Challenges and Opportunities: Is the Food Retail Industry Unique?

By: Steve Markenson, Director of Research, Food Marketing Institute

Just two short months ago I started at FMI as the director of research. Through my first assignment, releasing the 67^th edition of The Food Retailing Industry Speaks (Speaks) report, I quickly became immersed in the exciting and evolving food retail world. This survey of industry executives is designed to annually take the pulse of the industry. Having owned my own market research business for almost 20 years, I can certainly relate to the challenges and opportunities being navigated by food retailers through the turbulence facing the industry.

In my previous career, I fended off non-traditional competitors in our industry, navigated the world of employee health care benefits, recruited and retained the best staff, found new opportunities and ways to do business in a tumultuous industry to ensure my company’s survival, and maintained and grew the business’s customer base in the new world of social media and technology. All these challenges and opportunities in business are not foreign to me and I both empathize and see the possibilities for the industry.

Here are some key highlights from the Speaks report based on the Worry Index, where senior leaders in the food retail industry are asked to provide feedback on the positive or negative impact on sales and profits from a list of macro and micro issues.    

• Competition from non-traditional food retailers and online sales are now universal concerns impacting sales and profits. In addition, grocery retailers are now reporting online retailers are having a more tangible impact in areas such as foot traffic, basket size and center store sales.  
• Virtually all retailers are concerned about the impact of interchange fees, cost of health care and upward wage pressures on their bottom lines.
• Consumers’ focus on health and wellness and leveraging food to manage and avoid health issues are seen by many grocery retailers as opportunities. In response, most are expecting to increase organic, locally sourced, and health and wellness SKUs over the next two years. In addition, many plan to offer more consumer wellness programs, retail dietitians and nutrition guidance programs.  
• Many grocery retailers are focused on and finding success in using customer service in general and the checkout experience specifically to differentiate themselves from the competition. Community support and ties are also used with success by many retailers to differentiate themselves.
• Fresh departments such as produce, meat, deli and fresh prepared will see expansion in their space allocation and offerings in the next two years. This is not surprising given the high level of use as differentiators and success of these perimeter departments.
• The utilization of cost effective social media and technology driven outreach to customers has grown and will likely continue to grow in the coming years.  Grocery retailers are currently using multiple social media platforms including Facebook, Instagram and Pinterest and technology driven outreach such as email, apps, mobile marketing ads, and texts. Expectations are for greater use of all of these in the coming years. 

Learn more and download the full Speaks report at FMI.org/GrocerySpeaks. Now I am off to my next food retail research adventure as FMI begins work on the consumers’ perspective with the U.S. Grocery Shopper Trends 2018 report.