Business
June 8, 2022
3 min read

State of Grocery Retail Report Analysis: Top 3 Takeaways for Independent Grocers

Storewise Team
State of Grocery Retail Report Analysis: Top 3 Takeaways for Independent Grocers

With their release of the 2022 State of Grocery Retail Report, McKinsey & Company has done an incredible job capturing the trends we’re all seeing in our own markets and bringing the future into focus.Thank you Bill Aull, Becca Coggins, Sajal Kohli, Eric Marohn, and all of the additional contributors who compiled this excellent report.

We, in the grocery industry, continue to adapt and meet growing consumer demand for e-commerce, tech-enabled grocery stores, improved sustainability practices, omni-channel shopping and myriad other growth opportunities, all in the face of unfavorable macroeconomic conditions of inflation and labor shortage. The commonality among these trends is the solution -  technology  to manage rapid change and operate better against larger competitors. Simplicity is the call to action for any software company like ours including strong analytics, nimbleness through simplicity, and optimization of tech and talent. Every day, the Storewise team spends time with independent grocers across the country, and these are the three most salient points I gleaned from the McKinsey report in its relevance to their needs. 

Independent Grocers represent the most entrepreneurial segment of the industry, constantly rising to meet competition from national chains and holding their own with the strength of their customer service, the depth of their community relations, and the superior quality of their goods. Appropriate tech investment simplifies operations and allows them to focus on their core competencies of quality, service and value. 

By building a reliable financial infrastructure through strong analytics and automation, grocery SMBs will be able to minimize risk, free up talent and time budgets to explore new technologies, and move forward from a position of strength in 2022. 

Strong Analytics

A deep understanding of store data analytics is critical for optimal pricing and profit margin protection. Grocers need to understand the margins and performance of the products driving e-commerce, the products driving store visits, changes in top movers, effectiveness of promotions and the endless array of marketing mechanisms implemented by their Wholesale and CPG partners. The data must be tight and reflect real-time changes to avoid loss. Without adequate tech infrastructure it’s virtually impossible to stay up to date. 

Understanding pricing and movement also clarifies fluctuating consumer tastes and product demands. McKinsey’s report verifies experience in the field; Consumers have rediscovered cooking at home, they want good value, and they’re appreciative of healthier whole food options. They’re open to trying new things from a variety of brands and expect to see forward-thinking CPG brands on the shelf. 

The more partners and products you have, or aim to have, the more critical it is to stay on top of the data. Reliable data analytics are a prerequisite for building successful partnerships and digital capabilities. 

Nimbleness & Simplicity Outshine Size

If the past few years have taught us anything, it’s to be ready for surprises. For independents, nimbleness is a strength providing the ability to upskill staff quickly and at their own discretion, to build an ecosystem of partners with less bureaucracy, to research and implement new technology solutions, and to outmaneuver slower competitors. While it may take a national chain months to bring programs and partners online, Independent grocers are empowered to proactively move forward at their own discretion. They keep it simple.

The signature characteristics of independent grocers are becoming more popular; The fresh options, achievable pricing, and local relationships. Independents can respond to the specific needs of their community or market segment quickly and can participate in brand-affinity-building ways that are not achievable at larger sizes. Nobody will ever say “The bakery at that particular Walmart is awesome” or “That Dollar General has the best local produce partners.” 

McKinsey reports that small-format stores are rising in popularity due to the geographically-specific SKU selection and shorter travel times they make possible. With advances in data and analytics, grocers can tailor product offerings to their unique surroundings potentially creating sales gains of 2 to 4 percent. Hyperlocal shopping and SMB support is a growing cultural value in line with sustainability. 

Just as retailers are grappling with an explosion of new technology, customers are adapting to e-commerce, online promotions and digital trends as well. Today, customer service means customer education, and that’s an area where a local grocer can almost always outperform a national chain. To maximize the benefit of their size and hyperlocal messaging ability, SMB independent grocers need to engage authentically with their communities in the ways their customers are most comfortable with. That means exploration of messaging tools, be that social media, podcasts, digital magazines and other online media outlets, newsletters, print mailers or even signage. 

Regardless of the endeavor, independent grocers can pivot quickly because they keep it simple. Storewise solutions play to this strength by further simplifying daily operations through technology. 

Upgrade Tech, Upskill People

There are store functions that require tech and functions that require human ingenuity. Know the difference and use your resources wisely. Today, democratization of technology lets independent grocers rise against challenges and national competition with programs and services like Storewise. Affordable analytic and automation technologies can help retailers reduce store cost structures while optimizing labor costs, improving customer experience, and creating the time and budgetary space to reskill and redeploy staff to more strategic growth opportunities. 

While McKinsey's research suggests that 30% of grocery retail tasks could be automated in the coming years, automation won’t replace human staff. Automation will change how we invest our staff’s time and labor. Growing consumer demand for in-store technology solutions including self-checkout, grab-and-go, digital shelf tags, payment innovations are only achievable to SMB independents if they free up their staff’s time to explore and implement new technologies. To future-proof our SMB independent grocery stores, we need to spend less time on spreadsheets and price changes, and more time identifying and implementing the innovation that matters to our customers. 

Overall, increased automation is anticipated to reduce short-term attrition and create positive change in work experience for grocery store staff by addressing factors that employees regard as important - investment in the human aspects of their work and removing repetitive and demoralizing tasks. Reskilling and upskilling - investing in human talent - not only strengthens employee engagement and productivity, but is estimated to be between 20 and 30% more cost effective than employee turnover. Your people are your greatest asset and their time is your most important resource.  

The State of Grocery Retail Report details a long list of growth areas, and while the “to-do” list is long, many of the solutions map back to an increased need for just one key resource. Luckily, it’s a resource that Storewise analytics and automation software specializes in creating more of: Time.

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