Inflation is a big factor, as nearly half (44%) of retailers said they were “not very confident” or “not confident at all” in the strength of the economy coming into 2022. On the flip side, however, that leaves 56% of retailers saying they are “extremely” or “fairly” confident in the economy. While more than half of respondents this year are positive, it reflects a drop from last year’s result when 65% of retailers were confident coming into the new year.
Nearly two-thirds of retailers (61%) expect to see sales increase from 1%-9% in the first six months of 2022, with another 16% looking forward to sales increases of more than 10%, as well as the 11% who expect sales to stay the same. Those numbers compare favorably to the 12% who anticipate sales decreases in 2022, indicating that most retailers hope or expect to fully lap 2021 grocery sales.
Just over half of retailers (53%) plan to grow their store count in 2022, with the majority of those (73%) looking to grow by 1%-5%.
Hiring will continue to be a growth area for grocery retailers in 2022, with 75% of respondents saying they plan to hire more workers — up significantly from 56% in last year’s survey. While 38% of this year’s survey respondents plan to grow hiring by a moderate 1%-5%, a larger number (43%) are hoping to increase hiring by 6%-10% — with a promising total of nearly 20% looking to grow their employee count by more than 10%.
While last year’s focus for building sales was on growing online grocery and curbside pickup, in 2022 retailers plan to step up their in-store activities such as expanding fresh offerings (56%), improving supply chain efficiencies (54%) and increasing in-store promotions (46%). Online grocery is still a priority for many retailers (46%), as well as curbside pickup (36%), but less so than last year when 60% of retailers planned to introduce or expand online grocery. That shift is no doubt due to the large number of grocers who have implemented online already in the past year.
When asked, “What categories do you expect to have the most success with in 2022?,” 60% of respondents cited fresh produce, followed by foodservice at 56%, fresh meat (40%), frozen foods (35%) and center store grocery (32%).
Center store grocery ranked highest as the category facing the most challenges in 2022, by 44% of retailers, with general merchandise following closely at 40%. This is probably due to the fact that these categories are the ones most impacted by the current supply chain logjams and manufacturing and shipping slowdowns.
Deli/prepared foods made a comeback in 2021 after a challenging 2020 in the face of COVID. Looking forward, many retailers are renewing their focus on the category, with 48% of respondents planning to increase their prepared foods offering in 2022 and 45% planning to alter or change their prepared foods offering (i.e., more grab-and-go, prepackaged, etc.). Only 7% say they plan to cut back on prepared foods next year.
Overall, supply chain issues were seen as the biggest challenge facing retailers in 2022 at 40%, with labor following closely at 38%.
In 2021, 60% of retailers say that online sales represented from 1% to 10% of total sales, with another 11% reporting online sales of more than 10% of total sales.
Looking ahead to 2022, 58% of retailers expect online grocer to contribute from 1% to 10% of total sales — but more importantly, the number of retailers anticipating online sales of more than 10% rises to 19% for this year.
Private label continues to be a growth area for grocery retailers, with nearly half (48%) of respondents saying they plan to add private label offerings in 2022.
The majority of grocery retailers (58%) plan to bolster their health and wellness offerings this year, with a focus on growing/updating their assortment, new products and rolling out nutrition/shelf tags.
There has been a significant shift in which channels grocery retailers consider their biggest competition going into 2022. Mass retailers such as Walmart and Target were overwhelmingly the top response at 43%, while online retailers (15%), direct-to-consumer online channels (13%) and dollar stores (11%) all trailed behind.
Interestingly, in last year’s survey, online retail topped the list at 43%, indicating that growth in supermarkets’ own online grocery services has diminished that competitive threat over the past year.
Grocery retailers will continue to focus most of their marketing efforts on the Millennial demographic in 2022. No surprise, given the buying power of this largest living generation, born between 1981 and 1996 — the prime group for raising families. Health & wellness/natural shoppers and multicultural customers are also on retailers’ radar.
Social awareness and community initiatives remain a priority for the grocery industry, with most focus on sustainability/environmental issues (52%), supporting local businesses and suppliers (47%), reducing food waste/fighting hunger (46%) and improving diversity in the workforce (38%).