Type to search

Retail Industry Updates

How Grocers Can Maintain the Momentum They’ve Found in 2020

Share

Bain & Company has a bit of a bearish outlook for the grocery industry in a post-COVID-19 world. But the global management consultancy firm believes that outlook could turn more bullish if grocery chains can “respond decisively to looming disruption in the sector.”

In a recent report titled “The Future of U.S. Grocery: Maintaining the Momentum,” authors Bain Stephen Caine and Karl Zimmermann, who are both Bain partners, said, “Between 2019 and 2030, Bain & Company modeling suggests grocery profits overall will increase from just over $34 billion to $39 billion in the absence of concerted strategic action — a compound annual growth rate of only 1.2%.

While grocers have pivoted well during the pandemic to serve their customers — and increased their sales and profits in the process — they will need to retool for the strategic challenges ahead, according to the report.

“Next year could be tough as sales lap the highs of 2020,” Caine and Zimmermann wrote. “In our base-case scenario for 2021, restaurants begin to recover and grocery sector revenues could be flat or slightly down. In our low-case scenario for grocery, a vaccine is widely distributed and adopted early in 2021 and diners rush back to restaurants; annual revenues could fall by 4% to 7% were that to happen. Our high-case scenario for grocery is a bleak one for all of us who are already tired of pandemic curbs: It envisions lingering health and safety restrictions, an ongoing struggle in the restaurant sector and a rise in U.S. grocery revenues of 2% to 5% in 2021. In all three scenarios, grocery is shaping up for a substantial drop from what’s likely to be a high single-digit increase in 2020.”

The authors suggest seven strategic actions for grocers to secure the future:

• Sharpen your customer value proposition.

• Delight customers on high-impact journeys.

• Win profitably in e-commerce.

• Reimagine the role of the store and network.

• Gain a supply chain edge.

• Prepare for more consolidation.

• Explore new profit pools.

Click here for more insights from Caine and Zimmermann and to read their entire report.

Tags: