As the pandemic-driven surge in grocery sales subsides, grocery retailers must contend with an increasingly complex macroeconomic environment and heightened consumer expectations. This report delves into the evolution of the global grocery retail sector in 2023, examining how various retailers are addressing current industry challenges.
This report comes in PPT.
In 2022, as high rates of inflation battered consumers in Europe, the Americas, Africa and Australasia – and as the economy of China, relatively unaffected by inflation, stumbled due to other factors – the global grocery retail sector took a hit, posting an absolute dollar sales decline, in constant terms, for the first time in decades.
Value- and convenience-focused grocery channels are performing better, on a relative basis, than others, but two channels in particular – grocery e-commerce and warehouse clubs – stand out from the rest. Warehouse clubs, in particular, is doing brisk business, as the channel’s marriage of low unit prices and middle-class cachet proves especially appealing.
In 2023, nearly all grocery retailers of any size have adopted digital strategies. This shift is not only due to an increase in online grocery sales powered by changing consumption patterns. It is also occurring because consumers now consider e-commerce fulfilment options like delivery and click-and-collect to be essential offerings rather than unique perks.
As the global grocery retail sector faces new challenges due to an uncertain macroeconomic outlook, intensifying competition, the rapid pace of digitalisation, and increasingly demanding consumers, the success and failure of players in the space will hinge, more than ever before, on their ability to manage four factors: cost, user experience, supply chain optimisation, and scale.
The essential nature of grocery retail means it is hard to keep the sector down for very long. As a result, sales growth is projected to again be positive – though low – in 2023. Yet, as other factors converge to make grocery retail a more challenging enterprise than ever, small players in the space are increasingly in danger of being pushed out by larger, better capitalised rivals.
Retail is the sale of new and used goods to consumers from a business for personal or household consumption from retail outlets, kiosks, market stalls, vending, direct selling and e-commerce. Retail is the aggregation of Retail Offline and Retail E-Commerce. Excludes specialist retailers of motor vehicles, motorcycles, vehicle parts. Also excludes fuel sales, foodservice sales, rental transactions, and wholesale sales (e.g. Cash and Carry). Sales value excluding or including VAT/Sales Tax. Retail also excludes the informal retail sector. Informal retailing is retail trade which is not declared to the tax authorities. Informal retailing encompasses (a) sales generated by unregistered and unlicensed retailers, i.e. retailers operating illegally, and (b) any proportion of sales generated by a registered and licensed retailer that is not declared to the tax authorities. Unregistered and unlicensed retailers operate predominantly (although not exclusively) as street hawkers or operate open market stalls, as these channels are harder for the authorities to monitor than permanent outlets. Activities in the illegal market, which is usually understood to refer to trade in illegal, counterfeit or stolen merchandise, are included within our definition of informal retailing. Activities in the “grey market”, which is usually understood to refer to trade in legal merchandise that is sold through unauthorized channels – for example cigarettes bought legally in another country, legally imported, but sold at lower prices than in authorized channels – will be included as informal retailing if no tax is paid on sale by the retailer. However if the retailer pays tax – for example on cigarettes bought legally in another country but sold at a lower price than standard – the sale is included within formal retail.
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