Like workers in the healthcare industry, workers in the food industry have served heroically on the front lines of the fight against the pandemic in order to meet the needs of the rest of us. Kari Hensien, President of RizePoint, observes, “The food industry has learned a lot this year — more than it bargained for. Specifically, COVID-19 has taught us some important lessons about modernizing quality, safety and vendor management.”[1] This is true across the entire spectrum of the food industry. In this article, however, I want to discuss the grocery side of the industry. Food industry reporters Jeff Wells (@JeffWellsWH), Sam Silverstein (@SilversteinSam), and Catherine Douglas Moran (@c_douglasmoran) note, “Having closed the book on one of the most tumultuous years in recent memory, grocers are now looking ahead to a 2021 filled with opportunity and uncertainty. Although the novel coronavirus pandemic that hit the U.S. last March has delivered a sales windfall to food retailers, it’s unclear how consumers will respond once their communities, offices and schools open back up and they can dine inside restaurants once more. It’s also unclear when, exactly, that will all happen as COVID-19 vaccines haltingly roll out across the U.S.”[2] Below are some of the trends subject matter experts believe will impact the grocery sector this coming year.

Trends in the grocery industry

Online grocery shopping.
Although online grocery shopping was growing year over year, the pandemic saw a spike in such activity. Wells and his colleagues report, “The long-forecast online grocery boom happened all at once in 2020. Now, experts say, it’s time for grocers to improve their platforms and also make online order fulfillment more efficient. Pickup, which emerged as consumers’ favored e-commerce mode, is especially ripe for improvements given the high demand and the low-tech approach many retailers still take.” Food reporter Shayna Harris (@mamashayna) adds, “Nearly half of consumers say they prefer online grocery shopping. The channel grew by twice the rate that was anticipated pre-Covid. And there is still room to grow; grocery e-commerce penetration lags behind major consumer categories like beauty, fitness, and apparel.”[3]

Pre-COVID surveys generally found people preferred shopping in-store and some analysts believe consumers, hungry for social interaction, will return to in-store shopping once the pandemic recedes. Regardless of the level at which online grocery shopping eventually settles, grocers will likely pay much more attention to their e-commerce channel in the years ahead. Chief Architect at Brick Meets Click, Bill Bishop (@BrickMeetsClick), told Wells and his colleagues, “2021 will be the year when ‘seamless integration of e-commerce’ becomes a top priority for retailers. In addition to process improvements grocers will implement more personalization technology and meal-planning tools that will make online shopping a more manageable — and perhaps even an enjoyable — experience.”

Grocery store automation.
Jenny McLean, a Partner at Clarkston Consulting, believes, during the coming year, automation will make greater inroads in the grocery sector. She writes, “In a digital world, automation is being more and more rapidly implemented across many industries, including grocery. Many grocery retailers are considering automation as a strategic imperative to improve store performance and brand loyalty. Automation is enabling opportunities for a new shopping experience for consumers in the form of services like subscriptions, kiosks, and sensor-based payments.”[4] Recently, Albertson’s announced it is experimenting with automated kiosks. “The kiosks, which are manufactured by Estonia-based Cleveron, hold products in two temperature zones — regular and deep freeze. Shoppers designate a two-hour pickup window when ordering and then scan a code at the machine when they arrive to receive their groceries.”[5] Another part of the automation movement, McLean notes, involves technology that allows consumers to bypass long, in-store checkout lines.

Hensien adds, “Modernizing systems makes sense both from a competitive and financial point of view. … The most compelling reason to modernize is your employees. During these precarious times, they’re doing more with the same or fewer resources, taking on more stress and heading toward deeper and tougher burnout. If you can do more to bolster employees and create efficiencies, you’ll achieve better results in the long run, and that’s the investment that will pay off the most in the end. It will take modernization to get you there.”

Fewer products from which to choose.
Dietitian Cara Rosenbloom (@CaraRosenbloom) asserts, “Companies are putting innovation on the back burner to focus on supply chain issues. Stocking shelves with innovative new products is less of a priority than stocking shelves, period.”[6] One result of this refocusing is the elimination of so-called zombie products — products that underperform but still take up shelf space.  Rosenbloom notes one soup company reduced the variety of soups it produced from 80 to 40. Another company, Mondelez, plans to eliminate a quarter of its products to streamline manufacturing during the pandemic.[7] Other companies, like Coca Cola and Kraft Heinz, are making similar reductions.

At-home meal push.
Wells and his colleagues note, “Grocers got a major boost from consumers’ meal dollars when the pandemic stifled restaurants and spurred at-home cooking. But restaurants are going to grab many of those dollars back in 2021 as more people get vaccinated and communities reopen.” They insist, however, that grocers will give up those dollars reluctantly. They believe grocers will offer more meal kits as well as provide other services that make planning and preparing at-home meals easier. Because the return of self-serve, in-store buffets aren’t making a comeback any time soon, grocers will be especially eager to hold on to money they’ve made as a result of increased at-home meal preparation.

Stress on eating healthy.
Part of the push for preparing and serving meals at home will be stressing healthy eating. Wells and his colleagues explain, “Many consumers tended closely to their health in 2020 as they watched a deadly virus sweep across the globe. That heightened awareness, coupled with advances in personalization technology, set the table for grocers to establish custom wellness programs that promise to fully integrate food shopping with personal health.” Rosenbloom adds, “An upswing in functional foods and beverages — products that contain beneficial nutrients for health — has also been predicted by many 2021 food trend reports. … Beverage companies are also jumping on the wellness bandwagon. … One soda company has created a nighttime noncarbonated beverage to help facilitate a restful sleep during these stressful times. The beverage contains L-theanine, the same amino acid that’s found in tea, and is said to promote relaxation. Where legal, you’ll also find beverages with added CBD oil to reduce anxiety and promote restfulness.”

Greater transparency.
During the pandemic, consumers rushed to buy shelf-stable products to stock their pantries. This trend will likely subside. As a result, asserts Phil Lempert, food industry analyst and editor at SupermarketGuru.com, consumers will want to know from whence their fresh and frozen food comes. He explains, “Consumers are demanding transparency. They want to know where the carrots in that frozen dinner came from and what the name of the farm was. Companies are understanding that, and are adding more transparency in their manufacturing processes.”[8] According to journalist Nicole Spector (@NicoleSpector), consumers now asks questions like, “Who owns the brand and what do they represent?”[9] She adds, “This is a detail that shoppers care about more than they used to, and they’ll go on caring in 2021.”

Concluding thoughts

Grocery chains will closely watch how consumer purchasing trends continue to change as the pandemic diminishes. Not only will they stock different product assortments, they will get innovative in how they attract consumers back inside the store.

Footnotes
[1] Kari Hensien, “Three Lessons for the Food Industry in 2021,” SupplyChainBrain, 9 December 2020.
[2] Jeff Wells, Sam Silverstein, and Catherine Douglas Moran, “8 trends that will shape the grocery industry in 2021,” Grocery Dive, 4 January 2021.
[3] Shayna Harris, “A Grocery Revival? Top Food And Beverage Trends For 2021,” Forbes, 21 December 2020.
[4] Jenny McLean, “2021 Grocery Trends,” Clarkston Consulting, 18 December 2020.
[5] Catherine Douglas Moran, “Albertsons is testing automated pickup kiosks,” Grocery Dive, 7 January 2021.
[6] Cara Rosenbloom, “Grocery trends: Fewer new products, but more changes in supermarkets and shopping,” The Washington Post, 30 December 2020.
[7] Victoria Campisi, “Large CPG Brands Continue to Pivot,” The Food Institute, 16 September 2020.
[8] Rosenbloom, op. cit.
[9] Nicole Spector, “These Will Be The Top 9 Grocery Trends Of 2021,” Banking Rates, 22 December 2020.