This story is the first in a series on key trends that will touch grocers in 2022.

Retailers are heading into a 2022 filled with challenges. The supply chain shortage continues to concoction shelves, and record-high inflation doesn't seem like information technology will resolve any time shortly, forcing companies to enhance prices and potentially frustrate their customers.

Grocers are also struggling to proceed their stores and warehouses staffed in what many fear is a foundational readjustment in the labor marketplace.

Industry experts alluded to these challenges when discussing their height trends for the year. But they too pointed to numerous opportunities that lie alee for grocers — many of which are driven by the fact that significantly more people are nevertheless ordering and eating food at dwelling than before the pandemic.

Await grocers to elevate their meal offerings and offer new digital purchasing options this year. And despite the focus on finding value amidst price hikes, wait for many consumers to seek out premium products.

Here are the top trends that promise to shape the grocery manufacture in 2022.

Quick commitment expands

Following the ultrafast delivery boom in New York City and the rollout of faster service from e-commerce platforms similar DoorDash and Instacart in 2021, this twelvemonth will encounter widespread adoption of faster operations among top retailers, especially as they look to court younger shoppers, experts said.

Jordan Berke, founder and CEO of Tomorrow Retail Consulting, said retailers are looking for new means to heave due east-commerce demand as digital shopping has declined in recent months from its 2020 high point.

"Nosotros run into quick commerce falling into this demand generation space, which is why we run into an urgency effectually it," said Berke.

Courtesy of Gopuff

Thirty minutes volition become the new expectation for shoppers in delivery, and if grocers don't come across it, they'll need to develop another differentiator, said Anne Mezzenga, a Target veteran and co-CEO of retail blog Omni Talk.

"Whether that's dark stores, whether that's sortation centers, whether information technology'due south partnerships and acquisitions, every grocer is going to have to figure out a long-term solution for instant delivery [in order to] stay competitive," Mezzenga said.

She expects instant delivery to grow beyond urban cores and into bourgeoisie, putting greater pressure on regional grocers.

Meanwhile, for quick-commerce startups, 2022 may requite a better indication on whether they pose more than competition to convenience stores, local stores or traditional grocers, and how much they impact grocers' margins and product mix, said Vishwa Chandra, partner at McKinsey & Company.

"None of the players are at scale. None of the players have really fabricated a paring in terms of absolute volume, and so the question is, 'How big can this become?'" Chandra said. "And No. 2 is, where will that volume come up from?"

Mezzenga said she expects consolidation amid the rapid delivery firms, which are burning through money as they scramble to gain more footing.

Turning to automation to offset labor shortages

Given the continuing difficulty it's facing in hiring enough workers, the grocery manufacture needs to gainsay the perception that retail jobs are not bona fide career opportunities, said Nicole DeHoratius, a professor of operations management at the Academy of Chicago Booth Schoolhouse of Business organisation.

But many companies need firsthand solutions to handle the heavy menstruum of in-shop and digital business. Gautham Vadakkepatt, managing director of the Center for Retail Transformation at George Stonemason Academy, predicted that retailers volition hasten their adoption of automation engineering science to manage tasks not only in the backroom and warehouses but also in customer-facing areas of stores.

This includes adding cocky-checkout kiosks and aisle-scanning robots to retail floors. Downwardly the road, it could lead to the integration of equipment that picks center store items robotically while customers shop for items like produce, meat and seafood, Vadakkepatt said.

Investing in operational efficiencies like this could allow retailers to offering higher salaries and better benefits t o their workforce, boosting longevity and satisfaction, DeHoratius said.

Courtesy of Walmart

NeilStern, CEO of Good Nutrient Holdings, which oversees West Coast chains Bristol Farms, New Seasons Market and Metropolitan Market, said he thinks grocers will turn more heavily to self-checkout terminals in the coming months to rapidly deal with worker shortages and serve customers.

When Good Food added self-checkouts to a Metropolitan Market store in Gig Harbor, Washington, the retailer found that the terminals apace accounted for a third of its transactions, reflecting increasing condolement amidst customers with self-service equipment in food stores, he said.

"We're going to keep on working to hire more people, but the reality is nosotros're going to have to become to automation," said Stern.

Improving the use of consumer data

As the grocery business concern increasingly migrates online, retailers are seeing a growing need to use the data they collect through their digital channels to improve their ability to satisfy customers who accept grown accepted to personalized shopping experiences.

That trend is likely to intensify in 2022 as supply chain unpredictability shines a spotlight on the ability of grocers to avoid out-of-stocks and offering suitable alternatives when items people want are unavailable, said Spencer Toll, CEO of Halla, a technology company that helps retailers understand and reply to shopping patterns.

Improving substitutions is particularly important, considering dissatisfaction can lead to shoppers switching retailers, Price said.

DeHoratius said grocers take enough of runway for improving their ability to use consumer data. "Right now a lot of companies are operating in two independent silos with data and analysis, and [they] need to have the consumer behavior information finer inform [their] operational choices," she said.

Beyond helping retailers manage their inventory, analytics can give product manufacturers an edge as they look to deal with supply concatenation issues.

"One thing that I've been hearing from vendors … is they need amend information about what's going out the door through an online customer versus a regular customer," DeHoratius said. "That impacts their ability to forecast and their ability to deliver."

Permission granted past ClusterTruck

Meals get fresher and more than user-friendly

Grocers take been improving their prepared repast selections in recent years. To truly compete with restaurant and meal commitment services similar HelloFresh, they're standing to level up their meal selections while also adding digital ordering tools, said Tanja Ebner, master with consulting firm Oliver Wyman.

She cited Kroger'south integration of ghost kitchens into select stores as an example of how grocers are looking beyond prepared foods to kitchen-prepared meals that have digital ordering capabilities through apps similar DoorDash and UberEats. To boost the creativity and quality of dishes, grocers are hiring more culinary talent and preparing more than meals on premises or in nearby commissaries.

"Nosotros've started to see them doubling down on everything that's a meal solution," said Ebner. "Ready-to-heat, ready-to-eat, fix-to-melt meals and even a restaurant-quality fresh meal that's ready for pickup and for delivery."

Adept Food Holdingshas had success partnering with local restaurants on in-store meals during the pandemic, said Stern. Now the company is stepping up its own repast operations. Its Metropolitan Market place shop in Gig Harbor recently opened a Sweetgreen-mode custom salad bar. In March, a Bristol Farms store in Irvine, California, volition open a food hall concept with bootleg eating place brands, including Horton'south, a chicken sandwich articulation, and Swell, which serves fish tacos and lobster rolls. All of the restaurants will exist available for commitment on DoorDash.

"We're planning on elevating food service really to a much college level than we ever accept before," Stern said.

Retail media networks expand

A few months agone, Albertsons launched its own retail media network , and Kroger, which debuted Kroger Precision Marketing in 2017, announced a programmatic marketplace for advertisers .

Chandra and Mezzenga both expect grocers and due east-commerce platforms to ramp up their retail media networks in 2022 as a fashion to tap into the CPG sector's extensive wallets.

"I think a lot of 2022 will be about how ... they really create the tools to monetize some of this information," Chandra said.

Retailers and due east-commerce firms have loads of customer information, and retail media networks serve equally a way to leverage that consumer insight with brand spending. As retail media networks take off, providing brands with functioning data will be a key feature, Chandra said.

Courtesy of Metcalfe's Market

For brands, retail media networks are the "best fashion" to better empathize consumers and proceeds customer information, Mezzenga said. For retailers, she noted, they are an important way to help fund their technology investments.

While major retailers are building their retail media networks in-business firm, Mezzenga expects to see firms pop up that can help grocers, particularly smaller ones with fewer resource and capital, manage their ad and media.

The costs retailers face as they build e-commerce operations are motivating them to find ways to capitalize on the online relationships they are developing with shoppers, said Jason Goldberg, a retail annotator who is chief commerce strategy officer at Publicis, an advertising company.

"Grocers are heavily leaning into selling their own ads to try to brand more than coin to recoup the lost margin from digital grocery," Goldberg said.

Premium products advance

Even with economic challenges during the pandemic, premium nutrient in categories like alcohol, specialty java, meal kits, frozen meals and spices have gained popularity among shoppers, IRI found in 2020 . The recent momentum premium CPG gained volition continue to build in 2022, said James Richardson, a CPG expert and author of "Ramping Your Brand."

"We're seeing premium return to being the growth engine in near every category," Richardson said.

In recent years, market share at the category level for premium has skewed toward meals — packaged and semi-prepared ones — and startups similar Daily Harvest offering "fresh frozen" are pulling volume out of grocery stores, especially in the perimeter, while borer into consumer demand for convenience, Richardson said.

The intersection of fresh and CPG has been an underexplored expanse by packet food companies, manufacturers and investors, but new startups are disrupting the space and hauling in investors' dollars as customer need rises, Richardson said. "Where the need is shifting is to higher-priced, college-quality fresh, fresh-like or 'fresh frozen' nutrient."

Inflation has soared during the pandemic, hit records in recent months , and has put pressure on grocers to be more mindful of price-witting shoppers. But it's unclear how much aggrandizement is impacting the demand and cost elasticity of premium products. During Kroger's earnings phone call in early December, Chairman and CEO Rodney McMullen acknowledged that more than eighty% of consumers are feeling the impacts of inflation, but said premiumization remains a strong tendency.

" All beyond the lath, you see premiumization on what people practice ," he said.

Permission granted by Schnucks

Getting into the business of B2B

Sales to corporate clients, schoolhouse districts and other non-consumer entities take typically been the specialty of foodservice companies like U.s. Foods and Sysco. Just the growth of east-commerce has leveled the competitive playing field, allowing grocers to turn their digital playbooks toward a new fix of business customers, said Berke.

"Previously [B2B sales] felt very non-transparent, hard to crack. Information technology was all man sales teams and traditional bidding, whereas at present businesses are saying, 'I want an online portal that I can order from where I can see all pricing transparently and I don't demand to be calling someone every time I identify an guild,'" he said.

Nicholas Bertram, presidentof The Giant Company, said the grocer has a "growing" B2B platform that information technology plans to calibration through investments similar its new automated fulfillment warehouse in Philadelphia. Online wholesale retailer Boxed, which recently went public, also sells its bulk-sized goods through a B2B division that has been chop-chop adding staffers, according to a recent LinkedIn postal service from the head of the division.

Capitalizing on the opportunity, all the same, requires some operational updates. Business organisation clients want larger pack sizes — think 64-ounce bottles of olive oil instead of sixteen-ounce bottles, said Berke — along with a defended buying portal and payment processing that allows them to pay via monthly invoice rather than on a per-order basis. Retailers too need to hire dedicated sales teams that tin can pitch the service, negotiate terms and manage relationships.

The payoff comes in having large, reliable orders that are likewise assisting, said Berke. As retailers look to generate need for their growing online investments, look for major chains to scale up their business ordering services, he noted.