- Both retailers and suppliers anticipate that inflation will cause operating costs to increase
- Retailers are expanding numerous fresh or perimeter departments
- Despite macroeconomic challenges, a majority of retailers (61%) pointed to a positive impact on business sales and profits in 2021
Despite a challenging year marked by a persisting pandemic, historic inflation, supply chain bottlenecks, and labor shortages, the food industry is making significant investments to meet shoppers’ evolving tastes, according to a new report from FMI—The Food Industry Association.
Three of those areas in particular, include:
- New technologies. Some 73% of retailers are experimenting with new technologies like foodservice ordering and delivery, dynamic pricing, and mobile checkout systems to improve the customer experience.
- Labor allocation for online purchase fulfillment and in-store/curbside pick-up. 52% of retailers are increasing labor allocation for online purchase fulfillment and 48% are increasing labor for in-store/curbside pick-up.
- Expanding fresh. More than 80% are increasing the space they allocate to fresh-prepared grab-and-go products, with 70% offering foods with beneficial nutrition attributes for health and well-being.
These findings are according to the group’s annual comprehensive research report, “The Food Retailing Industry Speaks 2022.”
“A major trend that has emerged from the pandemic is shoppers are looking for fresher, healthier, more convenient options at their grocery store,” said Leslie Sarasin, president and CEO of FMI. “Food retailers have absorbed this feedback and are making great strides to create both online and in-person shopping destinations that cater to shoppers’ evolving tastes.”
According to the report, category departments expected to see growth include:
- Locally sourced (72%)
- Organic produce (62%)
- Plant-based foods and animal protein alternatives (64%)
- Allergen-free (38%)
- Gluten-free (35%)
Despite the macroeconomic challenges, the report stated that a majority of retailers (61%) pointed to a positive impact on business sales and profits in 2021 from local and national economies.
On the other hand, food suppliers – surveyed for the first time in the 74-year history of the Speaks report – were less upbeat (50% positive, 36% negative). Both retailers and suppliers agree that the current economic climate will not be as favorable, with both retailers and suppliers anticipating that inflation will cause operating costs to increase (78% retailers, 90% suppliers).
Meanwhile, the report indicates that the war in Ukraine is expected to have a negative impact on business (55% retailers, 45% suppliers) in light of factors such as strains on exports from Ukraine and overall impacts on the global economy.