Grocery retailers and manufacturers are predicting sales will grow in 2022 amidst rising costs and supply chain challenges and will continue to focus on digital commerce investments according to the Advantage Sales October Outlook 2021 report. The information in the report is based on two new surveys by Advantage Sales, a division of Advantage Solutions.
Key takeaways include:
- Six in 10 manufacturers and seven in 10 retailers expect higher dollar sales in the fourth quarter of 2021 compared to a year ago. Manufacturers and retailers agree price increases will be the top driver of dollar sales growth.
- Outside of price increases, more manufacturers than retailers say improved supply will drive growth. Retailers point to elevated levels of in-home consumption and increased consumer spending.
- To mitigate rising costs, nine in 10 manufacturers are planning or have taken at least one price increase since the pandemic started. One-half have taken one increase. One-fourth are planning or have taken a second. Nearly one-sixth are planning or have taken three or more. Most price increases have been reflected in the list price.
- Manufacturers are more optimistic than retailers about supply levels. While one-third of manufacturers expect supply levels to top 90% in the last quarter of 2021, none of the surveyed retailers do.
- More than half of retailers are expanding their fresh category offering. Four in 10 plan to trim space devoted to tobacco and general merchandise.
- Manufacturers say retailers that are winning online are leveraging new shopper fulfillment options, are focusing on online shopper experience and services, and have a retail media network. Nearly all retailers surveyed say they have increased their digital investments this year compared to 2019.
- Seven in 10 manufacturers plan to reduce traditional trade spending in the next six months. Their top reasons include supply constraints, diverting funds to digital investments and cost increases.