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When examining the grocery industry’s prospects in 2024, it’s hard to overstate the significance of the Kroger-Albertsons merger.
If the Federal Trade Commission allows the $24.6 billion deal to proceed — or if the grocer prevails in federal court over a challenge from the agency — it would reshape the competitive landscape in the U.S. The combination would introduce a colossal new supermarket player and would very likely create a ripple effect that impacts everything from supply chains to M&A activity across the grocery space.
If the two companies aren’t able to consummate the deal, or if they get bogged down in a protracted legal battle with the FTC, the year will look quite different.
But the mega-merger isn’t the only significant topic for 2024. In interviews with experts over the past few weeks, we’ve heard about a variety of challenges and opportunities facing the grocery industry.
Although consumer price sensitivity stemming from inflation will continue to test grocers’ ability to offer discounts and market affordability, the demand for both in-store and digital experiences means there’s never been a better time to craft a unique omnichannel business strategy.
Here’s a look at the eight trends that promise to impact the grocery industry this year.
Value retailing is here to stay
Experts agreed that they expect to see inflation cool in 2024. However, many consumers still don’t feel great about the economy and their financial situation.
Neil Stern, CEO of Good Food Holdings, anticipates rapid disinflation in the new year and predicts that private label will be a “big part” of grocers’ efforts to drive value. As private brand sales have increased, national CPG brands have started to see an erosion in their sales, which will lead to them getting aggressive about maintaining their market position through promotions and incentives, said John Clear, senior director at consulting firm Alvarez & Marsal. Over the next 12 months, Clear said he expects to see a “pricing war.”
Increasing units will also be a big focus of 2024, experts said. In recent years, retailers have been able to manage unit decreases with price increases. But as price increases come down, Stern expects manufacturers will ramp up promotional activity in stores to get consumers to buy more products.
“I think...