Food Retailers, Suppliers Innovate to Future-Proof Businesses as Inflation, Workforce, Supply Chain Issues Persist
New report finds the food industry is prioritizing innovation to increase efficiency and foster redundancies across product supply and assortments
PHOTO COURTESY OF: FMI
Food retailers and suppliers, facing formidable challenges with a changing workforce, inflation, supply chain hurdles, intense competition and shifting consumer buying habits, are investing in more creative and proactive approaches to future-proof their businesses, according to FMI—The Food Industry Association’s annual comprehensive research analysis The Food Retailing Industry Speaks 2023.
The 74th annual report finds the food industry is prioritizing innovation to increase efficiency and foster redundancies across product supply and assortments; investing in technology for worker recruiting, training and retention, and pay increases to ease labor issues; and prioritizing competitive pricing and strategies to provide value and maintain customer loyalty.
The report found that less than half of food retailers (44%) and suppliers (32%) believe supply chain disruptions will negatively impact their businesses in 2023, compared to 70% of food retailers and 82% of suppliers in 2022.
To maintain customer loyalty in this inflationary environment, retailers are fine-tuning competitive pricing for products and categories and increasing consumer communications about value. The majority of retailers say they are showcasing private brands as strong value alternatives, and 85% of retailers are investing in new technologies to improve the customer experience. In 2022, food retailers devoted an average of 1.3% of their total sales — more than $13 billion — to technology investments, and food suppliers spent almost twice as much on technology as food retailers.
Retailers also reported continuing to leverage perimeter departments to attract and retain shoppers. Eighty-eight percent of food retailers differentiate themselves from the competition by selling local assortments throughout the store, with 73% increasing local items in SKU allocation. Additionally, 85% use fresh prepared/foodservice programs to stand out among competitors and enhance consumer engagement.
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