Industry Thought Leaders Opine on Grocery 2023

When the calendar resets to January it is natural for people and businesses to take stock in their current position and contemplate the year to come.

With so much change in the grocery industry over the past few years — consolidation, supply chain upheaval, evolving consumer behavior, game-changing digital technology, etc. — it is important to take a moment to evaluate the year that was and prepare yourself for a successful future.

In Grocery Doppio’s newly released “State of Digital Grocery 2022 Performance Scorecard,” we look back at 2022 performance and break out the crystal ball and predict what 2023 has in store. According to the report, grocers point to increase inflation, labor costs, uncertain product availability, and a reduction in shopper spending as the key challenges that keep them up at night. To address these multi-layered obstacles more than half of grocers plan to invest in fulfillment capabilities, nurturing basket size, and improving inventory accuracy over the next 12 months. Check out the full report here and benchmark your current and future digital efforts against your peers.

In conjunction with the industry benchmarking found in the report, we asked a select group of grocery industry insiders for the key trends, strategies, and technologies they believe will have the greatest impact in 2023. Their responses shed light into where smart grocers should be focusing their efforts now and into the future.

Below these thought leaders explore how supply chain, fulfillment, ethics, consolidation, value conscious shoppers, seamless checkout, and more will shape the industry in 2023.

2023 Predictions

“If the grocery watchwords for the past few years were “convenience” and “safety,” “cost” and “value” are likely to top the list in 2023. Inflation already has consumers seeking lower-priced alternatives, including retailers’ private label brands, and a potential recession will accelerate those trends. Retailers’ biggest challenge will be making the internal changes necessary to offer BOPIS, curbside pickup, and delivery profitably. Regarding delivery, the recent rash of partnership announcements between food retailers and DoorDash, Uber Eats, Instacart, etc. indicate grocers believe outsourcing picking, packing, and delivery to these platforms is the best compromise for the moment.”
— Adam Blair, Editor, Retail TouchPoints

“2023 for grocers will be one of continued tech innovation in two areas: reducing margin loss of digital orders with store fulfillment and reducing labor costs through technology. These two areas are driving nearly all grocery technology investment. They must make those digital orders profitable compared to in-store customers and they must reduce labor to operate as they cannot get the employees needed to fully staff their stores.”
— Greg Buzek, President, IHL Group

“2023 will see grocers offer new propositions, solving for more nimble shopping missions. It is important that grocers get the health of their core proposition in place, understand the metrics that are most important, while testing and learning with some quick commerce solutions. For years, we argued that retailers should not take the path of least resistance. By foregoing building the internal capability and choosing a marketplace strategy in place of a native solution, they were delaying the inevitable disruption in their business. The strong performance of in-house solutions over third-party marketplaces provides confidence that the industry is building the right capability and will continue to satisfy loyal shoppers, wherever and whenever they want to shop.”
— Barry Clogan, Chief Evangelist, Wynshop

“Retail media will be an area of investment and experimentation.”
— Sucharita Kodali, Retail Industry Analyst, Forrester

“Navigating inflation will continue to be the top macro priority for grocers. Shoppers will trade down banners and brands in response to inflation, and grocer loyalty programs will focus on discounts to dull the impact of increased prices. The digital business will be forced into adulthood and must tighten operations to reach profitability. Grocers lost $24 billion in 2022 because of ‘unavailable’ or ‘unsubstituted’ items and are losing money on every order. Improving digital operations and inventory visibility will be the focus. We will also see experiments to tap into new digital revenue streams like retail media. Overall, tech budgets will go down even though spending on digital will increase 11%-16% compared to 2022. Investment and innovation will focus on the practical and not the possible – so buying bananas in the metaverse will need to wait a tad longer.”
— Gaurav Pant, Chief Insights Officer, Incisiv

“Everyone we talk to is looking at ways to make self-checkout ‘better.’ I put quotes around the term, because that means very different things in certain circles. Just walk out techs like AmazonGo? Not this year. Way too much tech to be price effective yet. But smarter scales, faster payment terminals, biometric tech like at my local WholeFoods... we're going to see a lot more of this in the year to come. No one wants to wait in line to checkout, especially if they're going to be doing the checkout work themselves.”
— Steve Rowen, Managing Partner, Retail Systems Research (RSR)

“1.) Consumers will continue to reward brands that anticipate and deliver on their ever-changing preferences. The technology will have to be ever-present without being intrusive. 2.) Ethics will become more vital to consumers whether it be sustainability, cruelty-free, geopolitical, ethnic, etc. 3.) Reaction to Kroger-Albertsons could lead to more consolidation on the supply side and less choice on the consumer side.”
— Phillip Russo, Founder/Publisher/Editor, Global Retail Brands

“Frictionless checkout – While true frictionless checkout like seen in Amazon stores will not be a reality, we will continue to see the expansion of trials and rollouts of this technology. Most applications will use a heavy dose of optimized camera technology. Micro fulfillment centers – Companies in this space cannot add MFC fast enough. With a very relatively small portion of SKU’s making up the majority of a grocer’s turns; we will see a large number of these optimized mini-warehouses both retrofitted to existing stores and incorporated into new store designs. Automation to offset labor shortages – Labor is still tight and not getting better in the foreseeable future. We continue to see big opportunities for technologies such as ESL to provide significant labor savings. More in-store readymade food – This will give consumers more variety, increase in-store dwell time, create more opportunities for impulse purchases, and potentially help combat the growing influence of food delivery services.”
— Jerry Sheldon, VP of Technology, IHL Services

“We continue to believe that managing supply chains to reduce waste will be critical to top and bottom lines for grocers in 2023. Computer vision can play a major role in on-shelf availability and keeping the proper amount of stock on hand. Furthermore, food as medicine continues to grow as a way to improve the health of Americans, and the grocery store will play a more important role in health and wellness. AI-driven solutions to gamify consumer choices and make subtle improvements in their baskets over time will have a measurable impact on their health and improve loyalty and share of wallet. A true win-win solution.”
— Deborah Weinswig, CEO & Founder, Coresight Research

For more insider insight on what the next 12 months has in store for grocery be sure to check out Grocer Doppio’s “The State of Digital Grocery: Year in Review and Outlook” webinar. The session features Barry Clogan, Wynshop; Doug Baker, FMI; and Gaurav Pant, Incisiv. The panel discusses the grocers’ digital performance, changing consumer behavior, investment activity, as well as the key trends that will shape the industry in 2023.

‍