Future Gazing: Grocery 2053
I know what you’re thinking
After reading this title we can guess what’s on your mind. 2053 is far. And some might call it impractical to look that far ahead, but we’re not trying to project dollar sizes onto trends. If you look back in history, it’s the macro trends that played out over extended periods of time that have meant some players disappeared while others were left to dominate – more on this further. Our aim here is to help retailers understand the shopper values that will shape the decades to come and offer a framework for thinking about how to transform their organizations over time. And it’s not a surprise that we chose this period. You’ll see a natural cutoff across trends in cohorts of shoppers aged 44 and below. They’ll be 74 in 2053 and we can expect these shoppers and their values to represent almost the entire landscape 30 years from now. This is just a first step and we’re excited to see what these shoppers will be up to in the distant and not so distant future. We hope you are too.
Introduction to Grocery 2053
While market context shifts have felt relatively dramatic for the grocery industry over the past few years, the reality is that shifts that unfold over decades are much more consequential. It isn’t one five-year period in grocery history that will change the fortunes of retailers. Rather, grocers will rise (or fall) based on their ability to align themselves to the dominant demographic, cultural, economic, and technological trends that will slowly reshape the market context over decades to come.
For example, from 1915 – 1970, the adoption of the automobile, the invention of the shopping cart, and growth in suburbanization and the middle class are examples of cultural, economic, and technological trends that enabled the supermarket to replace the specialty retailer as the dominant format. The 15-year period of heightened inflation was an economic trend from 1965 – 1980 that created fertile ground for discount chains like Dollar General, Walmart, Costco to take root and flourish. This enabled them to expand their footprint so that when they finally started selling food at lower prices, they quickly gobbled up share. From the 70s to today, the decline in the collective purchasing power of the middle class meant retailers who either focused on lower prices or higher-quality
goods were able to grow faster than the mainstream supermarket. The creation of mobile technology and the smartphone created the digital channel. Thereafter, a seamless, omnichannel retail experience became a highly prioritized need. The rise of dual-working households in past decades -- and the more recent work-from-home trend --- have given rise to Customers placing a bigger importance on saving time and has even impacted which states and counties Americans call home.
So, what are the trends that will have the biggest potential to reshape the competitive landscape over the next three decades, and what should retailers do about it? Which retailers in the top-quartile can feel secure in their value proposition and customer composition today so they are best positioned to win Customers’ hearts and pockets in 2053? Which retailers might need to evolve and target different customers or see their position fade? Finally, do these trends provide hope for regional supermarkets below the 1st quartile, or will they create a bigger divide between them and those at the top?
The future is exciting. But understanding what it will look like is challenging. At a compounded 3% growth rate, the U.S. grocery retail industry will more than double and be worth a wobbling $1.9 trillion in 2053. And what retailers focus on in the coming decades will determine their survival.
We’ve looked at all the trends shaping the future and have come up with five that we believe will (a) have a significant impact on the evolution of Customer behavior and (b) on who will win their hearts and pockets in the 30 years ahead. In order of their impact on future Grocery growth from a customer point-of-view, the trends are: Fiscal Conservatism, Affordable Health & Wellness, Values-Based Consumption, Data 3.0 and Channel Proliferation.
Finances (underlying need of Fiscal Conservatism) and Wellness will have the biggest impact on customer needs (and actions) and will be a force to be reckoned with over coming decades. That’s because they are more personal and immediate to the individual, whereas more aspirational needs take a back seat and tend to be satisfied only after these more immediate ones are fulfilled. Even health & wellness comes second in respect to finances, as Customers seek to fulfil their financial needs first.
How we did it
Here’s a quick overview of how we did it – a more detailed methodology follows on how we ranked trends based on Customer needs and as a result how we ranked retailers’ future positions in 2053.
- First, we identified 15 or so sub-trends through extensive desk research.
- Then, we grouped these into mega or macro trends that will have the biggest impact
- Second, we surveyed customers to understand which trends matter the most to them based on
- what stresses them most
- what they choose when asked to trade off
- what needs they are most likely to act on
- Finally, we ranked how retailers positioned themselves in 2053 based on
- their future customer base
- the trends relevant to them
- the value proposition alignment required
Customer Needs Methodology
We see some of these trends already shaping the Grocery Retail world today. How they will shape growth in the next 30 years is determined by how Customers feel about each of these, specifically on the following set of dimensions:
- Are the market forces underlying the trend a big source of stress for Customers?
- Are Customers willing to trade off on the needs underlying the trend?
- How often do Customers engage in a behavior related to the trend? What is future behavior intent?
- To what degree are the needs underlying these trends aspirational versus realized? For which trends will fulfillment face higher/lower barriers?
Answers to these questions help us understand the impact each trend will have on Customer behavior in Grocery retail in the next 30 years.
As we’ll see through this article, Customers will keep placing importance on new tech, sustainability, and new forms of consuming groceries in the retail space, but these needs will remain aspirational as Customers will seek to fulfill them only if financial and personal health needs are met first.
