Food Industry Challenges & How To Fight Them: Part II

The food industry has faced great challenges in the last three years. From the pandemic's start, which brought supply chain bottlenecks and labor shortages that we are still facing, to the war in Ukraine and inflation, many independent retailers are just trying to eke out a positive margin this year. 

"To put it mildly, the last three years have been overwhelming for our independent retailers," says IGA CEO John Ross. "From record profits to severe inflation, the pendulum has swung deeply in each direction in a short period of time. This business isn't easy, but I'm extremely proud of our retailers for hanging in there and continuing to serve their communities in the face of everything."

FMI-The Food Industry Association surveyed retailers and suppliers for The Food Retailing Industry Speaks 2022, a report that details what is impacting the industry now and what they expect to see in the coming year. We have highlighted some of the top challenges the industry is facing, according to the report, and noted where Independent Grocers Alliance members can find help.

In Part I, we covered the following:

1. Inflation Pressures Margins
2. Supply Chain Disrupts Business
3. Retailers Must Differentiate
4. Experiment With Technology
5. Labor Challenges Abound

Let's dive into the final five challenges and resources.

6. eCommerce Sales Expected To Increase

About 91% of food retailers having online sales and nearly one-half of them experienced sales increases in 2021, selling over 36,000 SKUs online on average. 20% of these retailers expect their online sales to increase this year.

"Now that shoppers have had a taste of the convenience of online shopping, they're going to want to keep doing it," IGA CEO John Ross says. "Long term shoppers are speaking with their dollars that online efficiency and local quality is what they crave." 

Resource: The Independent Grocers Alliance offers an affordable eCommerce program that can be up and running in 30 days. Better yet, your website is customized with content about your store and features frequently updated IGA content like recipes, blogs, and videos, integrates seamlessly with most POS systems, back-office systems, payment processors, loyalty providers, and SNAP online. Powered by Freshop, it also integrates with IGA’s National Digital Ad for an optimal shopper experience.

"You can launch now, catch up, and grow fast," Ross says. "Shoppers who create their first transaction with a retailer are seven times harder to switch by the time they have done their fifth transaction." 

7. Prioritize The Perimeter

Retailers are expanding their fresh and perimeter departments, according to the study. These offerings include fresh-prepared grab-and-go products, with 80% of retailers increasing the size of this department. They also plan to expand produce, meat, seafood, and in-store bakery departments. 

Resource: Shoppers want fresh, convenient options, so retailers can deliver by highlighting their Local Equals Fresh offerings with signage, including "made fresh here" stickers for the bakery, "cut fresh" aisle blades for the meat department, and more. 

8. Experiment With Store Development

Many retailers are actively reinvesting in their business and bringing their stores into the 21st Century with store development. That means using technology to enhance the shopper experience (73%), efficiency (80%), and bring in eCommerce (70%). 

Resource: Digital shopping and advertising can enhance the shopper experience, as can delivering helpful content to shoppers, like recipes and shopping tips, which are available through IGA.com. According to the survey, 62% of retailers are exploring self-service options as well, from self checkout to electronic shelf labels, which are available through IGA's Inner Circle vendors. 

9. Do Better & Give Back

Everyone in the food industry, from retailers to suppliers, are dedicated to improving Environmental, Social and Governance (ESG) initiatives, according to the report. They identified the top priority areas as: charitable contributions, diversity in hiring, Diversity, Equity and Inclusion (DEI) efforts overall, energy use reduction, and food waste reduction.

Resource: The IGA Coca-Cola Institute offers an array of courses to help retailers, store managers, and other employees ensure they're at the top of their game, from supporting diversity, equity, and inclusion efforts in the store to implementing sustainable practices.

10. Continue Community Support

Independent retailers shine when it comes to community support. From round up your change programs that benefit local charities to organizing coat drives in the winter, our stores continue to be anchors in the community. 83% of retailers surveyed in the report said they successfully used their community support as a service differentiation strategy in 2021. 

Resource: Get inspired by your peers and find a new way to help your community. Scan through IGA's Best Practices library to see what other independent retailers are doing to serve their communities, and be sure to highlight your efforts on your social media page(s) to ensure shoppers and the surrounding community know how you're helping. 

What is your store doing to stay current? Share your best practices via the form below, and read Part I of this piece here.