Food Retailers Innovating to Meet Current, Future Challenges
Food retailers and suppliers are taking creative and proactive steps to deal with current-day challenges while also preparing for the future, according to a new report from FMI - The Food Industry Association.
Results from the organization’s The Food Retailing Industry Speaks 2023 revealed the food industry is prioritizing innovation to increase efficiency and foster redundancies across product supply and assortments. This includes investing in technology for worker recruiting, training and retention, and pay increases to ease labor issues; and prioritizing competitive pricing and strategies to provide value and maintain customer loyalty.
“Food industry companies are maximizing efficiencies and, in some instances, creating strategic redundancies in the supply chain in their unending effort to ensure consumers have access to the products they love,” said Leslie G. Sarasin, FMI President and CEO. “The industry is also heavily invested in bringing more creative approaches to product assortments that will continue to delight and inspire their customers.”
Among the notable findings in the report, concerns about supply chain have eased but still remain on the radar for many. FMI’s annual survey found that 44% of food retailers and 32% of suppliers believe supply chain disruptions will negatively impact their businesses in 2023. Those figures are down considerably from 2022 when 70% of food retailers and 82% of suppliers said supply chain disruptions would have a negative impact on their businesses.
“The positive news is the industry is signaling its expectation that supply chain disruptions will continue to lessen as we move through 2023,” said Sarasin. “Across the food supply chain, we are taking the lessons learned over the past few years to change the way we invest in our employees, innovate to future-proof our businesses and, most importantly, adapt our operations to better engage with and serve shoppers.”
To maintain customer loyalty in this inflationary environment, retailers are fine-tuning competitive pricing for products and categories and increasing consumer communications about value.
The majority of retailers say they are showcasing private brands as strong value alternatives, and 85% of retailers are investing in new technologies to improve the customer experience. In 2022, food retailers devoted an average of 1.3% of their total sales — more than $13 billion — to technology investments, and food suppliers spent almost twice as much on technology as food retailers.
Retailers also reported continuing to leverage perimeter departments to attract and retain shoppers. Nearly 9 in 10 food retailers differentiate themselves from the competition by selling local assortments throughout the store, with 73% increasing local items in SKU allocation. Additionally, 85% utilize fresh prepared/foodservice programs to stand out among competitors and enhance consumer engagement.