As we move into 2023, grocers continue to brace for additional impact as the reality of inflation is raising the cost of food across North America. Today, customers are spending the same amount on groceries as last year, but going home with less. As consumers adjust their spending habits and grocery lists to endure more instability, the grocers who invest in affordability—both online and in-store—will be best positioned for success both in the current operating environment and over the long term.
Price Optimization
Premium items will no longer grab consumers’ attention. Instead, the retailers that offer the best value—the highest quality item at the lowest possible price—will win continued customer loyalty. Deals and discounts will be the name of the game; offering membership programs with low-cost benefits or partnering with brands to offer discounts are a few examples of how retailers can effectively demonstrate value. Implementing AI-powered pricing and promotions technologies can also help retailers adjust to the inflationary environment by providing updated discounts, promotions, and more to customers in real-time as the market continues to fluctuate.
Retailers must integrate optimized pricing and promotions into every aspect of the shopping journey, giving customers attractive, personalized deals. For example, mobile apps with features that allow customers to apply coupons and find deals while shopping in-store, or scan items to track their spending against their budgets, will help consumers make more informed purchasing decisions, ultimately driving more loyalty. Price optimization helps detect consumer sentiment, enabling retailers to invest in discounts where it matters most.
Technology drives personalization and value
Even in this inflationary environment, value goes beyond what items cost. Customers value quality and personalized, convenient experiences—and technology is a grocers’ best friend when it comes to delivering both. For example, local grocers can leverage technology to bring offerings online to better serve their community—like value-oriented prepared foods—to offer added convenience and selection by expanding the digital aisles.
Embracing technology can deliver value by creating efficient solutions to meet the needs of today’s cost-conscious consumers and streamlining operations. For example, using technology to improve efficiency in inventory management, fulfillment of delivery and pickup orders, or order management for prepared foods can give time back to in-store associates, allowing them to spend time on things that add value to the in-store customer experience.
Dynamic pricing also enables retailers to stay competitive. With dynamic pricing tools, retailers can leverage current consumer behavior to make more strategic investments in discounts as inflation impacts prices across the board. Consumers are at the core of this technology, as retailers are empowered to deliver relevant prices and promotions proven to resonate in today's competitive environment.
The future of retail is not online or in-store – it’s both. Grocers who create connected, technology-powered shopping experiences for customers will be best positioned to create the most affordable and seamless experiences.
Connected Experiences
The most successful retailers will connect online and in-store shopping to create one seamless, value-oriented experience. To give customers a fully connected shopping and value-driven experience, incorporating electronic shelf tags (ESLs) that automatically adjust prices by dynamic pricing will be much more effective than having in-store associates spend valuable time manually adjusting tags on the shelves. ESLs can also help customers discover new brands and products that are personalized and catered to their unique wants and needs—such as dietary preferences or preferred sustainability practices.
While it is an investment for retailers to create connected, technology-powered shopping experiences for customers, the grocers who prioritize this now will be best positioned to create the most affordable and seamless experiences.
The reality is that the future of retail is not online or in-store – it’s both. Efficiently delivering value and affordability across the shopping journey is the best way for retailers to remain competitive.
The State of the GROCERY INDUSTRY 2023
FEB 2023
Ryan Hamburger is Vice President of Retail Partnerships at Instacart, where he oversees all aspects of the company’s retail partnerships. As VP of Retail, Ryan is focused on establishing and deepening relationships with Instacart’s suite of more than 1,000 retail partners, as well as driving new marketplace and enterprise partnerships across North America. Prior to joining Instacart in 2015, Ryan worked at Bain & Company where he focused his time with retail & CPG clients across the United States. Ryan earned his BBA & MBA from the Ross School of Business at the University of Michigan.