For grocery retailers, 2022 was an interesting year. Although we have returned to some semblance of normalcy, many challenges COVID-19 has exacerbated are still being felt across the industry. As a result, grocers around the globe have spent this year reassessing and reinventing many aspects of their business operations.
As we begin 2023, there’s one thing we can say for sure: retailers must continue to embrace digital technology to stay competitive and attract – and retain – loyal customers. The future of grocery retail will depend on technology to increase efficiency, drive growth, and as a new generation of shoppers begins to emerge, create a next-gen shopping experience.
In this article, we take a deep dive into notable trends and technologies that will not only dominate the new year but will be responsible for fueling growth in 2023.
Our Top Five Grocery Industry Trends
More investment in AI and ML for Forecasting and Automation
As inflation and rising costs continue to influence how consumers shop, it is becoming increasingly more work for retailers to predict demand accurately. As a result, we’ve seen many grocers either order too much or too little. This has led to excessive shrink, food waste, and unimpressed shoppers. In 2022 many retailers began to embrace AI and ML-powered forecasting engines that could forecast across stores to determine enterprise or warehouse needs. This technology has improved buyer and large-scale fulfillment decisions and dramatically reduced the chance of human error.
While many companies offer this type of technology, Invafresh’s AI and ML-powered demand forecasting engine has helped our clients eliminate $150M in food waste and see in-stock improvement of three percent resulting in fresher products and happier customers. In 2023 we predict that both large and small grocery retailers will double down on their investment in AI and ML for forecasting and automation purposes.
Focus on Sustainability
The push for the food retail industry to go “green” isn’t new. Still, as consumers are becoming more demanding of brands to prioritize health and sustainability, it’s becoming more important, and leaders are listening. According to IDC, an international market intelligence provider, customer demands were the top motivating factor for adopting more sustainable practices. The most widely used strategy for becoming more sustainable was reducing waste and spoilage across the supply chain. Interestingly According to a NielsenIQ Global Health and Wellness Survey, 30% of participants are more likely to purchase products with sustainable credentials.
In 2023, sustainability will be a massive initiative for grocers around the globe. Luckily software can enhance their sustainability efforts. For example, our Fresh Retail Platform offers a variety of management features that can help grocers cut down on waste by tracking dates and deploying alerts before ingredients or finished goods spoil. Overall, platform solutions can also help minimize waste during preparation processes and identify these losses in real time to address the root cause.
![[Read next: "How to Build a Sustainable Grocery Store Strategy"]](https://no-cache.hubspot.com/cta/default/21714346/interactive-151427210797.png)
Growth of Commissary Kitchens and Centralized Production Planning
In 2023, food retailers will have a significant opportunity to invest in commissary and prep kitchens. Over the pandemic, and this year, in particular, grocers have seen an increase in the popularity of prepared foods. According to FMI, deli foodservice outperformed most grocers’ other fresh departments, but specific offerings fared better than others. Pizza, for example, had a standout dollar (16.7%) and unit (20%) sales growth compared to a year ago. A survey from NielsonIQ also found five percent of consumers surveyed in May were purchasing more deli-prepared foods compared to a year ago.
In 2023 grocers should implement technology that will optimize their commissary operations to evaluate their menus and offer items beyond the usual fare. Changing up formats and store design to make the in-store dining experience more satisfying; and promoting meal deals for busy, budget-conscious and discerning shoppers will help build a competitive edge.
The Rise of Data-Driven Decision-Making with Prescriptive Analytics
The pandemic has changed consumer behavior and marketplace dynamics and left a lasting impact on labor resources. More than ever, data-driven decision-making is critical to ensuring that in-store processes are optimized to deliver the freshest experience possible for customers. Prescriptive analytics is, for the first time, enabling grocery retailers to turn data into actionable insights that can directly translate into sales growth, minimized shrink, and improved operational efficiency. Access to software like our Fresh Retail Platform makes it easy to create measurable value from real-time data to understand the past, predict & adapt for the future, and optimize to deliver desired results.
Migration from On-Premises to Cloud
Many grocery retailers still use on-prem software. In 2023 we predict that many of these grocers will start migrating to the cloud. Not only is cloud software more convenient, but it’s also more secure, thanks to better security management, data encryption and vulnerability management. Using cloud software also generally comes with more consistent updates, so retailers can be sure they are using the latest version without having to deal with time–consuming software updates. Cloud computing also enables employees to access inventory information from anywhere. By offering real-time data and analytics, companies can get real-time visibility of stock availability to optimize omnichannel store fulfillment. The cloud helps retailers have a unified view of the customer across transactions and channels, providing shoppers with a better experience.
Looking Ahead
Every year comes with new challenges for the grocery industry, but innovations come with them. Grocery retailers must continue to invest in technology and embrace digital transformation. The industry has come a long way, and by paying attention to upcoming grocery industry trends, retailers can begin planning their digital strategies for 2023. This is truly just the beginning of a wave of transformation in grocery; 2023 should be an exciting year ahead.
