as much as possible. 

18 months into the pandemic, industry leaders will need to pick apart consumer trends to get a good idea of where changes are necessary.      

Shoppers are going out less frequently  

Unannounced to some, shoppers across the US were increasing the number of trips they took to the grocery store every month while expanding their preferred grocer network prior to the pandemic. That trend took a sharp turn as shoppers cut their average grocery trip frequency in half by the spring and summer of 2020. 

Trip frequency did rise later in the year, but statistics from McKinsey & Company suggest that the number of grocery store tips in 2021 is only 35% of pre-pandemic levels and a complete rebound is unlikely. 

And the pandemic isn’t over quite yet. Grocers will need to continue optimizing their e-commerce capabilities while offering affordable options in both physical and digital storefronts. 

Moreover, ‘one-stop’ shopping should encourage grocers to consider the locations of their storefronts, competitive pricing options, availability of fresh food, e-commerce services, and even cleanliness and hygiene practices.

 

Health and wellness products are on-the-rise 

Healthy habits are also on-the-rise as consumers prioritize cleanliness, hygiene, and wellness in the face of a deadly virus. Medical professionals have emphasized COVID-19-related complications for those with underlying health conditions, and that’s caused a shift in grocery demand over the last 18 months. 

What we’re seeing is a substantial uptick in fresh fruits and vegetables, household care, fresh meat, vitamins, personal care products, and organic products. In fact, healthy eating rose 38% over 2020 as naturally healthy, low-sugar, low-calorie foods grew in popularity. For retail grocers, this means taking inventory of current goods and making adjustments to match these trends is key going into the later stages of the pandemic.  

Affordability breeds customer loyalty  

As the pandemic grew additional lifelines going into late 2020 and 2021, grocery affordability and bargain-hunting behavior took priority over store hygiene and cleanliness procedures. In fact, 45% of consumers in 2021 indicate they plan to save money when possible and 29% have switched to less expensive products to save money. 

We are also seeing more opportunities for private-label offerings in grocery stores. Private-label sales increased by 13% at Albertsons and Kroger in 2020, and this percentage will continue to rise as consumers recognize the value of these products. 

Going into next year, grocers have an opportunity to incorporate consumer-friendly promotions, stock cheaper products alongside name-brand competitors, and link affordable goods to health and nutrition. 

Furthermore, affordability breeds loyalty. As ‘one-stop’ shopping continues to be the norm during the latter stages of the pandemic, consumers will seek grocers that offer everything they need within a single store. Compounded with affordable prices, shoppers have what they need to come back again and again. 

   

Consumers want personalization 

The e-commerce boom hasn’t just affected what products consumers expect from their retailers and grocers. Personalization has gained immense traction over the last few years and contributed to the most pertinent grocery trends of 2021. 

When perfected, personalized experiences capitalize on customized and segmented offers that foster connections between retailers and customers. Personalization is also incredibly effective when we look back at what consumers require in the wake of the pandemic. 

Attractive pricing, good timing, and relevant offers appeal to ‘one-stop’ shoppers who want to get the most out of their preferred grocer. As such, 60% of leading grocery retailers took steps towards personalizing their promotions and pricing strategy in 2020. 

Grocers have a lot to gain when it comes to creating personalized experiences for their customers, but they also have a lot to lose should they sit on the sidelines. In order to retain and maximize market share in 2021 and the years that follow, grocers must make personalization part of their shopper’s journey. 

 

The winners and losers of the changing landscape  

Consumer preference changes during the pandemic have also affected which grocers are coming out on top. Up until spring of 2020, the trend was pretty clear—discounters were gaining business over supermarkets and supercenters. From 2015 to 2019, discounters far outgrew other grocery formats with a growth of 6.2%, and this percentage wasn’t about to drop.

To combat a declining market share, major grocers like Target and Aldi invested in store remodels, supply chain investments, and product sales. But it really came down to the price of goods, as nearly 2,300 grocers closed between 2012 and 2019 when a competition ensued with discounters to see who was most affordable.  

In a complete reversal from pre-pandemic trajectories, supermarkets, supercenters, and clubs benefited from recent trends. These massive grocers offered virtually endless options, even when certain goods were out-of-stock. Additionally, several supermarkets incorporated e-commerce solutions including click-and-collect and delivery services through third-party apps. 

Instead of solely competing with discounters on price, supermarkets and other mass grocers became attractive to ‘one-stop’ shoppers who prioritized convenience, health and wellness products, and a multitude of brand options. 

No doubt—the landscape will continue to evolve, but when supermarkets reported a 12% to 16% growth in 2020, a new normal is not out of the question.

 

Grocers will need to adapt to the new normal  

Even if we are reaching the tail-end of the pandemic, there have been and continue to be lasting changes made to the grocery industry. Grocers demonstrated an immense amount of poise and resilience in 2020, and in many respects, they’ve set themselves apart from what they once were. 

Delivery and click-and-collect services, personalized experiences, healthy and affordable choices, and ‘one-stop’ shops are all here to stay. This is the new baseline for the industry, but we wouldn’t be here if grocers had not listened to consumer demand and acted accordingly. 

Going into 2022, the grocers that listen, innovate, and differentiate themselves from competitors will come out on top.  

Go to Top