During a period of record inflation, grocers large and small have adapted to industry challenges with creative innovations to meet shifting shopper behaviors. According to The Food Retailing Industry Speaks report from FMI – The Food Industry Association, despite the fact that 70% of retailers reported earlier this year that supply chain disruptions negatively affected their business, 73% of them adapted by adopting new technologies and methods such as foodservice and delivery, mobile checkout and grocery pickup.
Retailers also expanded their fresh or perimeter departments with more than 80% increasing space for fresh-prepared grab-and-go products and 70% increasing foods that focused on health and well-being, FMI found, specifically expanding locally sourced and organic produce, plant-based foods and animal protein alternatives and allergen-free selections.
“A major trend that has emerged from the pandemic is shoppers are looking for fresher, healthier, more convenient options at their grocery store,” said FMI President and CEO Leslie Sarasin. “Food retailers have absorbed this feedback and are making great strides to create both online and in-person shopping destinations that cater to shoppers’ evolving tastes.”
Private-label steps into the spotlight
With shoppers increasingly looking to get the most for their grocery dollars, food retailers have seized an opportunity to showcase their private-label brands, and 71% of them said they would work with suppliers on pricing and product availability. Sixty-four percent planned to launch new products and 58% said they would improve the packaging of their own brand products, according to FMI’s 2022 Power of Private Brands Report.
“As the food industry looks toward the future for private brands, they are setting bold targets based on high demand from consumers,” said FMI’s Vice President of Industry Relations Doug Baker. “To reach these goals, retailers and manufacturers are looking at several tactics including private brands outside the US that have higher shares for approaches to growth, including innovation, strategies to accelerate growth and enhanced e-commerce availability for private brands.”
To that end, earlier this year, after a 10.2% increase in its Kroger and Home Chef private-brand sales for the second quarter, according to Winsight Grocery Business, Kroger launched a value-centric private-brand label called Smart Way.
“As our customers face an ongoing inflationary environment, we know they are looking to stretch their dollars further than ever before,” said Stuart Aitken, Kroger’s senior vice president and chief merchant and marketing officer. “Smart Way is an exciting, eye-pleasing product line that will be easy for customers to find. By adding a simplified opening price point brand strategy to Our Brands portfolio, we will further cater to every customer, every time.”
Promotions and innovations combat inflation
Other retailers, such as brands under grocery cooperative Wakefern, are seeing record sales as a result of not only low-priced store brands but also creative budget-friendly promotions such as Don’t Miss Deals, which cuts the price of six to eight items each week.
“We also piloted a new personalized offer called PricePlus Perks, which uses our loyalty card to deliver personalized offers to customers on the brands they buy most often,” Wakefern spokesperson Karen O’Shea told NJBiz.com. “Saving money is so important to shoppers today and they are looking for the best in-store brands and promotions. We offer a value proposition that resonates with customers.”
Discount grocer ALDI has kept prices low and weathered market fluctuations thanks to a large selection of private-label products, cost-saving measures such as small-format stores that need fewer resources and employees to operate and its self-return cart system, Joan Kavanaugh, vice president of national buying at ALDI US, told Progressive Grocer.
“The things that make us different are the things that save our shoppers money, and that’s what allows us to withstand market fluctuations better than our competitors,” Kavanaugh said.
ALDI has also discounted the cost of popular Thanksgiving meal items this year to what the items cost in 2019, with some items receiving discounts of as much as 30% off between Nov. 2 to 29. The retailer’s Thanksgiving Price Rewind includes popular seasonal items such as cornbread stuffing, brown-and-serve rolls and apple pie.
Grocery Outlet CEO Eric Lindberg said the discount retailer’s recent e-commerce expansions, including its new partnership with DoorDash and development of a mobile app, are helping to better position the stores for success while helping shoppers get the most for their dollar.
“Being available on these platforms allows us to reach even more consumers during this time of extreme inflation, helping them stretch their dollar,” Lindberg told Winsight Grocery Business.
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