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What are the current challenges for brands in the grocery business?

It’s no secret that inflation and rising costs have impacted CPG prices greatly. This means that grocery shoppers are trying to find the best possible deal nearly at every touchpoint along the path to purchase. What’s different about the price-sensitive shopper in 2021 versus the shopper in 2009? The multiple ways to buy. Shoppers are buying food through mobile and social interactions mixing it with their in-store shopping experience. Grocery has always been a thorn in the margin mix for retailers and with additional costs of delivery hitting retailers hard this year, the pressure will remain.

We asked OneStone’s Sr Director of Ecommerce, Maria Guzman and Director, Claire Trellis about the challenges grocery brands have in the near future:

Claire: Brands are going to be challenged with retailer’s warehouse space, much like how in 2020 where warehouses were dedicated to PPE, warehouses are now going to focus on essential items. Brands may see a decrease in orders of non-essential items, to make way for everyday consumable goods. Brands that sell essential items, may want to consider increasing production for these items. Additionally, marketing dollars should be focused more on opening price point items that the price conscious consumer is looking to buy.

Maria: Beside the given challenge of profitability, another challenge is diversification. How do you diversify your assortment were you aren’t reliant on one product that can be heavily impacted by raw material increases and/or consumer behavior changes?

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