The retail industry faces the end of another turbulent year. COVID-era shopping trends skyrocketed the onset of complex omnichannel systems, emphasizing the necessity of growing online sales and myriad click-and-collect opportunities. Where does this leave the industry? Poised for a 2022 full of omnichannel innovation, competition, and potential for growth. Read on to explore key points.
Economic Impacts of 2021
Unprecedented online grocery sales during early COVID and subsequent shutdowns decreased in summer 2021, as the onset of vaccination proved hopeful for in-person shopping. However, fall brought rising COVID rates once more and about 50% of U.S. households (63.8 million) bought groceries online during the month of October alone. Average number of orders placed per month averaged 2.6+, with average basket sizes hitting around $115 pickup and $128 for delivery. Fewer trips, larger baskets is the mantra into 2022: Customers typically spend more online to justify delivery fees—especially when the retailer’s interface is easy to use, displays accurate inventory, and provides quick and efficient checkout options.
COVID-induced challenges such as labor and supply chain complications endure. Labor continues to be in very short supply, causing many retailers to move toward flex scheduling or augmented labor strategies as they operate at about 62% of planned staffing. Similarly, supply chain concerns persist, with disruption to chains causing out-of-stocks rather than food shortages: Average aggregate fill rate hits 85% rather than pre-COVID fill rates of 92%.
In fiscal grocery, fresh items continue to average 84% of stores total sales compared to other temperature zones. Produce still dominates other fresh departments compared to 2019 pre-pandemic numbers, whereas meat & seafood have seen a decline from 2020 sales.
As far as item assortment goes, meat departments have an average of 545 items in their assortment, down from an average of 560 pre-pandemic. Additionally, meat alternatives seeing a downward trend after such a hyper-focus during the pandemic.
Looking Ahead: Areas of Growth & Focus for 2022
Every year in the US, 24% of all food (54 million tons) goes to waste. 76% of these surplus foods are perishable. The EPA food recovery hierarchy deems any food gone to waste that doesn't involve feeding hungry people or reducing the volume of surplus food before it exists. THe highest priority for grocery retailers is stopping food waste at the source: Making sure no product gets unnecessarily wasted. Technology platforms that connect wate-preventing tools like inventory forecasting, eCommerce fulfillment, and expiration date management are crucial to reducing a retailer’s contribution to that 24%.
Sustainability is a critical market driver for retail in 2022 and beyond. 65% of global GDP is now under a 20-50 net-zero commitment, and sustainable products grow 5-6x faster than the average market products. Further, consumers expect and anticipate retailers to have sustainable practices: 44.8% of US shoppers say they are “much more likely” to shop at a store in response to an ad promoting sustainability vs. traditional advertisements.
Retaining One-Stop Shoppers
One-stop shoppers are a reality for the near and far future of retail. In the US, the number of weekly grocery shopping trips is down 65%. So long as COVID effects persist, fewer trips and larger baskets will, too—and even post-COVID, the convenient, time-saving, non-contact practices adopted by pandemic-conscious customers will likely still shape the way they shop for groceries. With such fewer trips, determining which retailer to patronize becomes a more critical decision. Cleanliness, fresh product availability, and eCommerce services are all cited as top drivers on store selection. Now more than ever, operational excellence is paramount to retailer’s maintaining a dominant share of consumer business.
Grocery Tech Integration
Executives at grocers of all sizes are voicing a fundamental shift from individual point solutions toward enterprise solutions, or partnerships with existing solution providers to build additional solutions. Driven primarily by resource and bandwidth limitations within IT & operations, this changing mindset indicates the undeniable value of a fully connected store. Total-store solutions continue to innovate for retailers of any size with specialized to-scale features, AI tech, and advanced fulfillment solutions.
Grocers have tried it all when it comes to online grocery: 20-minute pickup, third-party delivery service, interactive mobile ordering. Not all of it shapes up. And it goes without saying that meeting consumer delivery preferences is one—if not the key—differentiator in an already highly competitive retail front. In the scramble, some may lose sight of seamless omnichannel. Latching onto digital loyalty is no easy feat. No matter what a consumer prefers when ordering groceries, retailers have to be prepared on all fronts. The most successful omnichannel retailers thrive in categories like Search & Discovery, Seamless Ordering & Checkout, Convenience of Placing & Receiving Orders, and Customer Satisfaction & Issue Resolution—and prove that well-rounded solutions reign supreme in the online-shopping ecosystem. An ecosystem that will only get larger. Incisiv’s 2021 Digital Maturity Benchmark Study finds that “online grocery adoption, which jumped almost 43% between 2018 and 2020, is expected to grow to 50% by 2022.”
In light of already astronomical growth and innovation, retail continues moving toward a sustainable, interconnected platform of systems in 2022: Seeking to provide the freshest product, highest quality customer service, and superior operations.
The race for synchronized retail has already begun. Where will your stores fit in?