INDUSTRY INSIGHTS – Grocery Business Magazine

Grocery Business Advisory Board members look ahead at how the industry will evolve in 2024

Consumers are becoming increasingly health conscious, and this trend will persist in 2024. Expanding offerings of organic, plant-based, and locally sourced products can contribute to a more health-oriented shopping experience. Consumers are also placing a higher emphasis on sustainability and environmentally friendly products, so eco-friendly packaging and sourcing products from sustainable suppliers will be a key focus in 2024. Tailoring the shopping experience to individual preferences is gaining importance. Grocery retailers can leverage data analytics and artificial intelligence to understand consumer preferences. Emphasizing community involvement with local organizations will be a key trend. Retailers can collaborate with local farmers and producers to highlight regional offerings. Retailers will need to adapt to an evolving landscape of consumer behaviour, and this will require a strategic approach that integrates technology, sustainability, personalization, and a keen understanding of local and global trends. By embracing these shifts, grocery retailers will be able to stay ahead of the curve and create a more engaging and satisfying shopping experience for their customers in 2024 and beyond.

As we jump into the new year, we see the Canadian consumer continuing to focus heavily on value and price in determining where to shop, and it’s going to be up to businesses to look for creative ways to provide value and an engaging shopping experience.

We expect food inflation to remain top of mind for our customers, and that means we need to look for every opportunity to provide extra value inside our stores. Now is the time to focus on our strengths of high-quality products, great customer service and competitive pricing. As much as our customers are affected by food inflation, we are also impacted by rising costs and the disproportionately long supply chain to reach the west – and we’re always looking for solutions to avoid passing these cost increases along to our customers.

While customers continue looking for ways to save money, we are putting a strong focus on delivering a world-class private brands offering, providing quality products for amazing value that customers won’t find anywhere else. We will also look for more ways to reward our customers and show our appreciation through our More Rewards loyalty program. Our customers can get more out of every purchase by earning More Rewards points, which they can redeem for free groceries, gift cards, and much more.

Grocery retailers need to lean into what they do best in 2024 to keep customers coming through the door, whether that’s excellent service, a unique offering or exceptional quality. It’s time to focus on giving customers something memorable that they can’t find anywhere else.

Finding value remains at the forefront for consumers and continues to heavily influence their purchasing behaviour. As shopping patterns evolve, so does the perception of value, and it’s crucial for grocery retailers to understand what that means for Canadians.

In a landscape where Canadians seek ways to stretch their dollars without compromising quality, we are expanding our line of branded products to deliver high quality and substantial savings–over 30 per cent when compared to national brands. We continue to help maximize food budgets through our Thank You Rewards loyalty program, flyer offers, in-store promotions, and special events, to make grocery shopping enjoyable and affordable. Offering value needs to extend beyond pricing. Sustainability is an integral part of our value equation.

We actively support our team members, local farmers and producers, reducing our environmental footprint while strengthening the communities we serve. Within our stores, our team provides personalized service, such as custom cuts at the meat counter, to minimize waste. Initiatives like Too Good To Go further contribute to waste reduction. Additionally, our focus on sustainability includes services like battery recycling with Call2Recycle and our expansion of EV Charging stations at our stores with our partners.

We have seen 1970s-style inflation rates with the cost of food skyrocketing. The Bank of Canada’s inflation target is 2%. As of last October, our overall inflation rate had slowed to 3.1%. Food inflation declined to 5.4% year over year following a rise of 5.8% in September. Food prices are predicted to rise 2.5% to 4.5% in 2024 compared to 5% to 7% in 2023.

Despite the decline in the food inflation rate, prices haven’t gone down, so I don’t see much change in consumer behaviour in 2024.

Shoppers will continue to frequent discount stores more often to lower their grocery bill. Major grocers recently announced converting some existing full service conventional stores to their discount formats as well as building new discount sites to capitalize on this growing trend. Discount now represents about 50% of the grocery retail landscape in Canada. Shoppers will continue to buy more on deal, ad match, and use loyalty programs to save money.

Private label sales have soared the past couple of years. Canadian retailers have great private brands, and they continue to get better. National brands may experience tonnage declines as consumers look for lower priced alternatives. Retailers have claimed manufacturers are continuing to pass on billions of dollars of prices increases; with private label, retailers have more control on costing, which will enable them to more readily control rising retail prices.

Despite food inflation, healthy eating remains a concern for most consumers, and products with health benefits should continue to carve a bigger segment of the market.

Canada continues to enjoy one of the lowest food inflation rates in the world. Only the U.S. has been marginally lower. Canada continues to have one of the most competitive retail markets in the world. Those who visit the world and check supermarkets in their travels can attest to the fact that we have some of the best managed and best grocery retail formats anywhere. Also, our growing ethnic store formats do a great job catering to our growing diverse population. We have a lot to celebrate and a lot to be proud of.

We’ll see an intensification of the issues we faced in 2023: inflationary pressures, labour issues around wages and grocery pricing, all while the Canadian consumer continues to crave a harmonious blend of mindful consumption, sustainable and convenient grocery options. The main driver will be what the consumer can afford and who is offering the best value equation. As a result, we’ll continue to see discount grow market share as Canadians continue to be cautious in this precarious economy. While customers will become more attuned to the discount model, their basic expectations will still be the same as they were for full service – quality, value for pricing and a good shopping experience. Despite this, full service will still attract customers, but this more intense competition from discount will mean full service stores will have to fire on all cylinders to differentiate themselves and be successful in providing an exceptional offer and an experience. This may mean having key experts in departments where it matters like health and wellness, expanding more to self-serve, high-quality grab-and-go à la Marks and Spencer, restaurant-quality prepared meals for the time-strapped consumer coupled with ease of ordering and delivery, in-store dining, cafes and potential food court partnerships. The unfortunate trend will be the growing challenges retailers face around shrink and theft by organized retail crime. This undoubtedly adds to costs, and consumers can expect more steps and changes at store level with theft deterrent and detection technologies as well as labour and capital investments.

The consumer psyche has shifted from “what I want” to “what I need,” whereby shoppers are opting for the products that provide the best value for their budgets. This is why we are seeing higher trips to multiple stores and smaller baskets. In 2024, consumers will continue to be on the lookout for great value, and retailers are already stepping up their game to deliver just that. Recognizing the perception of value varies for different shoppers, retailers and manufacturers should work together to be more creative and innovative to satisfy the diverse demands of today’s value-conscious consumer.

As inflation and affordability continue to be top of mind, managing cash flow will be paramount for consumers. Grocery retailers and manufacturers will need to decipher the right balance on price pack architecture by category, whether it be smaller pack, lower ring, or larger pack, higher value. While consumers focus on value, industry’s top priority will be generating demand, causing retailers to continue to transition their real estate to discount formats, while shifting conventional strategies to deliver a clearer perception of value.

Assortment optimization will be critical in the fight for traffic and share of wallet. Canada’s population will grow by approximately 500,000 new immigrants annually in the coming years, all looking for familiar products from home available within the Canadian market; mainstream grocery retailers and manufacturers have an opportunity to win these consumers by working together to increase consumer choice.

Introducing…

2 NEW & EXCiTiNG FLAVOURS

JUST HEAT & EAT

90 SECS

RECHAUFFEZ AT MANGEZ

Call your ID-Foods representative today – 1800-361-9157

WHY YOU NEED TO EXPAND YOUR READY-TO—EAT MEALS SEGMENT

• Ready-to-Eat Meals segment is expected to grow annually at a 6% CAGR between 2023-2028
• 66% of Canadians are looking for an easy meal solution
• 50% of Canadians are looking for quick and convenient meals on busy days

EXPAND WITH PATAK’S READY—TO—EAT MEALS

• Patak’s is Canada’s #1 choice, trusted by 67% of shoppers for high quality ingredients and for its 60 years of spice blending expertise!
• Patak’s invests in category growth through National PR, TV, digital, and in store support.

Sources:

Pataks.ca

Celebrate 2024

year of the Dragon!

A rich blend of red chilies and garlic with a hint of sweetness.

Our famous Sweet Chili sauce with 20% real mango.

A spicy new twist to a popular flavour!

Call your ID-Foods representative today 1-800-361-9157

Visit us for more recipes ideas!

Bluedragon.ca

Blue Dragon dipping sauces are perfect as a dip, marinade or drizzle to liven up an dish!