Three Goals Every Grocery Retailer Should Pursue in 2023
Heading into a new year, grocery retailers are likely familiar with their biggest challenges: inflation, supply chain disruptions, heightening competition in e-commerce, and a looming recession, to name a few. So, where should grocers focus their resources?
In 2023, it will be crucial for grocery retailers to pursue ancillary revenue streams to increase margins, enable real-time insights into customer behavior to understand inflation’s impact, and beef up supply chain resiliency to enable quick response times. All of these adjustments aim to turn 2022 headwinds into 2023 advantages.
Facing inflation’s strain on profitability, proactive grocery retailers are exploring additional ways to monetize their resources beyond the traditional path of selling products to customers. Retail media — productizing space on your web and mobile properties for advertisers to purchase and access your unique first-party audience — is a hot sector, projected to exceed $100 billion this year as the fastest growing ad-supported digital media channel.
Data licensing also offers an avenue for grocery retailers to capitalize on existing assets. The rich first-party audience data that retailers accumulate on their customers is an increasingly valuable resource, particularly amid the deprecation of third-party cookies and mobile privacy changes.
By licensing out data, grocery retailers can boost revenue and margins while keeping prices for shoppers steady. For example, grocers can provide point-of-sale and supply chain data, then charge a premium for category-level data as well as shopper-level and loyalty data.
Diversify revenue stream
In 2023, it will be crucial for grocery retailers to pursue ancillary revenue streams to increase margins, enable real-time insights into customer behavior to understand inflation’s impact, and beef up supply chain resiliency to enable quick response times.
Access real-time data to understand customer behavior
Boost supply chain resiliency to enable quick reactions
Given inflation’s impact on consumer behavior, grocery retailers need to gain real-time insights into how their customers are responding to economic anxieties. For example, loyalty programs are increasingly attracting shoppers with the promise of savings. Retail Dive reported a 20% YoY increase in the number of global consumers who used customer engagement programs to shop on Black Friday weekend in 2022.
To understand these shifting trends, granular analysis of how retail adjustments drive shopping tendencies can help grocery retailers navigate if, when, and how to tweak prices, as well as which kinds of shopping experiences to offer. Real-time velocity data on how quickly certain products are selling (digital and in-store) also signals to grocery retailers which products to ramp up or down in their supply chain at a time when near-instantaneous reactions are crucial to adapt to market shifts.
With customer choice increasing every day for where, when, and how people purchase goods (online, delivery, subscription, curb-side pickup — the list goes on), grocery retailers need to be proactive in understanding what drives customers toward those options and offering shoppers their desired buying experience.
Plagued by shipping challenges and the unpredictable availability of raw materials, the pandemic lifted the veil on supply chain vulnerability. Experts agree that disruptions are likely here to stay, so grocery retailers need to optimize for that reality.
In their own supply chains, grocery retailers should pursue visibility, data collaboration, contingency plans, and backup partners. For example, with the cold and the flu on the rise right now, medicine is flying off the shelves. Did grocery retailers anticipate this spike in demand? Did they exchange data with supply chain partners to devise informed approaches? Did they engage in discussions with their current suppliers — as well as additional suppliers to meet increased demand — in the summer to prepare for the sniffly season? Proactive, future-facing collaboration across the entire supply chain can drive swift adjustments.
By pursuing supply chain resiliency, alternate revenue opportunities, and real-time data on customer behaviors, grocery retailers cannot just cope with macroeconomic challenges but become significantly more adept at doing so than rivals — in which case, 2023, despite its obvious challenges, could be a breakthrough year.