In an industry that’s long been notoriously slow to evolve, business has never been more competitive or complex for grocery retailers and food manufacturers as they navigate the rapid transformation of consumer preferences and industry disruptors. From trending ingredients to personalized shopping experiences, full-service sales and marketing agency Acosta, based in Jacksonville, Fla., has revealed its top predictions that will shape the grocery space in 2019 and beyond.
In the year ahead, price will be top of mind for both manufacturers and retailers, Acosta predicts, with rising transportation and commodity costs forcing manufacturers to increase their prices. In 2019, retail food-at-home prices are expected to rise between 1%-2%, according to the United States Department of Agriculture. Retailers will be fiercely analyzing price inflation to stay competitive in a fragmenting retail environment, Acosta said.
After several years of decline due to the rising prominence of fresh foods, manufacturers are drawing shoppers back to the frozen food category with better-for-you, clean-label and higher-quality products that appeal to shoppers’ needs. With 99% household penetration, according to a Packaged Facts report, frozen foods are ample in opportunity, and new healthy and convenient innovations in exciting flavors and varieties are helping boost sales.
Following Amazon’s acquisition of Whole Foods, grocery e-commerce has never been more crucial, and brick-and-mortar operators will continue to expand their services in an effort to catch up, Acosta said. Retailers are increasingly teaming up with third-party players like Instacart to broaden their reach and provide fast, convenient and affordable delivery, while Acosta predicts that online retailers will continue to strategically move into brick-and-mortar spaces or partner with established retailers to expand their brand’s reach. Click-and-collect will also continue to emerge as retailers refine their implementation, Acosta said.
With the rise of e-commerce, retailers are striving to maintain foot traffic by reinventing the in-store shopping experience to be more personalized and interactive. Convenience, the ability to browse easily and sample products, and immediacy will continue to be the key draws, Acosta said. For example, Lazy Acres Natural Market, part of the Bristol Farms family of brands, recently unveiled its fifth location, in Los Angeles County, featuring a design format that calls shoppers’ attention to nutritious foods through clear signage, food sampling and cooking demonstrations.
Other Acosta 2019 predictions for in-store shopping experience upgrades include:
In line with improving the in-store shopping experience, Acosta also predicted that retailers will increasingly turn to smaller store footprints due to the slow death of the mall, with anchor spaces repurposing for entertainment and lifestyle, including grocery stores, to drive traffic. Ahold Delhaize’s Giant Food Stores banner, for instance, recently introduced in Philadelphia its new small-format concept, Giant Heirloom Market, designed for urban neighborhoods, featuring modern technology to enable a more convenient experience, including “Endless Aisles” whereby customers can order items for pickup and delivery on iPads in the store through Peapod.
As grocery home delivery expands to include prepared foods and complete meals, Acosta predicts consumers will be cooking from scratch less frequently, signaling the need for retailers to change the development of infrastructure of meal prep and additional delivery logistics, such as inventory optimization.
E-commerce and home delivery demands create challenges on trucking and delivery networks and the infrastructure they depend on, Acosta said, with cardboard and other packaging suppliers and packaging waste compounding those challenges.
Retailers will increasingly focus on the omnichannel experience, according to Acosta, including physical store formats and digital experiences such as click-and-collect. Today’s omnichannel grocery landscape is valued at more than $1.01 trillion, according to recent data from Nielsen and Rakuten Intelligence, marking a 2.6% increase from a year ago and a 3.4% increase from this time in 2016. In a presentation to analysts and investors, Walmart recently revealed its sales momentum gained by optimizing its stores for e-commerce, including Grocery Pickup.
Acosta also predicts that the better-for-you movement around naturally derived wellness additives will continue to grow in 2019. With functional foods one of the top health trends today, retailers and manufacturers are promoting natural remedies such as turmeric as ingredients that fix something that the body is lacking, according to Technomic, and the year ahead will see a new wave of ingredients that enhance something in the body. CBDs, or cannabidiols—which are known to combat anxiety, relieve pain and promote relaxation, among other benefits—will particularly rise in popularity, Acosta said, as the stigma of being related to cannabis continues to decline while marijuana legalization expands and recognition of its medicinal value grows. New Seasons Market, for example, recently introduced GronCBD chocolate bars and tinctures to all of its 26 locations across the Pacific Northwest.
Stocking up and pantry loading could be a thing of the past, Acosta suggested. With more shopping options available now than ever before, shopping trip composition is changing with consumers shifting toward quick trips and pantry fill-ins. Convenience is key, as nearly half of consumers view shopping as a chore, according to a recent Nielsen report. As such, shoppers are replacing stock-up grocery trips with smaller, more frequent needs-based trips, with 10% of shoppers claiming they buy solely for the meal they are planning to consume that same day, per Nielsen.
As the economic recession fades, consumers will increasingly return to premiumization, favoring quality, convenience and healthfulness over pure price, said Acosta. Premium products are driving growth across the store perimeter, particularly the meat department, where high-quality packaged and ready-to-eat products draw shoppers for convenient meal solutions and introduce them to new cuts and enticing flavors.
Lastly, Acosta predicts that health services will continue to expand in retail. Retailers are increasingly enhancing their pharmacy services with new offerings like full-time pharmacists, mobile apps and convenient refills. Raley’s, for instance, over the summer launched its new pharmacy app, RxRefill On-the-Go, in partnership with mobile pharmacy platform mscripts to help reduce shoppers’ wait time and allow them to easily manage their prescriptions and order refills.
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