Food Industry Challenges & How To Fight Them: Part I

The food industry has faced great challenges in the last three years. From the pandemic's start, which brought supply chain bottlenecks and labor shortages that we are still facing, to the war in Ukraine and inflation, many independent retailers are just trying to eke out a positive margin this year. 

"To put it mildly, the last three years have been overwhelming for our independent retailers," says IGA CEO John Ross. "From record profits to severe inflation, the pendulum has swung deeply in each direction in a short period of time. This business isn't easy, but I'm extremely proud of our retailers for hanging in there and continuing to serve their communities in the face of everything."

FMI-The Food Industry Association surveyed retailers and suppliers for The Food Retailing Industry Speaks 2022, a report that details what is impacting the industry now and what they expect to see in the coming year. We have highlighted some of the top challenges the industry is facing, according to the report, and noted where Independent Grocers Alliance members can find help.

1. Inflation Pressures Margins

85% of both retailers and suppliers expect inflation to pressure their margins and increase operating costs, so many retailers are using private label (72%) and price differentiation strategies (62%), like high-low or everyday low price, to manage.

Resource: IGA is continuously developing resources to help retailers cope with inflation, including a shopper-facing sign kit, webinars that examine the statistics and impact of inflation on independents, and more. 

Additionally, IGA's Exclusive Brand private label is available to all IGA retailers, and offers shoppers a double-your-money-back guarantee.  

2. Supply Chain Disrupts Business

82% of suppliers and 70% of retailers surveyed expect the supply chain disruptions to have a negative impact on their business. While there is not much retailers can do to avoid these disruptions, they can go heavy on local foods and products, which might not be as impacted by supply chain disruptions.  

Resource: IGA retailers can leverage their Local Equals Fresh partnerships with local farmers for meat, produce, flowers and plants, honey and artisan sauces, and even alcohol. Stay tuned to The IGA Minute for ongoing updates from Red Oval family manufacturers.

3. Retailers Must Differentiate

Competing with national chains on price alone is nearly impossible for an independent retailer, so highlighting your points of difference is imperative to success. According to the report, retailers have been promoting the following services to keep and attract business:

• Local assortments throughout the store (90%)
• Product innovations, including new item introductions (81%)
• Organic assortments throughout the store (81%)
• Online shopping (80%)
• Curbside pick-up (79%)
• Social media programs (71%) 

Resource: Show off your differentiators with the appropriate signage. From our Local Equals Fresh sign kit to Groceries Online branding for online ordering and curbside pick-up, our visual merchandising options have something for everyone.

4. Experiment With Technology

"Most food retailers are experimenting with new technologies to improve the customer experience and a similar percentage are experimenting with new technologies to enhance efficiency," the report says. Notable technology they are experimenting with include: dynamic pricing, mobile checkout systems, foodservice ordering and delivery. 

Resource: Whether you're looking to shift some of your print ad budget to digital advertising (see National Digital Ad), offer eCommerce services, or outsource your social media management, IGA has a program to help. For best results and a full omni-channel marketing program, explore our 360º Analysis for a marketing analysis and implementation plan. 

5. Labor Challenges Abound

87% of retailers and 86% of suppliers reported struggling to attract and retain quality employees is having a negative impact on their business. In response, they are considering better wages, salaries, and benefits, more training and development, and education programs and benefits. 

Resource: The IGA Coca-Cola Institute is a Learning Management System (LMS) dedicated to retailers worldwide and offers blended training programs that include 180+ industry-specific online courses. They serve more than 10,000 businesses and all Independent Grocers Alliance members have access to their library of courses. 

Additionally, retailers can access our Labor Solutions content here. 

Come back next week for five more challenges the food industry is facing, along with resources available to Independent Grocers Alliance members.