Opportunities and Challenges

The key areas that retailers will focus on in 2022

Key areas of focus for retailers in 2022

While foodservice is one of the key areas that retailers will focus on in 2022, there are high hopes for other categories as well. When asked, “What categories do you expect to have the most success with in 2022?,” 60% of respondents cited fresh produce, followed by foodservice (56%), fresh meat (40%), frozen foods (35%) and center store grocery (32%).Conversely, center store also ranked highest as the category facing the most challenges in 2022, by 44% of retailers, with general merchandise following closely at 40%. This is probably due to the fact that these are the categories most impacted by the current supply chain logjams and manufacturing and shipping slowdowns.There has been a significant shift in which channels grocery retailers consider their biggest competition going into 2022. Mass retailers such as Walmart and Target were overwhelmingly the top answer at 43%, while online retailers (15%), direct-to-consumer online channels (13%) and dollar stores (11%) all trailed behind.

Interestingly, in last year’s survey, online retail topped the list at 43%, indicating that growth in supermarkets’ own online grocery services has diminished that competition over the past year.For 2021, 60% of retailers say that online sales represented from 1% to 10% of total sales, with another 11% reporting online sales of more than 10% of total sales. Looking ahead to 2022, 58% of retailers expect online grocer to contribute from 1% to 10% of total sales — but more importantly, the number of retailers anticipating online sales of more than 10% rises to 19% for next year.Overall, supply chain issues were seen as the biggest challenge facing retailers in 2022 at 40%, with labor following closely at 38%. But retailers had plenty to say about what they see as the biggest challenges this year:

“Competition for barely qualified staff.”

“Freight costs and the fact that nobody wants to work, but they certainly want to get paid.”

“Fresh proteins are expensive so pricing is a major challenge. Labor will continue to be the biggest challenge ahead.”

“Labor has been extremely challenging over the past six months in particular. We had thought it would improve in the fourth quarter but not seeing it at this point.”

“People seem to think a grocery store position is not something they want as a career. It also is looked upon as not being a high-paying industry.”

“Supply and increased pricing. Lack of labor to fill needs. Consumer confidence becoming more nervous in present condition. Consumers are worried as to the direction we are taking, and spending is not the problem as much as how to get the products. Panic again hitting certain products.”

“Supply-chain disruptions due to the pandemic and worker shortages will certainly continue into the next year.”

“Supply-chain issues have severely impacted our store expansion and development plans. Many projects that we slated for 2021 openings/remodels had to be pushed back to 2022 openings due to manufacturing/shipping delays for mechanical equipment and building materials.”

“The Great Resignation has impacted maintaining adequate staffing. We’ll have to pay more and adjust work focus to keep our associates.”

Even as vaccinations have helped open up the country and led a return to “normal” lifestyles, the fallout from COVID continues to impact the grocery industry in unexpected ways. But as retailers learned to pivot and adapt in 2020 and 2021, we can expect them to do the same in 2022.