“In 2023, the lingering impact of inflation, the growth of online shopping and the full return of the store shopping experience, will have a significant impact on shaping the grocery industry,” says Jeewani Fernando, provincial consumer market analyst with the Alberta government.
“In 2020 and 2021, health and safety concerns driven by the global pandemic upended the grocery industry. In 2022, the health crisis took a back seat to soaring inflation and prolonged period of supply chain disruptions. While inflation continues to impact consumers, plenty of other trends in the grocery industry may emerge in 2023.”
The latest ‘Trends in retail’, which contains items that analyze developments in the grocery sector, looks at some of these trends in more detail. The trends that this analysis looked at were:
- impact of inflation on consumer behaviourial changes and some grocers’ actions (increasingly introduced private label products, shrinkflation and price freeze on selected products)
- growth of online shopping/e-commerce and delivery in the grocery sector
- full return of in-person grocery shopping
Grocery price changes are highly important to consumers since they shop so frequently. Combined with the fact that food is one of the most inflationary consumer categories, shoppers are aware of rising prices and are adapting to this new reality. At the same time, grocers have responded in various ways to these changes in consumer behaviour.
“The impact of e-commerce is becoming clearer,” says Fernando. “Rather than replacing grocery store visits, online shopping will supplement in-person shopping. Grocers that integrate the online shopping experience will likely resonate best with grocery shoppers.”
E-commerce and online grocery purchases were growing in Canada pre-COVID, and this growth accelerated during the pandemic as consumers were restricted to their homes.
“Canadians are once again shopping in-person more often rather than stocking up and limiting their trips. This highlights one of the fundamentals of the industry: in-person shopping is not going to disappear. As the industry is built upon habitual and frequent shoppers, the grocers that have the most effective value, quality and convenience offerings will thrive in any environment.”
While grocery retailing is built on fundamentals such as value, quality, convenience and in-person shopping, there are opportunities to differentiate. Specifically, when competing retailers offer similar service, local sourcing can be a way to stand out. Grocers are also using many innovative ways to stay competitive. These include updating their fresh departments and centre store aisles, updating their in-store dining options and introducing new technology like ordering kiosks, smart carts and app-friendly functions.
“Grocers are also investing heavily in new ways of doing business to retain shoppers, grow their business, and help protect their margins,” says Fernando. “New technological innovations are paving the way for a new customer experience, where shoppers can use mobile apps and internet-enabled devices to take advantage of promotions and a more convenient experience.”