What’s Trending in the Grocery Industry

The next generation of grocers are constantly adapting to their customers’ needs. Value pricing, smart planning, and leveraging technologies such as AI are all key to an incredible consumer experience.

People in a grocery store checkout line talking to the clerk.

The grocery industry is striding confidently into a new era after weathering the near-constant disruption of the last few years. It’s not just your typical store anymore.

Sure, customers can still go to Trader Joe’s or Whole Foods and fill up a cart, but that’s just one of many options. Pop in to an Amazon Go during lunch, grab a couple things and walk right out? No problem. Costco delivery at 9:00 p.m.? Consider it done. We’re all busy people, and as an industry, you know that.

To reemphasize an important word in retail, it’s all about omnichannel. Consumers want groceries when, where, and how we want them, and grocers are answering the call. Let’s take a look at what’s trending in the grocery industry and what’s next.

Value, Value, Value

The threat of high inflation doesn’t seem to be going away anytime soon, so customers are keeping a keen eye out for value, making promotions and incentives more important than ever.

According to a recent Workday & Deloitte joint paper called “How Grocers Can Thrive Amid Industry Change,” 1 in 3 grocery shoppers have made the switch to mostly store brands to get more bang for their buck. And grocery chains are finding ways to incentivize dining at home, like offering quality pre-made meals.

Competitive pricing is essential to retain customer loyalty. With a myriad of choices at their fingertips, it’s never been easier to hop over to another store when the price isn’t right. Cue the pricing wars, with a side of working hard to get customers to buy more units while they’re at it. And right alongside this focus on price is a branding and messaging effort to convince customers that prices are actually staying lower.

To get more value, 1 in 3 grocery shoppers have made the switch to mostly store brands.

Adapt & Plan to Thrive

Grocers will need to step up to maintain market share among a plethora of competitors. Investing in digital infrastructure is a key part of this adaptation, and a cornerstone of an effective omnichannel strategy.

Generative AI is starting to play a key role in this, as grocers use it to leverage the massive amount of data they have to better understand customers’ needs and interests. Shoppers expect a personalized, convenient experience, and the in-store experience must reflect that.

One innovation that helps grocers keep pace with consumers’ expectations is smart, data-driven conversational commerce. Building conversational commerce into store websites makes it possible for AI to be a co-pilot to the shopping experience and can lead to a truly delightful experience—one that makes the shopper keep coming back.

Beyond the in-store experience, delivery service models like Instacart, Shipt, and AmazonFresh are making a massive impact on the grocery industry. Revenue from online food delivery is predicted to hit over $1 trillion in 2024, according to Statista, with a predicted 20% growth in revenue in 2025. This will continue to impact market share for traditional grocery stores and make it essential for them to find ways to adapt to stay competitive.

New models also mean new approaches to planning, so grocery industry leaders must ensure that their planning models, especially financial planning, are ready. Lunds & Byerlys, a U.S.-based grocery chain, was running financial planning with spreadsheets, leading to inefficiency and disconnection. But with Workday Adaptive Planning, they’ve transformed the entire process, making it easy to forecast, plan for different scenarios, and build ownership and buy-in across the organization. Gwen Hendrickson, director FP&A, tells more in her own words in the video below:

Hear how Lunds & Byerlys transformed their financial planning with Workday Adaptive Planning.

Frontline Workers Take Priority

In addition to being the ever-important first impression to customers, frontline workers have the potential to become the next generation of company leaders—if grocers invest in their growth from day one. But retaining employees is still an uphill battle, and according to Deloitte research, the workforce is the top challenge for 7 of 10 retail executives. In 2023, 52% of frontline workers changed jobs at least once.

Grocery industry leaders are focused on getting the most out of their frontline workers, with long-term goals in mind. A renewed focus on scheduling is extremely important, in an industry where some workers may be juggling multiple jobs and seek a highly flexible approach to scheduling. Identifying skills gaps and providing personalized training and career development all play a key role in this strategy, and the results benefit employers, employees, and customers.

Labor is the number one challenge for 70% of retail executives.

Leveling Up the In-store Experience

If the experience of coming into the store is truly delightful, that could make all the difference in loyalty. If you’ve ever experienced the frustration of wandering a grocery store looking for one elusive item, then you could benefit from a store app that makes it easy to track down that pesky polenta (this is purely hypothetical and not based on actual experience, of course). This requires investment in the technology necessary to make it happen, but the benefits are ripe for the picking.

Another part of the in-store experience that grocers are ramping up are restaurant-quality experiences to make grocery shopping less of a chore, and more of a delight. Well-fed, happy shoppers are more likely to stay longer and take more home in their carts.

Retail Media: The Next Generation

Many grocers are focused on personalized digital experiences to reach customers, like targeted advertising via social media profiles and “shoppable” media like you might see on Instagram.

Data is abundant in the grocery industry, and if grocers can use that data wisely, they can vastly improve the quality of media that they serve up to new and returning customers. And again, data science and generative AI are grocers’ best friends when it comes to planning and executing these campaigns.

So what’s the bottom line? First, you must have a solid planning foundation to support new business models. And while sophisticated advertising and data-driven personalization are essential to grocery industry success today and in the future, in the end, it all comes back to the in-store experience and the workforce focus needed to make it exceptional. Frontline workers play a key role, and grocers that win the in-store experience are more likely to win and keep customer loyalty in this hyper-competitive space.

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