84th Annual Report of the Grocery Industry Finds Grocers Upbeat Despite Uncertainty

Rising business costs, labor, competition are foremost concerns

April 13, 2017, 03:02 pm

Optimism seems to be running much higher than reality would indicate among the nation’s grocery retailers.

At least that’s the impression we’re left with, based on the responses Progressive Grocer received to its latest survey that’s driving our 84th Annual Report of the Grocery Industry, which can be found in our April issue here. 

In fact, responses indicate that grocers are more optimistic than they’ve been in recent memory, buoyed by a peak in consumer confidence, though dampened by the prospects for national immigration reform, the proposed Border Adjustment Tax, lingering deflation that has depressed sales numbers, and ongoing competitive pressures that are challenging traditional retailers to innovate, streamline and stay relevant.

PG’s survey includes the responses of 125 retail grocery executives, including presidents, CEOs, C-level officials, store owners and managers, category managers and merchandisers, and store operations, sales, advertising and marketing executives.

Amid the challenges of driving a $668 billion industry, grocery retailers are most worried about the rising cost of all aspects of doing business, labor issues and competitive threats.

Not the least of those threats is the expanding foothold of online retailers, leading traditional grocers to invest more time and resources in online ordering, click-and-collect and home delivery services. In addition, they’re stepping up efforts to create a seamless experience for consumers, from the brick-and-mortar store to the endless aisle, and to engage shoppers more tenaciously along the path to purchase, from home to store and back.

Within this competitive environment, differentiation is paramount, offering the convenience that cyber-centric shoppers expect and the sensory experience that pure retailers can’t deliver. And as grocers grapple with a growing number of SKUs on their shelves, limited-assortment retailers are coming on strong to serve consumers seeking greater values.

Year after year, grocers too easily can be described as being “cautiously optimistic” when it comes to how they feel about the road ahead. With all of the challenges, as well as the unknowns of a market undergoing change at a rapid pace, caution may be better than optimism, but prudence shouldn’t be allowed to suffocate innovation.