If 2020 taught us anything, it was to expect the unexpected. But expecting the unexpected doesn’t mean accepting being unprepared. Certain trends emerged in food retail throughout the year, we learned that retailers who were more forward-thinking, innovative, and technologically focused were quicker to respond to changes. Grocery stores were quick to focus on online ordering and fulfillment by enhancing their capabilities or partnering with third parties to meet demand and according to CS News, over 73% of convenience retailers increased spending on technology and cited having greater business intelligence, better store inventory management, and the reduction of shrink as three of their five top priorities.
So, what does this all mean we can expect in 2021?
- As people have come accustomed to working from home and not commuting, cooking a full breakfast is no longer something saved for the weekends, and consumers are looking for new options.
- Ready-to-cook and ready-to-heat fresh meals are in high demand from consumers across multiple cooking methods, cuisines, and serving sizes.
- Consumers will continue to purchase groceries online but are willing to buy from multiple providers as price and service are still the driving factors for their purchase decisions.
Food Retailers' Expectations
- In 2020, food retailers rushed to offer products online, but many are still challenged by the lack of store fulfillment solutions integrated into their systems. This will be an area of strong focus as 3rd party fulfillment and delivery services are expensive and take control away from the retailer.
- Smaller retailers will rely on private brands and unique assortments to differentiate themselves from the competition.
- Large retailers like Walmart and Kroger will battle Amazon’s online dominance with new offerings for ordering, fulfilling, and delivery.
CPGs and Other Providers' Expectations
- Realizing they can now sell directly to consumers will lead to new competition for wholesalers and retailers from CPGs. Private labels, specialty assortments, prepared foods, and meat will be critical to shield traditional retailers from this competition.
- M&A activity among service providers and retailers will accelerate in 2021.
- Technology providers are merging and creating new ecosystems, crossing the traditional categories of tech and services.
One thing remains clear for many retailers to succeed in 2021, they must continue to be forward-thinking and innovative. Technology-focused food retailers will be positioned well for success.
About the Author
Jesus Mathus is the Global Head of Retail Solutions at ADC where he is responsible for bringing the point of view of our retail customers on everything we do. Prior to joining the ADC team, Mathus was the Chief Information and Supply Chain Officer for Cardenas Markets, a grocery chain based in Southern California. At Cardenas, Mathus was responsible for setting the IT strategy to transform its technology platform as well as the supply chain growth plan to support the business as the company expanded its national footprint. Before his time at Cardenas, Mathus was the Chief Information Officer for Bodega Latina Corp (dba El Super) where he led the transformation of the company's technological platform to improve overall profitability and market share.