Navigating the 2024 Grocery Landscape: Insights from C+R Research
Filed Under: Shopper, Food & Beverage, Grocery
Kathleen Blum
Vice President, Shopper Insights Research
As we jump into 2024, the grocery sector continues to face challenges as the players race to gain share. In the recent Supermarket News article, Grocery Battlefield 2024: Food Retailers Put Up Their Mitts in the Pricing Arena, industry analysts provide their POV on what lies ahead for this year. Here is my perspective on their insights and how they might shape the future of food retailing.
Shopper Spending Power Versus Grocer Margins
The potential shift from a period of rising prices to deflation will put pressure on grocers to lower prices to better compete and attract more shopper dollars. However, labor costs are still high, which will squeeze already tight grocer margins, making operational efficiency and strategic pricing more crucial than ever as Walmart continues to gain share by providing value to their customers that is reinvested to improve store productivity. Discount grocers like Aldi are also gaining share by keeping prices low, even lower than Walmart, attracting budget strapped shoppers from traditional supermarkets.
Industry Consolidation to Compete
As grocers look to compete in this competitive landscape, we may see a wave of consolidation. We already know about the pending Kroger and Albertsons merger, which will likely move forward, but regional players may also leverage this as a pathway for growth, cost streamlining, and way to compete with other grocers, mass, and online in this ever-evolving marketplace.
In- and Out-of-Store Experience as a Differentiator
While value and how to efficiently provide that value is key in 2024, shoppers continue to look for how grocers can make the experience more personalized and convenient, which opens up the opportunity for grocers to create experiences that differentiate them and allow them to connect with shoppers on more than just price. Subscription services like Amazon Prime and Walmart+ allow shoppers access to streaming entertainment and travel deals in addition to shopping and delivery discounts, while regional players like Publix and Wegmans focus on service, prepared foods, and unique and trending product offerings keep shoppers coming back for more.
Health & Wellness as a Differentiator
As grocers look for opportunities to differentiate, “food as medicine” is a key trend that can be capitalized. Shoppers are looking for help to identify what they can or should eat to address a myriad of wellness issues related to the ‘Ozempic Effect,’ Celiac Disease, and lactose intolerance. Offering in-store expertise, apps, and even special signage/sections can go a long way in creating a destination for shoppers dealing with certain health issues or just working on general overall better health through food.
Final Thoughts
As we navigate the complexities of 2024, grocers must balance the need to compete on price with the necessity of differentiating their offerings to ensure shoppers obtain the value, quality, and experience needed to create short-term sales as well as long-term loyalty.
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