The future of grocery retail

They can add new offerings and be a kind of life solution center, promising to save shoppers time and money with improved taste, health, and experience—at higher profit margins than the traditional model. No longer must they own, so they can speed up the addition of these broader capabilities.

Grocers also have value to offer to other businesses. Look at the rise of retail media, where grocery technology draws in targeted marketing revenue for access to a very targeted audience. Some visions of food as medicine involve taking insurance or employer subsidy payments for medically tailored meals, introducing a new ecosystem of partners that grocery’s capabilities can serve. Future grocery revenue and profit may come from new quarters.

Seismic supply shift

Consumers love having peak-quality fresh produce of every variety, including exotic produce, at all times of the year, no matter the season or latitude where they live. They also like paying low prices for packaged food and household goods created from commodities sourced from and manufactured in the most economically efficient countries. But the system supporting this global approach is getting more complicated.

Political tensions and tariffs are often making global sourcing riskier and more expensive. The pandemic exposed weaknesses in worldwide transportation and shipping. And growing conditions and food miles are coming under increasing scrutiny. In fact, food can travel a thousand miles before we consume it, with all the carbon that comes with it. Such distances do not sit well with customers who are becoming more interested in buying local, knowing where their food comes from, and how it got to them. Hyper-personalization also means adapting what’s stocked to community-specific preferences. There will likely always be a global food supply chain, but there should be a seismic shift in how grocery supply will work.

Fortunately, there are new technologies and approaches to providing more supply locally. For instance, take the advent of controlled environment agriculture (CEA), which can use AI to adjust environmental factors such as temperature, light spectrum, H2O, and CO2 to drive and scale new product innovation that is not possible in field-grown environments. More regional manufacturing can enable grocers to access faster supply chains with fresher food produced on demand, limiting food miles, waste, and resources. Seven in 10 grocery retail executives in our survey say they will likely shift food supplies from global to more local. Plant-based and cultivated meat and other novel sources of calories and nutrition may further alter the landscape. Advances in autonomous vehicles may also have a role to play, especially since over half of grocery executives surveyed expect more frequent deliveries to stores in the coming years.