Rising prices, frozen food renaissance, evolution of omnichannel will make waves in grocery in 2019
This post is sponsored by Acosta.
Higher prices and changing shopper behavior will shape the grocery industry in the coming year, according to predictions from Acosta. Here’s a look at three major trends that will play out in 2019.
Rising costs push up prices
“In 2019, the topic of price will be on the agenda for both manufacturers and retailers,” said John Clevenger, senior vice president and managing director of Strategic Advisors at Acosta. “With increasing transportation and commodity costs, manufacturers will be forced to increase price. Retailers will be aggressively scrutinizing price inflation to stay competitive in a fragmenting retail environment.”
Two current examples include Mondelez International announcing it will raise prices in 2019, and Hershey Co.’s plans to increase prices by an average of 2.5% to offset higher shipping and commodity costs. In addition to rising shipment and labor costs, tariffs resulting from disputes between the US and some of its trading partners may also have an impact on prices.
Shoppers return to the frozen food aisle
Consumers’ renewed interest in frozen foods will be a bright spot for retailers in 2019.
“After several years of decline, manufacturers have finally cracked the code on getting shoppers back into the frozen food aisle with cleaner labels and higher quality products that appeal to shoppers,” Colin Stewart, senior vice president of business intelligence at Acosta, said.
The quality and variety of frozen foods have improved drastically, and shoppers are turning to the freezer case for healthy and convenient meal options. In fact, sales of frozen entrees climbed 5.7% this year compared with 2017, according to data from Spins.
Frozen vegetables have also seen a new rush of popularity. Welch’s made news earlier this year when it introduced avocados to the freezer aisle, offering pre-sliced bags of the beloved fruit that is notorious for its short shelf life.
Retailers evolve to suit the way consumers want to shop
In addition to changes in what they’re shopping for, there is also a major shift underway in how US consumers like to shop.
Brick-and-mortar stores are still favored by most consumers, but providing options that emphasize convenience is key. The growing importance of omnichannel to the modern shopper is spurring brands and retailers to expand their offerings in both brick-and-mortar and digital platforms. Blue Apron’s deal to make its meal kits available in Costco is one of several recent moves that will give meal kits -- once available only via delivery service – an increased presence at retail.
Retailers are also investing in technology that makes it easier to shop online and have groceries delivered or have an order assembled for pick up. BJs Wholesale Club and Meijer are among the retailers that have rolled out click-and-collect service, and grocery delivery company Instacart offers the service in almost 200 stores in 25 urban markets.
“Retailers are still learning about how to implement click-and-collect and how it impacts trips,” Stewart said. The coming year will surely bring valuable insights as the service rolls out in more stores.
If you enjoyed this article, sign up for FMI dailyLead to get news like this in your inbox, or check out all of SmartBrief’s food and travel newsletters as we offer more than 30 newsletters covering the food and travel industries from restaurants, food retail and food manufacturing to business travel, the airline and hotel industries and gaming.