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This Little Piggy Went to Market? Grocery in an Age of Disruption

4 min read

August 24, 2022

Bringing home the bacon looks a little different for grocery shoppers and providers these days.

Plagued by the same concerns facing other retail industries over the past two years, including the global pandemic, supply chain issues, and labor shortages, grocers have had to contend with the additional challenge of being considered “essential businesses.”

Grocery stores are the most frequently visited retail outlets for shoppers who make weekly (and sometimes daily) pilgrimages to buy food and other necessary household items. Their expectations for each visit are high, and grocers have been forced to rise to the occasion in real-time as customer needs evolve.

The world has irreversibly changed, causing lasting impacts on the global food service industry and consumer requirements. What have been the significant effects of this transformation on grocery retailers, and how can they keep up with the new customer experience? Let’s take a trip to the grocery store.

This Little Piggy Left the Labor Market

While the global grocery sector saw increased sales during the pandemic, store associates – often considered essential workers – were hard hit. Despite stores’ bonuses or hazard pay offerings, many employees quit or were forced to leave in the face of increased COVID-19 exposure, irate customers, and increased workloads.

In addition, the Great Resignation of 2021 saw employees worldwide taking stock of their priorities and shifting their careers to match. Like others in retail, grocery associates often found themselves overworked and underpaid, leaving the industry for jobs with more perceived benefits.

Employee retention rates are bleak for grocery stores everywhere. Overall, the global attrition rate for the grocery retail industry rose to 60 percent in 2020, up from 40 percent the previous year, according to McKinsey’s 2022 State of Grocery in North America Report.

With the rise of online shopping and retail automation, the required skill set for grocery employees has evolved. McKinsey found a projected 17 percent decline in the need for physical and manual labor in the U.S. and Western Europe but a 64 percent increase in technological knowledge from 2016 to 2030.

In response, employers offer incentives like higher wages, training opportunities, and education stipends to attract and retain talent. They’re also capitalizing on automation to free up workers for jobs requiring a more personalized touch, such as assisting customers with product suggestions and distributing advice from multi-channel contact centers.

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This Little Piggy Stayed Home to Buy Groceries

One of the earliest and most visible changes to the grocery industry was the widespread shift to online shopping at the beginning of the pandemic. While many chains had pickup and delivery options available, like Peapod, Uber Eats, or DoorDash, most customers still preferred to shop in-store.

As the pandemic progressed, however, online grocery services boomed. In Europe, 41 percent of consumers used online shopping as their primary channel, while online and delivery orders increased by about 50 percent in North America. McKinsey tracked the same trend in Asia, with 30 percent annual growth for online grocery retail in China and over 50 percent annual growth in India.

Retailers are upping their game when it comes to the omnichannel experience, as these shoppers tend to shop more often and spend up to 20 percent more, according to a study from Symphony RetailAI. Grocers must provide a seamless customer experience spanning the digital and in-store realms to capitalize on this valuable market segment.

This Little Piggy Bought Sustainably Sourced Roast Beef

Customer priorities have shifted over the past few years in ways that at first might seem contradictory. Today’s consumer is increasingly focused on saving money on their grocery bill but is also willing to spend extra for sustainable or healthy ingredients.

In North America, a net 42 percent of shoppers indicated they were looking for ways to save money, the same number as in Europe, according to McKinsey. For Europeans, this represented a 12 percent increase over last year, likely reflecting the impact of inflation on wages and prices.

While customers are getting thriftier overall, they are seeking out value-driven groceries. Thirty-nine percent of high-income Europeans planned to focus more on healthy eating in 2022, and about 40 percent of Americans. They indicated they were prepared to pay more for local, environmentally friendly, and organic products.

For retailers, the challenge will be to track client preferences and make personalized recommendations. Implementing workforce optimization technology that follows the customer journey and provides insights into their needs enhances the customer experience and allows retailers to anticipate the next grocery trends.

This Little Piggy Had Nothing on the Shelves

Over the past few years, high consumer demand, labor shortages, production delays, and shipping disruptions have caused historic global supply chain issues. This translates to empty shelves, lost profits, and upset shoppers for grocers.

In North America, out-of-stock rates increased by at least 15 percent over the past year, according to McKinsey. However, these tend to be limited to certain goods, and many underlying issues are expected to resolve.

The more immediate and pressing concern facing grocers and customers alike is worldwide inflation. With increasing supply costs far outstripping consumer income growth, retailers must balance cost and pricing.

According to McKinsey, 63 percent of CEOs in the European grocery industry cited high inflationary pressure as one of their top concerns as of January 2022. This number has likely only increased with the added complications of the war in Ukraine.

Economic challenges aren’t going away any time soon. Inflation exceeded seven percent at the beginning of 2022, and 90 percent of American CEOs expected pricing pressure from consumers to continue in the coming year. Grocers must face the predicament of providing necessities to shoppers without pricing themselves out of the game.

One thing grocery retailers can do is reassure consumers that they’re facing these challenges together. The right communications system helps grocers easily keep customers up to date. For example, notifying shoppers about in-stock items, so they don’t waste a trip to the store helps prevent frustration and shows the value placed on customers’ time. Trust is a precious commodity in the grocery business, and clear communication helps build loyalty.

Delivering on Omnichannel Market Experience

Shoppers choose their primary grocery store based on multiple factors: convenience, range of products, prices, and helpful associates, to name a few. When they go online, they want to receive the same services and goods they would in-store, and it’s up to providers to navigate both spaces.

While online or omnichannel shopping may seem hands-off for store associates, there are many points in the process where customers may need personal assistance. It’s essential for the same friendly faces (or, at least, voices) to be available to help clients when they need it.

That’s where contact center AI comes in. Using this technology, virtual agents can help customers with basic questions and direct more complicated queries to a real live store associate. Personal shoppers can also reach out to customers if they have questions about out-of-stock items or substitutions and keep track of the customer journey during the process.

Omnichannel analytics allow retailers to personalize the customer experience, capturing usage data and offering personalized options like promotions or product suggestions.

To remain competitive in an increasingly online market, grocery stores must focus on establishing quality omnichannel interactions, providing growth opportunities for employees, keeping up with consumer demands, and managing supply chain issues.

Investing in technology to improve both the customer and employee experience is an invaluable way for grocery retailers to maintain their edge in this evolving market.

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