The State of Grocery Shopping in 2022
Think about the last time you went grocery shopping. What did you buy? Where did you buy it? Were you in a store, in bed, or in your car for a curbside pickup? How much did you spend? Did you find everything you need?
As we somehow enter year three of the pandemic, we have lots of questions. Questions for you, yes. But also for the grocery industry. We wanted to know about what’s in store (specifically, at our favorite grocery stores) and what it will mean for our shopping carts and our kitchen tables. So we thought we’d investigate.
We spoke with brands, retailers, and experts across the country about the current state of grocery shopping. We combed through press releases, pored over industry insights, and attended virtual seminars and even a fully masked in-person expo. All to uncover the mostly exciting, but also concerning, developments coming in the year ahead. Here’s what we learned.
1. The price of our groceries will continue to go up.
Unfortunately, it’s true: Prices are up across a range of categories, and according to a recent study from data group Numerator, groceries is at the top of the list. Yes, we expect it to continue. And yes, it has a lot to do with the strain on the supply chain you’ve been reading about.
These supply chain issues are part of why Kraft paid some of us to not make cheesecake over the holidays and why our pets are looking at us with “sad eyes.” Sadly, shortages will persist — at least through the early part of the new year, says Gad Allon, a professor of operations, information, and decisions at Wharton School of Business. Brands and retailers we spoke with have had to delay launches, increase lead times, raise funding, and find other creative — and, at times, costly — ways to cope with the misalignment. In turn, this often means higher prices for the consumer.
“There’s no getting caught up anymore,” explains Lisa Anderson, a supply chain expert who works directly with manufacturers and distributors within the food system. Still, companies of all sizes are working hard to minimize the effects on our grocery bills; one of her clients is moving production from Asia to North America. (The hope is to save money when it comes to getting the product to consumers.) Lin Jiang, co-founder and chief executive of Yishi, a small, Asian-inspired oatmeal brand, told us the company raised more money so it could stock up on ingredients at a lower cost.
Meanwhile, Instacart added a bunch of new and useful features, Daniel Danker, a vice president of product, points out. These include real-time availability updates, “running low” status badges, an industry-leading replacement recommendation algorithm (Target offered a similar perk during the holidays), real-time customer-shopper chat, and smart coupons and promotions.
These rising prices are concerning, though, particularly for people with lower incomes and limited access to food. According to a Feeding America survey in November, demand for food assistance is still elevated compared to pre-pandemic levels, with 85% of food banks reporting either an increase in demand or demand holding steady from the previous month. Norbert Wilson, a professor of food, economics, and community at Duke University says, “I think there’s some potential for limited resourced areas to gain better access, especially through online shopping platforms,” but also pointed out the challenges, specifically with service and delivery fees.
Some good news: We’re seeing these platforms and retailers work together to increase access. In 2020, Instacart announced its partnership with Aldi to introduce Electronic Benefits Transfer and Supplemental Nutrition Assistance Program (EBT SNAP) payments for same-day online grocery delivery and pickup. As of December, 40 retailers, like Publix, The Save Mart Companies, Price Chopper/Market 32, and more, offered this service, which includes free delivery and pickup for all EBT SNAP orders. Recipients in many U.S. states can use also their benefits on Amazon and Amazon Fresh.
We’re also seeing more deals, discounts, and discount retailers. In November, Instacart also launched a “Deals Tab,” reduced delivery fees, and a dollar store hub, which consists of roughly 14,000 stores, including Dollar Tree (more than 6,800 stores), the 99 Cents Only Store, Five Below, and Family Dollar at the end of last year. Hy-Vee and Walmart are also participating in a Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) pilot program this year. The hope, all around, is that if prices have to go up, we can do as much as possible to help those in need. If you want to help, this is a great place to start.
2. Online shopping will continue to grow.
It turns out, we like shopping for our groceries online. Accelerated by the pandemic, online sales were predicted to surpass $100 billion in the U.S. in 2021 and could represent more than 15% of sales in 2022 (up from 12.4%). With that in mind, more new and niche online grocery retailers are vying for our *add to cart* clicks. They’re bringing harder-to-find groceries to our doorsteps and championing sustainability. Some follow a subscription model or require a membership to shop; with others, it’s pay as you go. Last year Umamicart and Plantbelly joined the growing list of grocery delivery services while more-established companies broadened their reach, selection, and offerings: Misfits Market, Hello Fresh, Thrive Market, and Weee! added more grocery items, new categories, and expanded into more regions. And Boxed plans to dip into “on-demand, fresh grocery delivery” this year.
What’s also interesting is that the majority of us will continue to get our groceries at physical stores … after we shop for them online. According to a recent report from Mercatus, 75% of online orders will be fulfilled from stores via pickup services. Retailers across the country are continuing to ramp up their pickup offerings. Sprouts Farmers Market “didn’t even have pickup in very many stores” pre-pandemic, says Gil Phipps, chief executive of marketing. Now it accounts for just over 10% of the brand’s business. Pickup with Google Maps, which the company claims reduces wait times to less than five minutes, is now available in over 2,000 stores. And by the end of 2022, Costco plans to double the number of locations with pickup lockers to more than 200.
3. Delivery times will get even shorter.
In just under a decade, same-day delivery has gone from novelty to standard feature. Delivery access continues to expand while times shrink from 24 hours to 30 minutes. Some companies now even promise delivery in 15 minutes or less in several cities, including New York, Chicago, and Boston.
Last September, Instacart launched its Convenience Hub, a 24/7 virtual convenience store offering delivery “in as fast as 30 minutes.” Today it has nearly 100 retail partners, including Kroger, Publix and Ahold Delhaize USA, as well as 7-Eleven, CVS, Rite Aid, and Walgreens.
We don’t see this trend slowing down in 2022 either. In December, DoorDash made two big moves. It opened its own ultra-fast delivery service in NYC, promising delivery in 10 to 15 minutes with plans to expand to more cities in the coming months; it also launched on-demand grocery delivery, offering delivery in “as little as 45 minutes” from more than 400 Southeastern Grocers stores, including the retailer’s Fresco y Más, Harveys and Winn-Dixie, according to Supermarket News.
4. Checkout lines will keep disappearing.
In February 2020, Amazon opened its first cashierless grocery store with its “just walk out” technology, which, as the name suggests, lets us enter a store, grab what we want, and go (totals are automatically tallied and credit cards are charged on the way out). Just under two years later, retailers are really embracing the idea of “frictionless” self-checkout. In November, Amazon opened a 35,000-square-foot grocery store outfitted with its “just walk out” technology (it’s the sixth store in the U.S.) and, according to Bloomberg, the company “has signed a flurry of deals” to provide its tech to other stores.
The mega-retailer has also been testing out smart shopping carts, called Dash Carts. Designed for small- to medium-sized grocery trips (think: two grocery bags’ worth), the carts are outfitted with a scanner and scale, so you can essentially self-checkout as you shop. It’s rolling out these carts in Amazon Fresh stores nationwide and plans to more than double the number of stores in 2022 (there were 22 in six states and D.C. as of Dec. 7, 2021), according to Supermarket News — although Amazon is still TBD on just how many more we’ll see in 2022, according to a company spokesperson. So we’ll all stay tuned! Instacart is also partnering with retailers, including Kroger and Wakefern, to bring smart shopping carts to their stores. At the moment, the company’s still figuring out “how [to] make these more affordable,” says Lauren Svensson, a spokesperson.
5. Center aisles will keep getting major makeovers.
What comes to mind when you picture the center of the grocery store? Is it rows and rows of shelves filled with shelf-stable cans, boxes, bags, and containers? That used to be the case, but grocers are changing things up. Hy-Vee added TV screens and store-branded coolers (with soups, pasta, and frozen meals) to break up the traditionally tall, lengthy aisles. And, according to Christina Gayman, a Hy-Vee spokesperson, all of their stores will transition to all-digital shelf tags. The tags display product info and pricing digitally, which means retail workers can update them in minutes, increasing accuracy and reducing paper waste.
As part of Sprouts’ new store format, the grocer added a large plant-based-meal solution center just opposite its new “innovation centers,” a display area for new, often exclusive items, including produce, small brands, and the store’s own private-label products. They also moved meat from the back to the front of the store. Stop & Shop is integrating natural and organic products into its center aisles (they previously were in a standalone section) and broadening the multicultural assortment (it added a Bosnian section to a store recently). Some stores are even adding bars — with alcohol! — to the center aisles to help break things up.
6. More and more small brands will pop up — online and in stores.
It seems like a new direct-to-consumer brand pops up every week — and no category or cuisine is off limits. Breakfast, you say? You could, for further examples, start your day with a bowl of plant-based pancakes or house porridge grains. Come lunch, heat up some soup dumplings or a hearty bowl of mac and cheese, and follow it up with a mid-afternoon snack or several (enjoy a cocktail while you’re at it). How about Mexican for dinner? Italian? Don’t forget the ice cream!
While there are countless small brands popping up every day online, many are also carving out a bigger space on shelves across the country. And that’s great news, considering small businesses need support now more than ever. Big stores carrying small brands is good for brands and it’s good for us, the shopper, as it means we get to try more things.
Since Yishi first appeared at Whole Foods locations in Illinois (in August 2020), the company has raised $3.13 million and will be in 870 stores by the end of February, according to Jiang. This March, she’ll appear on air to promote her growing business. (She couldn’t share more, but did say, “It’s not Shark Tank.”) According to Kelly Landrieu of Whole Foods Market, the retailer has seen a 30% increase in both local producer partnerships and items at its stores since 2016. She attributes this growth to three things: an ever-growing interest in entrepreneurship, increase in access to expertise and tools for the makers, and a shift in our awareness of food trends, sourcing, and ingredients.
For the first time in 2021, Hy-Vee hosted its “Best of Local Brands” summits and will host another next month; Stop & Shop carries more than 300 local brands in its stores (and expects this number to continue increasing); and a team at Sprouts called itself an “incubation ground” for new and exclusive products, with a particular focus on growing local produce (shoppers in Arizona might remember sampling some origami cantaloupe, a new melon that was grown by farmers in Arizona last summer). Big food brands are also taking note and collaborating with smaller, local brands to make gin-inspired pickled cucumbers, macaroni and cheese flavored ice cream, buttery Pop Tarts, and more.
At the same time, these small brands could be in for their most challenging year yet, thanks to the aforementioned supply chain issues. “They get hurt much more, disproportionately more, than the big players,” explains Allon from Wharton. “They don’t have the scale. They cannot absorb anything.” His suggestion: We buy the small or local brand when we can.
7. Plant-based products will outpace conventional ones.
Plant-based is not a trend. In fact, it never was. “For [Weee!] customers, initially the Asian populations, plant-based has always been big,” says LarryLiu, founder and chief executive. “I think [the] mainstream is kind of catching up.” The numbers agree. In the past two years, sales have grown 43 percent — nine times faster than total food sales — and, according to a recent Bloomberg report, will continue to outpace conventional products throughout the decade, with plant-based meat and dairy products leading the way.
In addition to pioneers and other early adopters, more of us are giving the plant-based lifestyle a go: One in three Instacart customers has purchased a plant-based meat or milk product, as of December. But we’re also not completely ditching animal-based items: More than half (58%) who buy plant-based meat also buy conventional meat, according to the retailer. Still, taste remains the top barrier for shoppers. “We’re not going to get people to shift away from eating animal meat by offering them a salad; we need to offer them a better meat option,” says Deanna Jurgens, chief executive of growth at Beyond Meat.
Big and small, new and long-established companies are investing and innovating across a range of food categories to entice these flexitarians to, well, flex their spending. Retailers are mixing plant-based items in with their conventional counterparts and even expanding their own lines to compete in the space. Marcellus Harris, who manages pork and poultry at Kroger and was a speaker at one of the Plant Based World Expo (PBWE) keynotes, says the retailer now “has close to 100 plant-based items in their Simple Truth Brand product line,” launching 30 this past year. Beyond Meat introduced three new products in retail: plant-based burger patties, a new version of beef, and chicken tenders in 2021 (the latter is made with fava bean — a plant protein that we’ll see even more of in 2022). According Jurgens, Beyond Meat is also partnering with PepsiCo. Just Egg collaborated with Kellogg’s and Field Roast in 2021 to bring new plant-based breakfast sandwiches to the masses, and, along with developing their own set of new products, the company plans to partner with more manufacturers, according to Matt Riley, a senior vice president of global sales.
While, yes, we noted that grocery prices are going up, some plant-based grocery companies are hyper-focused on lowering them in order to attract more (frequent) shoppers into the fold. “When we launched our products, nearly two and half years ago, it was two times the retail prices today,” says Riley (it went from the equivalent of $7.99 for a 12-ounce bottle to $3.99). And Beyond Meat “set a goal to introduce at least one product, in one category that is priced at, or below, its animal protein equivalent by 2024,” says Jurgens.
8. Private-label brands will get even more plentiful and beloved.
For decades, certain store brands have been household staples: Kirkland, Trader Joe’s, and any one of the award-winning Aldi-exclusive brands (they’ve racked up more than 1,400 accolades, if you’re counting) come to mind. While they’re not a new idea, the number of store brands out there has just exploded. Beyond their increasingly attractive value (read: lower prices), we’re drawn to their improved quality and assortment of items. In fact, one in three shoppers had already switched to additional private brands during the pandemic, reported Store Brands.
Last year, we saw both major launches and dietary-specific extensions. Target introduced Favorite Day, which includes more than 700 products, mostly in the snacks and treats categories, as well as a plant-based line of groceries to their existing Good & Gather brand. Seemingly overnight, Amazon launched hundreds of products under a new brand Aplenty — you might have read about it — to complement the three other brands it sells (Happy Belly, Fresh Brand, and Amazon Kitchen). Thrive Market introduced a line of frozen meals made with Beyond Meat, Hy-Vee came out with Good Graces, a selection of more than 30 gluten-free products, with an additional 60 in development, and 7-Eleven added a sparkling water, imported from Italy to its private-label line of products, which hit $1 billion in annual sales in 2020. Even Weee!, which currently doesn’t offer its own line of products, sees a lot of immediate opportunities in the space; “2022 is probably where we will start,” says Liu.
9. The climate crisis will continue to drive innovation.
We want to start this section off by acknowledging the climate crisis is a decades-long problem that will require a global, coordinated solution. It is real. It is massive. And, while there’s a lot of amazing work being done, we can — and must — do more right now, specifically within our food system.
Currently, the food system generates about 35 percent of total global man-made greenhouse gas emissions, according to a recent study. There’s also a major issue with food waste, particularly in the U.S. where over one-third of the food produced is never eaten (California just passed a law addressing this). Basically, we’re growing, manufacturing, transporting, and consuming our food in a way that’s catastrophic to our health and the health of the planet.
So, here’s where we use the s-word: sustainability. We need to feed the world’s growing population more sustainably by improving production methods and reducing food waste. How we do it, though, is still being debated and lacking urgency.
Companies of all sizes are exploring the climate-related impacts of their businesses (some more than others). Hy-Vee created a disaster relief fleet in 2021, which currently includes 10 vehicles, to respond to areas impacted by devastating events, including the recent tornadoes in Kentucky and Tennessee. Meanwhile, brands and retailers who tout sustainability as part of their core DNA are taking steps to further improve their operations. “We’ve always committed ourselves to carbon-neutral shipping, zero-waste fulfillment centers, but we’ve also made commitments recently for being carbon-negative by 2025,” says Jason Bidart, a senior director at Thrive Market. The company is also aiming to be plastic neutral in 2023 and is working with suppliers now to switch its plastic containers and liners for frozen foods with ones made from corn starch and bamboo.
While we probably won’t see cell-based or cultivated meat on the shelves this year, Upside Foods opened its 53,000-square-foot food production facility in November and hopes to get USDA- and FDA-regulatory approval soon. Early estimates, which are speculative at this point, suggest the carbon footprint of this meat is roughly 92% lower than beef, 52% lower than pork, and 17% lower than chicken in a large production facility that runs on renewable energy, reported Fast Company. The plan is to launch with chicken first, though the company’s still figuring out whether it will be a breast, sausage, or something else, explains Amy Chen, chief of operations. Whatever ends up on shelves first, the end goal is to actually change the food system and create one that offers “the same delicious meat that [we] love, but [in a way] that’s better for the world and better for animals,” says Chen. We’ll be first in line to try it.
What are you most excited about when it comes to grocery shopping in 2022? Tell us in the comments below!