Diverse Offerings Will Be Key to Grocery Success in 2023


Grocers need to prepare for a changing environment as they head into 2023. While pressures such as inflation will remain top-of-mind, when it comes to strategies like pricing, retailers also need to think about how other factors affect what their customers are looking for in the grocery aisles and how grocers need to change to keep up with new demands.

One area where grocers can find opportunities is the introduction of new items, according to KK Davey, President of Thought Leadership for CPG and Retail at IRI. The supply chain issues that have plagued retailers for the past year have been mostly resolved, making this a great time to bring in new products — both high-margin private labels and unique items from smaller brands that can help set you apart from the competition.

“Ensure that your assortment gets a little bit more varied next year,” Davey said. “Variety is going to become a key differentiator because consumers are kind of a little bit tired of eating the same thing for the last two or three years because of COVID and then because of supply constraints. The supply constraints have eased in most categories, so offering more variety to consumers will be a good way to differentiate. Clearly you can’t walk away from the billion dollar brands but figure out which of those are growing and which are losing and try to open up some space.”

Some larger brands have been doing better than others, and these are the ones grocers should be keeping an eye on, according to IRI. For instance, Red Baron grew during the pandemic and supply chain challenges as an option for consumers to have pizza at home, while Tillamook products have competed well on quality.

Davey also noted that shoppers are cooking at home more, a habit developed during the pandemic that is now helping them manage their wallet in the face of inflation. They also are buying more ingredients as opposed to frozen or shelf-stable meals. The pressure shoppers face means that grocers need to have the right products at the right price points, which means understanding customers on a deeper level than ever before.

This doesn’t mean other options aren’t still important. IRI also expects an uptick in away-from-home meals for breakfast and lunch as offices continue opening up and consumers seek out easy meals. The expense of dining out, particularly at full-service restaurants, means that grocers can benefit from offering affordable prepared meal solutions.

“I think consumers are going to be stressed for time as they begin commuting back to the office,” said Davey. “Offering a high-quality prepared meal that is affordable will become important. A lot of people are still packing their lunch, and I think that trend will continue. So how can we provide the ingredients that are easy for them to fix for lunch and take it with them to their workplace will take on a little bit more of a competitive differentiator.”