The Modern Grocery Experience

Sustainability

Food retailers and suppliers are stepping up their sustainability efforts in many areas compared to the previous year. A potential catalyst for this shift relates to shoppers' desires for social responsibility. In fact, 32% of retailers and 33% of suppliers say consumer demand for social responsibility is beneficial to their business.

This year’s survey also shows many areas in which retailers and suppliers are advancing sustainability efforts versus the prior year. In fact, 89% of food retailers and 81% of food suppliers have identified environmental, social and governance (ESG) as an organizational priority.

The areas of focus for which an increasing number of retailers have quantified goals and implementation time frames in place include energy use reduction, food waste reduction, package waste reduction and animal welfare. For companies without established goals and timeframes, many are working to develop them. An additional 20% of retailers are working on plans for food waste reduction and 22% are working on plans for package waste reduction, 18% are working on establishing plans for energy use reduction and 22% are working on plans for improved water use beyond the 32% that already have them in place.

Supplier focus areas that have seen measurable increases from the previous year include energy use reduction (87% vs. 82%), package waste reduction (87% vs. 77%), responsible sourcing (80% vs. 70%), food waste reduction (75% vs. 65%) and animal welfare (53% vs. 48%).

Technology

Workforce

Food retailers witnessed a slight improvement in employee turnover compared to historic levels, which mitigated some of the pressure on their recruitment efforts. In all, food industry companies continued to make major investments in benefits, training and skills development to support attracting and retaining employees. These investments range from 401ks and financial education to health care benefits. Retailers and suppliers faced higher health care costs for employees in 2023 and expect more increases in 2024.

In fact, more than 90% of retailers and all suppliers offered competitive or improved wages and salaries to boost hiring and retention of full-time employees and 74% of retailers and 81% of suppliers offered improved benefits. And to address competitive trends in variable work schedules, 65% of retailers and 56% of suppliers offered flex time.

Retailers and suppliers continue to recognize the value of investing in employee training and development, despite significant costs associated with these benefits. The cost of training averages more than $600 per employee for food retailers and $750 for food suppliers.

Another area of competitive investment, health care, accounted for 1.3% of sales for food retailers and 1.4% for food suppliers in 2023, as most full-time employees were eligible and took advantage of these benefits with employers covering the majority of the premium costs. In 2023, employer health care expenses increased by an average of 6% for retailers and more than 4% for suppliers, with the industry facing 10% or more in increased health care costs over the next two years. Solutions to mitigate these costs included modifying the employee portion of the premiums, fully absorbing the increases and exploring other options.

Employers cited retirement investment plans, pensions and access to financial education as other employee benefits, with 401K employer matching programs as the leading benefit offered by both food retailers and suppliers. Access to a financial planner and financial education were more often listed as benefits among supplier employers.

Consumer Communication/Marketing

The food industry continues to pursue a wide range of approaches to reach broad customer bases, ranging from traditional to emerging strategies.

For food retailers, two of the most frequently used communications platforms are also among the most effective — email and in-store signage. Facebook and Instagram are the most used social media platforms. Printed circulars are still employed by almost 70% but are very effective for only 40% of those using them. Retail media networks are used by about a third of retailers and very effective for about a third of that group.

On the supplier side, the most used marketing platforms are digital: Facebook, Instagram, digital circular, retail media networks and mobile marketing/ads. Social media networks score relatively high as effective tools for suppliers, as do TV ads, apps and in-store promotions. Retail media networks are used by 87% of suppliers and are very effective among 38% of those using them.

TikTok has become a starring platform for suppliers as 67% of supplier respondents use it and 78% of those find it very effective.