Current challenges in Grocery Retail

The grocery industry continues to face numerous disruptions – rising supply chain costs, labour and raw material shortages, geopolitical conflicts, changes in consumer behaviour and expectations, and the ongoing cost-of-living crisis.

Grocery retailers today need to transform in order to navigate these disruptions and meet consumer demands. If managed well, current challenges can present new opportunities for grocery and consumer product companies to maintain profitability and meet consumer demands. As International Search specialists operating across the Grocery Retail sector, Connect Search is taking a look at current challenges in the Grocery Retail market. Read on to find out more.

Reduced Overall Spending

As the impact of rising costs becomes more apparent, consumer spending is set to reduce. Capgemini’s 2023 Consumer Trends report found that almost half (44%) of consumers will reduce their overall spending in 2023, and 61% are concerned about their financial situation. Food prices are at an all-time high due to global inflation and, according to the World Bank, are unlikely to stabilise until 2024. Inflation has meant high prices, but it’s also meant consumers trading down to private label and a loss of brand loyalty.

A heavy focus on price could prove beneficial to retailers with well-established loyalty programs, which provide the opportunity to track shopping preferences and deliver targeted offers to shoppers at the optimal moment.

In-Store Experience and Fulfilment Options

In-store shopping has increased in some supermarkets, but it’s clear that rapid delivery is increasingly important to the consumer experience. According to Capgemini’s 2023 Consumer Trends report, 43% of shoppers said that delivery and fulfilment are the most important service attributes when shopping for groceries. On average, consumers are willing to pay an additional 3.3% of the order value for a two-hour grocery delivery. Therefore, grocery stores will benefit from redirecting their efforts towards renovating their physical stores, and retailers will see value in investing in last mile delivery. By taking an innovative approach to the physical store, brands can offer memorable shopping experiences that will nurture consumer loyalty and help to create a unique brand identity that sets them apart.

E-Commerce Experience

Grocers will continue to make e-commerce options like pickup and delivery faster, more efficient and overall better experiences. We can expect to see retailers add offerings to their pickup apps to make it easier for customers to make impulse buys, like the candy and gum items customers often add to their baskets at the checkout aisles in stores. Providing sampling with e-commerce orders is another area where grocers might experiment. Furthermore, grocers could seek out more options to make pickup more efficient, such as lockers or autonomous robots in parking lots.

These are just a few of the challenges and opportunities facing the Grocery Retail sector and the ability to implement and utilise technology and operational processes behind the scenes will be key. It feels like a pivotal period for Grocery Retailers to differentiate the consumer experience as part of their wider offering.

If you’d like to learn more about the latest trends in the Consumer Goods space, please don’t hesitate to get in touch with Connect Search today. Contact one of our industry specialists on contact@connectsearch.com or head to our Contact Us page.