Predicting the Future of Grocery

Dec 31, 2020

Your inboxes are likely filled with looks back at 2020 and reflections on all the craziness that ensued. Instead, I want to look forward to the years ahead in our industry. Using insights from our stores in China, which have been dealing with the virus longer than any other country, and research from multiple sources on changing shopper behavior, here are my predictions for 2021-2023.

First Half of 2021

The COVID-19 virus and vaccine will continue to dominate headlines. Consumers will stay polarized, with some fearful of both the disease and the vaccine, and others anxious to get it all behind them. Conspiracy theories will continue, but their entertainment value (and credibility) will fade as consumers move on to something else for entertainment.

For the grocery industry, this means episodic outbreaks in their local communities, while others will be quiet. Comp sales will continue to be positive in January and February, but as we lap virus effects, will have to compare 2021 to 2019 to get a real read on if we are growing or losing share. I encourage you to set up your own comp sales chart, as knowing if we are growing or losing share is critical right now.

A return to restaurants?

Over half of consumers will warily return to restaurants and dining out, but many smaller chains won’t make it. Total dining capacity is likely to be contracted through the end of 2021 and into the following year, though eventually restaurateurs will see pent up demand and reopen or start new restaurants.

Invest in prepared foods

Grocers who take this time to up their game in deli and prepared foods will reap long term share. A local grocery store’s prepared foods are the freshest sources of complete meals in the entire town. Innovate here: invest in new fresh menu options, build a sandwich program, invest in talent (which is out there, right now still struggling to find employment in restaurant and hospitality). Hire a chef and let them see how much nicer it is to work a regular schedule in a grocery store rather than the late night/long hours in restaurants and give them latitude to build a cool local breakfast/lunch/dinner solution for your community.

Manufacturers partner with grocery stores

Manufacturers will be anxious to ramp up volume. There will be an odd period of escalating sales in dine out, but strength in grocery. Brands that invest in grocery channels will reap big rewards, as millions of consumers now know how to cook and how to shop in ways they didn’t before.

eCommerce remains strong

eCommerce will stay solid, even as we lap the panic buying of Spring 2020. Grocers who haven’t done so can still get in on the game, but that window is tightening. eCommerce shoppers are more likely to stay loyal to their grocer, less likely to deal-shop, more likely to expand baskets into meat and produce.

Back Half of 2021

As the vaccine starts to reach more consumers, many will flock back to restaurants. About a third of Americans say they are anxious to get back to eating out; 25 percent say they won’t go back to cooking at home when it is safe to eat out.

Cooking at home is here to stay

But most Americans say they will continue to eat food cooked at home. They have learned new skills, learned how to save money and make healthier food for their families. The majority of Americans say they will eat out less than they did before the pandemic once COVID-19 is behind us.

Local grocers must earn shoppers again

Communities will be thankful for their local stores, but the hero image of the hourly cashier risking their health to help their community stay fed will fade. Local grocers will once again have to earn shoppers based on service and quality, not just their fear that bigger chains are less safe.

Retailers will invest in décor and marketing

The good news? Now is the perfect time to reinvest in your store. New signage, a fresh paint job, and fixing broken ceiling tiles and flooring go a long way. According to Invista 2020 research, new décor has been creating one to three percent comps on top of the COVID bump. The research also says that new signage and updating your brand pleases shoppers, with over half saying they think a store that updates interiors also buys healthier food. 

Retailers who take the time to re-evaluate messaging in-store and in their advertising will sustain share. Shoppers loved knowing they were shopping a local family chain during COVID, so pulsing up messaging like “local” and “independent” will pay dividends for years.

IGA retailers can reinvest in their store's appearance by taking advantage of the IGA décor program, which is less than half the cost of in-store improvements. Our team is ready to help you harness the full potential of this program so that you can increase your comps and keep shoppers returning.

CPG brands will innovate

Expect to see a rash of innovation from CPG brands. Many brands delayed new products during COVID-19, so there will be a backlog of cool new items hitting shelves. Also expect to see manufacturer discounting and national promotions accelerate. Brands will need to earn spots on shelves, and in some cases, re-earn them.

Retailers will provide value-focused solutions

It will come at a good time. Artificial government stimulus will have expired by summer, and the realities of our bifurcated economy (some industries surging, others languishing) will hit many consumers hard. Retailers and brands need to be thinking ahead to packaging value as a part of their marketing—not as a gimmick to increase temporary share, but as a sustained service to help them keep their families fed.

I am not talking about running our normal sales ads here—instead, think about how you can package meal solutions and harness private label with CPG deals to make meal dollars to help families. Need will vary, and as always, it will be intensely personal and local—everything IGA does well.

eCommerce will be the norm

eCommerce will become a normal part of most retailers' core operations, and by the end of 2021, most will have figured out how to serve online shoppers just like we do in-store. Retailers who don’t invest in eCommerce now may find they missed it. Trying to build a digital relationship in the future will be costly, as you will be forced to buy back online shoppers from other retailers.

By year end, online grocery will run over five percent nationally, but in many communities it will be much higher.  IGA stores in resort communities or with older consumers will figure out how to market to individuals who don’t want to, or can’t easily get into our stores. Once connected to eCommerce, retailers will discover that these shoppers are intensely loyal.

2022 & Beyond

With COVID-19 behind us, you might expect shoppers to go back to their old ways. But issues of safety and health will stay with us for a very long time. Expect healthy eating, safety, and clean stores (and restaurants) to be critical decision-making factors when shoppers pick one store over another.

Clean, updated stores will succeed

Research has shown for a long time that when shoppers see cracked floor tiles, dirty restrooms, or missing ceiling tiles, they assume the food is low quality, too. This new, health-paranoid mindset will intensify shopper fear for decades. Retailers need to learn how to see their stores through the shoppers’ eyes. If a store is known as local, fresh, and safe, it has a very bright future!

Restaurant will adapt

Restaurants will have learned how to serve both dine-in and delivery consumers, who in turn will have learned that they can order in a lot more choices than just pizza and Chinese take-out. After decades of losing share to restaurants, local grocers will come into 2022 with momentum, but we will have to stay ahead of local food offerings to sustain share.

Some classes of restaurants will not survive the impact of COVID-19 and never reopen. Others will reinvent themselves as low cost take-out. Expect to see drive-in windows emerge at previously dine-in-only chains like Red Lobster and Olive Garden.

Local businesses will attract consumers and legislators

I predict a surge in interest in local business, both from consumers and legislators. Democrats anxious to appear pro-business, but afraid of seeming to pander to big corporations, will turn their eyes to small business. Much of the stimulus money, and who actually received what, will reveal a story of unfairness, with big companies who didn’t need help sucking up dollars that were need for smaller, family-owned business. This will create a receptive ear in Washington for programs that support us on both sides of the aisle.

Retailers will cater to amateur chefs

Consumers who learned to cook for the first time will be interested in furthering their skills (online cooking classes are up 300 percent in viewership this year). Retailers who invest in in-store demonstrations, recipe programs, cooking share groups, or other clever marketing will earn shopper share.

Private label will grow

Private label brands will continue to grow. As the economy stabilizes, shoppers who had to buy based on price will learn how good many exclusive brands are. Retailers should look to expand their assortment of private label and market it aggressively to shoppers while supporting name brands who launch innovative products.

Delivery (and fees) will be expected

By now shoppers will be used to paying for delivery at restaurants and will accept delivery fees for eCommerce in grocery. By comparison, we will look inexpensive! (Have any of you gotten an Uber Eats bill or lunch your kids ordered where the surge ends up costing $20.00?!)

This will be a real opportunity for grocers to develop prepared food delivery models of their own. Said another way, once we are picking and delivering for shoppers, we can deliver anything. Why not pizza? Chinese? Sushi?

Previous in-store dining programs will have new legs as we rethink our stores as distribution hubs to shoppers looking for convenience—and they will be willing to pay for it.

Local + Fresh + Independent = Success

Finally, health and freshness will continue to pay enormous dividends for well-run IGA stores and their retailers. Our meat and local produce will continue to be massive competitive advantages. Local, independent, and quality will be drivers for future growth for decades to come.

Way, Way Beyond

New Formats; New Locations

Look to IGA in the coming months and years to expand our store formats (like Latinx, health, and price-focused stores), which will help us reach more shoppers in more communities around the globe—and possibly beyond. I can see the headline now as we move into the next decade: "Jetson's IGA to Open on Mars!"  

With a local, community-focused brand that shoppers want, the galaxy is the limit! 

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