Recent Trends in Grocery Retailing in North America

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The grocery retail industry in North America has undergone significant changes in recent years, with advancements in technology, evolving consumer preferences, and new market entrants. The COVID-19 pandemic has also had a major impact on the industry, accelerating some trends and creating new challenges.

Let us discuss some of the latest trends in grocery retailing in North America. Lot of these are based on my daily/weekly shopping experience. Please feel free to add more in the comments section. I will explore more and write about it.

Online Ordering and Delivery:

Online ordering and delivery have become increasingly popular in the grocery retail industry in North America. According to report by Grocery Dive, Online grocery sales will increase at 12% annual rate over 5 years. The pandemic has accelerated this trend, with many consumers turning to online ordering and delivery to avoid going to physical stores. Retailers are investing heavily in online ordering and delivery platforms to meet the growing demand. Companies like Instacart, Amazon, and Walmart are leading the way in this space. Online ordering and delivery have the potential to increase revenue and reduce costs by enabling retailers to reach a wider customer base, reduce the need for physical stores, and optimize delivery routes.

The COVID-19 pandemic has accelerated the trend of online ordering and delivery as consumers seek to avoid physical stores. Retailers have responded by investing in online ordering and delivery platforms to meet the growing demand. The pandemic has also highlighted the importance of contactless delivery options and safety measures during the delivery process.

Walmart has been aggressively expanding its online grocery ordering and delivery capabilities. Walmart’s online grocery sales grew by 97% in the second quarter of 2020. The retailer has partnered with third-party delivery services like DoorDash and Postmates to expand its delivery capabilities.

1.Online Grocery Shopping: Many grocery retailers have launched online grocery shopping platforms that allow customers to order their groceries online and pick them up at the store or have them delivered to their home. For example, Walmart offers a grocery pickup service and a grocery delivery service in many of its stores.

2.Partnership with Third-Party Delivery Companies: Many grocery retailers are partnering with third-party delivery companies to offer home delivery of groceries. For example, Kroger has partnered with Instacart to offer home delivery of groceries in many of its stores. Although, this trend is waning out, we will discuss about this sometime later.

3.Subscription Services: Many grocery retailers are offering subscription services that allow customers to receive regular deliveries of their favorite products. For example, Amazon offers a subscription service called Amazon Fresh that allows customers to receive regular deliveries of groceries and other household items.

4.Curbside Pickup: Many grocery retailers are offering curbside pickup services that allow customers to order their groceries online and pick them up at the store without having to go inside. According to Grocery Dive, among fulfillment methods, pickup is predicted to have the fastest growth and biggest market share gain over the next five years, with a 13.6% CAGR. By 2027, that method is expected to account for more than half (50.3%) of online grocery sales, up from 45.4% in 2022, stealing share from ship-to-home and delivery. For example, Target offers a curbside pickup service in many of its stores.

5.Mobile Apps: Many grocery retailers have launched mobile apps that allow customers to order their groceries online and track their orders in real-time. For example, Whole Foods Market has launched a mobile app that allows customers to order their groceries online and arrange for pickup or delivery. I don’t have to talk much about this, as most of us use these apps on everyday basis.

In-store Technology:

In-store technology is another trend that is transforming the grocery retail industry in North America. Retailers are using technology to enhance the customer experience, streamline operations, and gather data on customer behavior. Self-checkout kiosks, digital signage, and mobile payment options are just a few examples of the technology being used by grocery retailers. In-store technology has the potential to increase revenue by improving the customer experience and reducing costs by automating certain tasks.

Kroger is one of the leading grocery retailers in North America when it comes to in-store technology. The company has introduced digital shelves that display pricing and product information, as well as electronic shelf labels that can be updated in real-time. Kroger has also implemented scan-and-go technology that allows customers to scan items with their smartphone and pay without having to go through a traditional checkout line.

The COVID-19 pandemic has accelerated the trend of in-store technology as retailers seek to minimize physical contact between customers and employees. Retailers have implemented touchless payment options and self-checkout kiosks to reduce the need for physical contact during the checkout process.

1.Self-Checkout Kiosks: Many grocery retailers are implementing self-checkout kiosks to improve the checkout process and reduce wait times. As per Retail Dive, self-checkout now comprises nearly 40% of grocery check-out options. Having said that, we also need to look at balancing this with the impact on customer experience as well as the impact of shoplifting. For example, Walmart has implemented self-checkout kiosks in many of its stores, allowing customers to scan and pay for their items without having to go through a traditional checkout line.

2.Digital Signage: Many grocery retailers are using digital signage to display pricing and product information, and to promote sales and special offers. For example, Kroger has implemented digital signage in many of its stores, allowing customers to easily find the products they are looking for and stay informed about sales and promotions.

3.Mobile Payment Options: Many grocery retailers are implementing mobile payment options to improve the checkout process and reduce physical contact between customers and employees. For example, Whole Foods Market has implemented Apple Pay and Google Wallet as payment options in many of its stores.

4.Scan-and-Go Technology: Many grocery retailers are implementing scan-and-go technology that allows customers to scan items with their smartphone and pay without having to go through a traditional checkout line. Although Kroger discontinued this, Walmart still offers this for Walmart+ Customers.

5.Customer Data Collection: Many grocery retailers are using technology to collect data on customer behavior, preferences, and purchasing habits. For example, Safeway has implemented a loyalty program that collects data on customer purchases and uses that data to offer personalized promotions and discounts.

Private Label Brands:

Private label brands are gaining popularity in the grocery retail industry in North America. According to a report by Nielsen, private label sales in the US grew by 29% in 2020. The pandemic has accelerated this trend, as many consumers are looking for affordable options. Retailers are investing in private label brands to differentiate themselves from their competitors, offer lower prices to customers, and improve profit margins. Private label brands have the potential to increase revenue by offering customers a wider range of products and reducing costs by eliminating the need for branded products.

Costco is one of the leading grocery retailers in North America when it comes to private label brands. The company’s Kirkland Signature brand generated $58 billion in fiscal year ending August 2021. Costco’s private label brands are known for their high quality and low prices, which have helped the company differentiate itself from its competitors.

The COVID-19 pandemic has accelerated the trend of private label brands as consumers seek affordable options. Retailers have responded by investing in private label brands to improve profit margins and offer lower prices to customers.

1.Quality and Value: Many grocery retailers are positioning their private label brands as high-quality, affordable alternatives to branded products. For example, Kroger's private label brand, Simple Truth, is known for its high quality and affordability, and has a focus on natural and organic products.

2.Product Range: Many grocery retailers are expanding their private label brand offerings to include a wider range of products. For example, Target has expanded its private label brand, Good & Gather, to include a wide range of products, including fresh produce, meat and poultry, dairy, and bakery items.

3.Exclusive Products: Many grocery retailers are offering exclusive products under their private label brands to differentiate themselves from their competitors. For example, Trader Joe's is known for its unique and exclusive products, including its private label brand, Trader Joe's.

4.Brand Recognition: Many grocery retailers are investing in their private label brands to improve brand recognition and loyalty. For example, Costco's private label brand, Kirkland Signature, is known for its high quality and affordable products, and has a strong following among Costco customers.

5.Health and Wellness: Many grocery retailers are offering private label brands with a focus on health and wellness. For example, Whole Foods Market's private label brand, 365 Everyday Value, offers a range of natural and organic products at affordable prices.

Health and Wellness:

Health and wellness have become increasingly important to consumers in the grocery retail industry in North America. According to a report by Mintel, 79% of US consumers are trying to eat healthier. The pandemic has accelerated this trend, as many consumers are looking for ways to boost their immune systems. Retailers are responding to this trend by offering a wider range of organic, natural, and healthy products. Health and wellness products have the potential to increase revenue by attracting health-conscious customers and improving profit margins by offering higher-margin products.

Whole Foods Market is one of the leading grocery retailers in North America when it comes to health and wellness. The company offers a wide range of organic, natural, and healthy products, including its 365 Everyday Value brand, which is known for its high quality and affordability. Whole Foods Market’s focus on health and wellness has helped the company differentiate itself from its competitors and attract health-conscious customers.

The COVID-19 pandemic has accelerated the trend of health and wellness as consumers seek ways to boost their immune systems. Retailers have responded by offering a wider range of organic, natural, and healthy products to meet the growing demand. Grocery retailers have launched a variety of health and wellness initiatives to meet the growing demand for healthier food options and appeal to health-conscious consumers. Here are a few examples:

1.Organic and Natural Products: Many grocery retailers are offering a wider range of organic and natural products to meet the growing demand for healthier food options. For example, Whole Foods Market is known for its focus on organic and natural products and has a set of quality standards for all products sold in its stores.

2.Nutritional Labeling: Many grocery retailers are implementing nutritional labeling programs to help consumers make informed decisions about their food choices. For example, Kroger has implemented a program called "Our Brands" that includes nutritional labeling and ‘use by’ or ‘best?if used by” dates on all of its private label products.

3.Health and Wellness Programs: “Grocers are taking the next step by rolling out personalized health tools that offer tailored food scoring and dietary guidance, and tie in with their digital platforms.” For example OptUp from Kroger provides health score from 1 to 100.

4.Dietary Restrictions and Allergies: Many grocery retailers are offering a wider range of products to meet the needs of consumers with dietary restrictions and allergies. For example, Trader Joe's has a line of products called "Trader Joe's Gluten Free" that includes a variety of gluten-free options.

5.Local and Organic Produce: Many grocery retailers are promoting local and organic produce to appeal to health-conscious consumers who are looking for fresh, healthy food options. For example, Sprouts Farmers Market is known for its focus on fresh, locally sourced produce and organic products.

Sustainability:

Sustainability has become an increasingly important issue in the grocery retail industry in North America. Consumers are becoming more aware of the environmental impact of their shopping habits, and retailers are responding by offering more sustainable products and packaging. Sustainability initiatives have the potential to increase revenue by attracting environmentally conscious customers and improving profit margins by reducing waste and energy consumption.

Walmart is one of the leading grocery retailers in North America when it comes to sustainability. The company has set a goal to achieve zero waste by 2025 and has launched several initiatives to reduce waste and improve sustainability. Walmart has also partnered with suppliers to reduce packaging waste and improve the environmental footprint of its products.

The COVID-19 pandemic has highlighted the importance of sustainability as consumers become more aware of the environmental impact of their shopping habits. Retailers have responded by investing in sustainability initiatives to reduce waste and improve their environmental footprint. Grocery retailers have launched a variety of sustainability initiatives to reduce waste, improve their environmental footprint, and appeal to environmentally conscious consumers.

1.Sustainable Packaging: Many grocery retailers are exploring sustainable packaging options to reduce waste and improve their environmental footprint. For example, Walmart has launched a program called "Project Gigaton" that aims to reduce the retailer's greenhouse gas emissions by one billion metric tons by 2030. As part of this program, Walmart is working with suppliers to reduce packaging waste and switch to more sustainable materials.

2.Food Waste Reduction: Food waste is a major issue in the grocery retail industry, and many retailers are implementing initiatives to reduce waste. For example, Kroger has launched a program called "Zero Hunger | Zero Waste" that aims to eliminate hunger and food waste in the communities where the retailer operates. As part of this program, Kroger has implemented measures to reduce food waste in its stores and donate surplus food to food banks and other organizations.

3.Renewable Energy: Many grocery retailers are investing in renewable energy to reduce their environmental footprint and reduce their reliance on fossil fuels. For example, Whole Foods Market has installed solar panels on the roofs of 176 of its stores and is committed to sourcing 100% of its energy from renewable sources by 2025.

4.Sustainable Agriculture: Many grocery retailers are working with suppliers to promote sustainable agriculture practices and reduce the environmental impact of food production.