Rapid technological advances and social changes are reshaping America’s retail grocery industry, according to a recent report from the computer software giant Oracle.
“The grocery industry sees positive signs in 2023,” says Mark Jackley, content strategist for the company. “Though uneven supply is still inflating the price of food and other items, causing shoppers to buy fewer groceries, consumers are once again filling stores as well as buying online.”
The Covid 19 pandemic turned the grocery industry upside down, forcing management to pay closer attention to supply chain issues and logistics partnerships to deal with shortages of everything from toilet paper and paper towels to disinfectant and baby formula.
Continued supply chain disruptions caused by numerous factors (including crop failures, trucker strikes and geopolitical upheaval) are forcing grocery retailers to rethink their fulfillment models and product assortments to meet consumer demand, Oracle observes. “Grocers will increasingly align their planning decisions with demand forecasting, inventory management and goods receipt flow (checking items received against purchase orders).”
The pandemic also fueled innovations like online shopping and home/curbside delivery. At the same time, consumer interest has grown regarding more sustainable foods and business practices, as well as the creation of healthier diets.
To support these changes, technology advances are automating key parts of the grocery business, such as inventory management, customer marketing, in-store checkout, and a new range of delivery options.
Inflation counts as one of the biggest factors that is reshaping shoppers’ attitudes and behavior, Oracle points out, changing everything from what they choose to buy to how they buy these products.
Although the price of food isn’t rising as fast as it did in 2022, sticker-shocked consumers are buying more carefully, purchasing less, and seeking greater value. It’s not easy to save. Since May 2022, online grocery prices have risen 13.4%, faster than those in any other ecommerce category.
Oracle’s research reveals that 75% of consumers are comparing online and in-store prices. It’s not surprising that many of them are seeking deals with promotional pricing and are willing to buy from new places if it saves money. Others have made the switch from buying traditional name brands to accepting private-label offers.
Shoppers have dealt with inflation in different ways. changes in addition to switching to less-expensive private-label items, including buying in bulk, and exploring new channels, such as online outlets, subscription services and choosing to shop in so-called dark stores that operate like warehouse stores to provide quick, no-frills shopping.
Dark stores, also called micro-fulfillment centers, are devoted exclusively to online grocery orders. Customers never enter the outlet, instead scheduling home delivery or curbside pickup. Using apps, customers place their orders on items currently on shelves, which are then fulfilled within minutes.
“Speedy, accurate orders are a win for consumers, while these retailers save on store design and point-of-sale service,” Jackley explains.
Some consumers have chosen to make use of specialized subscription services such as ButcherBox, a supplier of meat and fish, as well as others where subscribers are willing to pay fees to have their favorite foods delivered.
Return to Instore Shopping
While consumers still shop for most of their groceries in stores – brick-and-mortar stores account for 85% of U.S. grocery sales – online grocery shopping is here to stay, Oracle asserts.
It cites a 2022 study by Statista reporting that digital grocery sales in the U.S. rose to $100.7 billion in 2021, compared with $80.3 billion the previous year. The same study estimated that online grocery sales will reach $366.1 billion by 2027.
Walmart (including Sam’s Club) is the largest online grocer, with more than 25% of the market. Other large grocery e-tailers include Amazon Fresh, Kroger, Costco, Target, and Albertsons. Smaller brands Vitacost and Thrive specialize in natural foods and Weee! in Asian and Latin fare.
Now that they are back in stores in force, shoppers also are taking advantage of tech-driven improvements. For instance, customers can check out faster using scanners that let them ring up items as they walk the store, then pay without going through busy checkout areas. Going one better, Artificial Intelligence-powered smart carts automatically handle scanning and payment.
Some 25% of consumers now use grocery shopping apps, according to payment systems provider Ingenico. Such apps hold shopping lists, display store maps, offer digital coupons and integrate with loyalty programs. At some stores, shoppers can preorder deli and bakery items online instead of standing in line at the counter clutching a paper order number. Digital kiosks promoting the latest deals are popping up as well.