The grocery retail market in India has seen many transformations from the weekly bazaar, to neighborhood stores, to mom-and-pop stores, to new-age experiential mall culture. The ‘new normal’ is bringing new trends and changes in the retail business. 

Here are the top five trends that promise to shape the grocery industry in 2022:-

1. Decreasing Volumes

Sales volumes are likely to decline in 2022 as the impact of COVID-19 wanes. Volume fell by 2.1 percent in 2021 compared with 2020. In particular, the last three quarters saw declining volumes, though they were still 5.7 percent higher than those of 2019, leaving room for a further decline. Going forward, we expect volumes to stabilize slightly above 2019 values and revenues to stay clearly above 2019 values, given the high inflation rates.

2. Slower Online Growth with More Differentiated Offers

Online growth might take a yearlong pause in 2022 in many markets. Still, we expect growth to continue in the midterm. By 2030, e-grocery will make up more than 20 percent of the market, depending on the country and scenario.

At the same time, online offerings will become more differentiated (such as instant delivery versus scheduled delivery), serving the specific needs of additional consumer segments and shopping missions. Consumers will increasingly split their baskets across more than one online food player.

3. Intensified Sustainability and Health Focus

Consumers are planning to focus even more on a healthy diet in 2022 and to shift their spend to more sustainable products. The trend is primarily driven by high-income groups and younger generations (for example, Gen Z and millennials). 39 percent of high-income consumers plan to focus more on healthy eating in 2022.

For retailers, this means further widening their assortment of healthy and sustainable products and increasing their visibility.

4. High-Quality Entry-Price Tier

Consumers who shop at entry-price levels are less willing to make trade-offs on the quality of these products. By now, the entry-price tier matches the quality of the main national brands in several markets and categories. This makes differentiating between the entry-price tier and the main price tier increasingly difficult.

To meet these higher expectations, retailers may need to raise the quality of the private label in the entry-price tier or merge it with the main tier.

5. Shift in the People Model

Grocery retailers face two key challenges: high demand for new skills and roles that are difficult to cover because of the shortage of available talent, and high attrition of existing employees. Some companies are reimagining and redesigning roles, with technological and social skills rising in importance - along with a premium on adaptability and the ability to master various tasks - as physical and manual tasks decline in importance.

To navigate the transition to a new people model, companies can anticipate future talent demand and invest accordingly (‘strategic workforce planning’), leveraging reskilling and up-skilling as key sources of value creation. They can also address attraction and retention by focusing not only on financial incentives but also on employee experience.

Source: McKinsey