McMillanDoolittle discusses growing retail trends at PLMA Global

Speakers from McMillanDoolittle, a Chicago-based retail consulting firm, discussed what’s driving innovation in retail at the PLMA Global virtual event.

Amanda Lai, senior manager and food retail lead at McMillanDoolittle, and Neil Stern, CEO of Good Food Holdings and partner emeritus at McMillanDoolittle, talked about what trends the company is seeing in the U.S. and beyond and how they impact the private label landscape.

While retail sales grew in the U.S. during the pandemic, particularly 3% in 2020, the category distribution was very uneven. McMillanDoolittle data showed that in 2020, grocery stores saw a 12% sales growth, and beer, wine and liquor stores seeing an 18% growth. Clothing, shoes, and department stores saw negative growth. 

In 2021, however, there was a resurgence of retail. Clothing stores went from -29% to +46% sales growth, and shoe stores went from -22% to 38% sales growth. Department stores, used merchandise stores, and bars and restaurants rebounded in 2021 as well.

“We observed 18% retail growth [in 2021] over 2020,” said Lai. “While that’s largely positive, 2022 has its own challenges and disruptions only a quarter into the year. Challenges from supply chain and inflation. Given all of these challenges, the ‘rules of retail’ are changing.”

Lai said that a key trend among retailers is disruption in three areas: extreme value, extreme convenience and extreme experience. Instead of trying to do several things at once, retailers can use their private label products, especially in the extreme value category, to stand out and thrive in one of these three areas.

“Extreme value is defined by offering very sharp pricing at a sustainable cost, creating a ‘treasure hunt environment’ that enables discovery and a sense of newness,” said Lai. “It’s also using private label brands to leverage new traffic to your store. The need for extreme value is more during recessionary periods, as seen during the beginning of the pandemic and even during the Great Recession. But even today, this continues to be a core segment that retailers are tackling.”

One trend that emerged during the pandemic is convenience. Online grocery penetration has accelerated in the past two years, with forecasts showing increased online grocery sales even by 2025.

“Before the pandemic, the U.S. was only expected to have an 8% eCommerce penetration by 2025,” said Lai. “With the pandemic, it is now expected to land somewhere between 11-13%. We see this pattern across the board for retailers around the world.”

Growing innovations that are seeing positive results in the retail industry that get at some of these key trends include easier pickup options, cashier-less technology, co-creation options for consumers and increased collaborative prepared food offerings.

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