Supply chain disruptions. Labor shortages. Inflation. Rising food prices. Declining profits. The onslaught of troubles in the grocery retail sector feels never-ending. And while the worst seems to (hopefully) be over, we’re far from smooth sailing.
Yet, amid these challenges, new opportunities have emerged. The surge in artificial intelligence capabilities sped up technological innovation, and online shopping reached new heights.
Today, grocers can automate parts of their operations, offer personalized customer experiences, and make more informed data-driven business decisions.
Read about the biggest trends shaping grocery retail in 2024, and discover what grocery industry leaders are doing to stay ahead. We’ll help you understand what these trends mean for your business moving forward.
1. Omnichannel grocery shopping
In the consumer packaged goods (CPG) industry, around $0.86 of every dollar comes from omnichannel shoppers, with one in five buyers combining in-store visits and online orders.
When you offer an omnichannel retail experience, grocery buyers enjoy a unified and consistent interaction with your brand across platforms and touchpoints, from social media and apps to physical stores.
Several major grocery chains are leading the way in omnichannel approaches. Whole Foods Market, owned by Amazon, offers in-store pickup for online orders and personalized deals for Amazon Prime members.
Tesco uses a combination of traditional stores, dark stores, and automated micro-fulfillment centers to support both online and offline shopping.
Costco has established a strong omnichannel presence with its easy-to-navigate ecommerce platform, integrated membership benefits, and click-and-collect service. Its app offers exclusive deals, warehouse information, and shopping list management for online and in-store shopping.
“It takes a lot of pushing to change grocery buying behavior and compel a customer to check out online,” says Emma Kula, Co-Founder and Chief Product Officer at Stellar Eats. “We leverage a free shipping threshold to help push them to convert, and really appreciate that they become aware of it at a critical moment in the buyer’s journey with one-page checkout.”
2. Phygital experiences
Phygital experiences combine physical and digital elements to create an immersive, personalized shopping journey. While omnichannel provides consistent experiences across separate channels, phygital blends physical and digital elements into a single, unified experience. It’s a shopping experience that’s similar to how buyers actually shop and live their lives—seamlessly switching between digital and physical interactions.
Successful phygital strategies include smart shelves, interactive product displays, automated checkouts, and smart carts.
Walmart, for example, is testing a new exit system using artificial intelligence (AI) to verify purchases without stopping the buyers. The new exit technology scans all the items in the cart in seconds as customers walk out.Whole Foods Market is also rolling out Amazon One, a palm-scanning system for payment and Prime benefits. Customers will hover their palm over a scanner to pay and get discounts. By the year-end, all US Whole Foods stores will have this type of retail technology within them.
3. Augmented reality and virtual reality (VR)
Augmented reality improves the grocery shopping experience in many ways, like guiding shoppers to products using virtual store maps and aisle markers, or displaying nutrition facts and reviews when customers scan a product.
It can offer tailored promotions and product recommendations, making the shopping journey more personalized. 3D product demonstrations and visualizations created through AR make the buying experience more interactive and informative.
Wine company 19 Crimes, for example, uses AR on its bottle labels. When scanned with a smartphone camera, the person’s face on the label comes to life and talks to the customer.
Virtual reality is a similar type of technology—instead it immerses users in a 3D virtual world that replicates or even improves upon the real-world shopping experience. For example, users can put on a VR headset and explore a virtual store that feels like an actual physical store location.
VR also has practical benefits for retailers, such as virtually testing store layouts and strategies before rolling them out. Kellogg’s used VR to optimize the placement of its Pop Tart Bites, resulting in an 18% sales increase during testing.
Pro tip: Shopify AR lets you directly add realistic, interactive 3D models to your product pages, so your buyers can get a true sense of the size, scale, and detail of your products.
4. Focus on value-based shopping
According to a McKinsey report, price has become the main factor driving purchasing decisions in various categories. Consumers, including younger shoppers like Gen Z, are buying fewer items per shopping trip and placing greater emphasis on price and value.
Inflation, while easing, still worries shoppers. In February 2024, 70% of consumers named food prices a top concern, according to the Food Industry Association. Though lower than its peak, weekly grocery spending in the US remains well above pre-pandemic levels.
Consumers make decisions about supermarket chains based on price, features, and convenience, with private brands (also called store brands) leading the charge after their record success in 2023.
In the 12 months ending June 2024, nearly all US households bought private brand products, with store brands accounting for 24% of all units sold across categories like grocery items, health and beauty, and household goods. Forty-three percent of consumers said they bought private labels to save money.
But it’s not just about the price; 83% of shoppers now think private brands match or beat branded products in quality. Grocery stores are jumping on this trend, with 80% planning to grow their private label offerings, focusing on value and competitive pricing in the next two years.
To succeed, grocery retail stores likely will need to develop strong private brands that rival famous name brands, while striking the right balance between quality, innovation, and affordability.
5. Retail media networks
Retail media helps you promote products on a retailer’s platform through onsite product ads, offsite displays, and in-store promotions. And it’s a fast-growing channel—the retail media network (RMN) market was valued at $45 billion in 2023.
Since they retailers’ first-party data and expansive reach, RMNs are an ideal choice at a time when collecting third-party data is becoming increasingly restricted. These networks createan additional revenue stream for grocers by helping them reach wider audiences through more ad channels. They also offer an opportunity for more tailored interactions, which 86% of buyers desire today.
Around 64% of retail merchants plan on joining an RMN this year, and projections show that grocers could boost their revenues by 13% through retail media activities in 2024.
Because grocery shopping remains something people prefer to do in-store, options such as radio ads, smart carts, interactive kiosks, and digital screens have become important display opportunities.
Hy-Vee, for example, uses digital displays in its meat counters and food courts. Instacart’s smart carts help shoppers find deals, locate products, and tally prices.
To make the most out of RMNs, find out which platform excels at meeting your specific needs. Shopify Audiences, a retail media network for Shopify brands, helps retailers like you find high-intent buyers and optimize ads across platforms. Merchants using it have reduced acquisition costs by up to 50%.
6. Artificial intelligence
Progressive Grocer’s 2024 Grocery Tech Trends Report shows that 66% of grocers plan to invest in technology in 2024. Almost half (43%) of consumers worldwide are excited about the potential value of these technologies in improving shopping experiences.
One of tech’s biggest contributions to retail has been hyper-personalization, which uses artificial intelligence to analyze large customer datasets and deliver tailored experiences. Personalization can grow revenue by 5% to 15%, reduce customer acquisition costs by 50%, and generate 40% of revenue in fast-growing companies.
Here are some examples in the wild:
- ASDA’s rewards program uses AI for gamification to drive engagement and sales.
- Instacart’s Ask Instacart uses natural language processing for more intuitive product searches and recipe suggestions.
AI-powered cameras and real-time data analytics are improving inventory management for grocery retail stores. One big retailer has reported a 90% increase in shelf-stocking efficiency and a 30% boost in meat aisle sales using these technologies.
Predictive analytics, considering factors like weather, local events, and social media trends, allows AI to forecast consumer demand with unprecedented accuracy, reducing waste and out-of-stock. 77% of grocery retail executives expect AI to help with real-time, high-accuracy inventory tracking within five to 10 years.
7. Sustainability concerns
Record temperatures, rising sea levels, and frequent natural disasters are affecting where and how food is grown. These changes are disrupting transportation, causing crop failures, and introducing new pest challenges.
Sustainability concerns have a growing influence on consumer choices. About 95% of US consumers, especially millennials and Gen Z, aim to incorporate sustainable living. However, economic uncertainties have led to a growing tension between consumers’ desire to support their principles and their need to make cost-effective purchases.
Grocery retailers are responding by improving sustainability in several ways:
- Product offerings. We’re seeing an increase in free-from and plant-based alternatives in grocery retail stores. With 27% and 17% of US shoppers reducing their animal and dairy consumption, respectively, many grocers are offering more vegan-friendly and ethical options. For example, Swiss grocery chain Migros is partnering with food tech companies to offer innovative options like cultivated (aka lab-grown) meat.
- Waste management. The Pacific Coast Food Waste Commitment’s 2023 report shows that between 2019 and 2022, US grocery retail stores reduced food waste by 25%, saving around 190,000 tons of food, valued at $311 million. Grocery chains like Albertsons use AI-based technology to help order the right produce quantities, convert unsold but non-consumable food to animal feed or compost, and partner with Uber for food donation drives.
- Technology adoption. Grocers are looking towards AI, machine learning, and data analytics to optimize operations, reduce waste, and improve sustainability efforts. For example, Invafresh offers AI-powered tools that streamline product ordering and give store-specific guidance on in-house production, minimizing overstocking and waste.
8. Social commerce
With around 60% of the world’s population using some kind of social media platform, it’s changing how grocery retail stores reach its customers, especially the younger ones.
TikTok, with more than one billion monthly users—60% of whom are Gen Z—leads this trend. Grocers are using TikTok to advertise and grow their customer base. Whole Foods, for example, taps into TikTok trends, using popular seasonal hashtags like #berrychantillycake and #holidaytiktok to stay visible with younger audiences.
Social media influencers are shaping CPG trends, with grocers partnering with influencers to reach broader audiences. For example, Walmart teamed up with @theautisticmumcafe on Instagram to spotlight the school supplies she loves buying for her neurodivergent child.
Social media transparency is also driving consumer awareness of ingredient quality, sparking a trend toward products with high-quality ingredients like whole milk dairy products, natural sweeteners, and responsibly sourced meats.
9. Health and wellness
Health and wellness products have long been popular in advanced economies, but emerging markets such as China, India, and the Middle East are now seeing rapid growth. In fact, the intent to increase spending on wellness products and services is two to three times higher in these regions compared to advanced markets like Canada and the United States.
A 2024 FMI study found that 84% of food retailers are focusing on nutrition and well-being strategies, with 78% reformulating products to offer healthier options. For example:
- Albertsons’ app provides real-time nutritional information and rewards
- The K-Ruoka app by Finland’s Kesko supermarket chain offers personalized wellness goals and recipe recommendations
- Hy-Vee has introduced a health subscription service that includes dietician appointments and wellness workshops
Some grocery retail stores are positioning themselves as health-focused brands, such as Sprouts Farmers Market, which emphasizes organic products, and Healthy Living Market, which operates as a premium wellness retailer.
For grocery retailers, supporting consumers’ holistic health goals include offering convenient and abundant access to personalized health and wellness products.
Take action on these grocery retail trends
Staying ahead of the curve is possible when you keep up with the grocery retail trends we discussed. But you need to take action.
If you’re looking for a platform that can help you build your grocery retail store with all the necessary features and apps needed to succeed in today’s times, Shopify is an excellent option.
With features like local delivery and curbside pickup, multi-location inventory tracking and fulfillment management, powerful analytics, and a ton of apps, Shopify can help you create a grocery store that makes the most of the latest technological innovations.
