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's Food Industry Association's annual comprehensive research analysis The Food Retailing Industry Speaks 2023.
The 74th annual report finds the food industry is prioritising 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 labour issues; and prioritising competitive pricing and strategies to provide value and maintain customer loyalty.
"Food industry companies are maximising efficiencies and, in some instances, creating strategic redundancies in the supply chain in their unending effort to ensure consumers have access to the products they love," FMI President and CEO Leslie G. Sarasin said.
"The industry is also heavily invested in bringing more creative approaches to product assortments that will continue to delight and inspire their customers."
Sarasin continued stating that the industry's positive news is signalling its expectation that supply chain disruptions will continue to lessen as we move through 2023. Across the food supply chain, FMI has been taking the lessons learned over the past few years to change how FMI invests in employees, innovates to future-proof the businesses and, most importantly, adapts operations to better engage with and serve shoppers.
The report found that less than half of food retailers (44 percent) and suppliers (32 percent) believe supply chain disruptions will negatively impact their businesses in 2023, compared to 70 percent of food retailers and 82 percent of suppliers in 2022.
To maintain customer loyalty in this inflationary environment, retailers fine-tun competitive pricing for products and categories and increase consumer communications about value. Most retailers say they are showcasing private brands as strong value alternatives, and 85 percent of retailers are investing in new technologies to improve the customer experience. In 2022, food retailers devoted an average of 1.3 percent 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 percent increasing local items in SKU allocation. Additionally, 85 percent utilise fresh prepared/food service programs to stand out among competitors and enhance consumer engagement.
