21 April 2023
21 April 2023
Succeeding in the grocery space has transformed radically over the past few years. It has required grocers to adapt to changing customer expectations, technology, regulations, and economic pressures. They have had to reassess each aspect of grocery store operations to maintain margins while keeping customers happy.
As we venture into 2023, leaders need to stay ahead of emerging grocery store trends and adapt their strategies accordingly. Let’s dive into the four significant grocery store trends that are set to make a considerable impact on supermarket operations this year. Understanding these trends in the grocery industry and their implications will help you effectively navigate the changing landscape and seize opportunities to thrive in an increasingly competitive market.
As we continue to see the industry evolve, four significant trends will shape grocery stores this year:
The Great Resignation has radically transformed the grocery industry and shows no signs of slowing down yet: more than half of frontline grocery store workers said they are planning to leave their jobs. Workers are not only quitting in record numbers, but leaders are also struggling to fill the vacant positions. This new shift in quitting and hiring trends has brought new challenges to grocers. It poses a safety threat and increases the work for remaining employees.
To fill this gap, some grocers have turned to automation to take over some of the tasks previously carried out by employees. Self-checkout systems, automated shelf-stocking robots, and AI-powered inventory management systems are all become more common in the grocery store.
The shift towards automation won’t solve the problem entirely, however. Stores still need employees to provide the human touch for a great customer experience and reasoning that computers can’t yet offer. Store teams need the tools and efficient processes to work faster and be more productive even with a leaner staff.
Another way some companies deal with the worker shortage is through a new trend, labor hoarding. Labor hoarding is where organizations retain more employees than necessary and is most often used during economic downturns. Employers choose to keep workers on their payroll even when there’s not enough work and employees are underperformers. It often results in decreased productivity and increased costs to employers.
While employers may labor hoard to maintain a skilled workforce, avoid the costs of hiring, and improve employee morale, it is a risky strategy. It can lead to a financial strain on companies and ultimately result in layoffs or business closures if economic or workforce conditions don’t improve.
Enhanced training and career development opportunities are critical for creating a more skilled and motivated workforce. Grocery retailers need to focus on the employee experience and improving the hiring, onboarding, and training process to mitigate the effects of labor shortage. According to the National Retail Federation, retailers are experiencing 60% employee turnover.
For the grocery industry, that means they need to train about 20,000 people a year to make up for the lost staff! A streamlined and accelerated onboarding mobile-first solution provides new employees the tools they need to get up and running quickly and gamifies the learning journey to get people operational quickly.
Cross-training is also valuable to maintain employee loyalty. Helping workers learn new skills not only creates a more skilled workforce but also increases job satisfaction.
While inflation has forced many consumers to become more price-conscious, shoppers are still concerned with making healthy, sustainable choices. In fact, 70% of participants in one survey said they want to be healthier, and 50% said healthy eating is their top priority.
Financial pressures continue to impact consumers: 66% of Millennials and 64% of Gen Xers said they are worried about their financial situations. This leads them to make fewer impulse purchases and cut back on non-essentials. However, that does not impact their shopping according to their values: only 41% in the same survey said they would pay more for sustainable products.
This emphasis on healthy and sustainable eating practices combined with financial concerns provides grocers with a unique opportunity to maintain competitive pricing with healthier foods. For example, tailoring value-priced private-label goods with healthier offerings, such as gluten- or dairy-free products, will attract younger, healthier, and value-conscious eaters in 2023.
Operational productivity and efficient practices are the best ways that organizations can appeal to customers. By focusing on supermarket operational efficiency, companies can reduce costs on healthy food and offer competitive pricing that will appeal to health-conscious consumers.
The pandemic pushed grocery shopping online, and delivery orders are here to stay. Consumers use multiple channels to research products, find savings, assemble shopping lists, and purchase groceries. This habit means that any naturally gravitate towards retailers facilitating online shopping with a seamless and convenient omnichannel experience.
Grocers need to offer a frictionless shopping experience that unites online and offline channels and provides digitized shopping experiences that mimic an in-store one. It requires leveraging advanced technologies to remain competitive, such as endless-aisle solutions allowing shoppers to purchase items online for home delivery when the product is unavailable in the store. Mobile platforms give customers a blended omnichannel experience with personalized recommendations based on shopper location and preferences. Small and medium-sized grocers can use third-party technology to get the technology needed to compete with larger chains.
Beyond the right tools, workers need to know how to leverage and assist with the new technology as well. Employees must be trained on new processes and tools to help streamline their work without hiring more people. It both improves the customer experience and lifts the burden off of staff.
Like most retail, personalization is a growing trend in the grocery industry. Tailoring products, services, shoppable recipes, and recommendations to meet individual shoppers' specific needs and preferences improve sales and drives brand loyalty. Personalization is especially important for Gen Z: 77% of Gen Z said businesses need to customize interactions and want communications based on their preferences. Personalization directly impacts grocers’ bottom line: customers spend, on average, 40% more per session when there is personalization.
Grocers have started using personalization to improve the shopping experience. For example, Misfits Market started using personalization to show shoppers the products they want and avoiding the products they show less interest in. This level of personalization gives shoppers a “less mentally fatiguing” experience, according to the founder and CEO, Abhi Ramesh. Likewise, Albertson’s Just for U loyalty program collects customer data to deliver personalized digital coupons and targeted offers. It helps customers save on products they frequently purchase while also encouraging them to try new items they will likely enjoy based on their preferences.
Consumers want to have an experience that takes their preferences into account. Creating personalization and tailoring the shopping experience to meet consumers’ tastes will build loyalty and encourage customers to try more products they may enjoy.
The transformation of the grocery industry isn’t slowing down any time soon. In particular, the landscape is significantly shaped by labor challenges, health-conscious consumers, omnichannel grocery experiences, and the push toward personalization.
As supermarkets navigate these challenges and opportunities, leaders need to adapt and innovate to stay ahead of the curve. By addressing labor shortages with more effective training and development, catering to the health-conscious and price-sensitive preferences of today’s consumers, integrating seamless omnichannel experiences, and leveraging personalization strategies, grocers can create a shopping environment that meets the ever-evolving demands of their customers.
Embracing these trends will not only help grocers remain competitive but also foster customer loyalty, drive growth, and ensure long-term success in a rapidly changing market.
YOOBIC's Frontline Employee Experience Platform enables 350+ retailers including Lidl, Gamestop, Lacoste, Peloton and Vans improve operational consistency and agility, get real-time visibility into retail execution, and improve their customer experience. Learn more here!
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