For the European grocery sector, 2022 was all about inflation and growing consumer price sensitivity. This led to the biggest decrease in the margins of grocers in five years. In real values, turnover dropped by 7.1 percent, driven by intensified downtrading across income brackets. While margins are decreasing, interest rates and capital costs are rising. As a result, many grocery retailers see the challenge is financing the investments both in sustainability and technology that are necessary to reduce emissions, build resilience, and drive future growth.
This year’s report takes a comprehensive look at the key trends shaping the grocery sector in the coming years. How will the fact that consumers plan to save more money on food affect different formats, channels, and categories? Will grocery retailers need to look for further economies of scale to better deal with rising costs and increased margin pressure? To what extent are grocers equipped and resolved to leverage analytics and automation to drive productivity? As e–grocery largely retains the uplift observed during the pandemic and meal delivery grows, will more online offerings reach break–even in 2023? Finally, will more grocers join the ranks of the pioneers who already engage their suppliers to reduce greenhouse–gas emissions that occur during food production?
The State of Grocery Retail report is an annual global publication covering three continents, with dedicated reports for Asia, Europe, and North America. This year’s report, “Living with and responding to uncertainty – The State of Grocery Retail 2023: Europe,” is a continuation of a partnership between McKinsey & Company and EuroCommerce, designed to provide executives with a comprehensive view of the market and future trends. In preparing the report, we surveyed more than 12,000 consumers across eleven European countries and almost 50 grocery executives from more than 20 countries across Europe. In addition, we interviewed three sector thought leaders and pioneers. We combined EuroCommerce’s policy and sector knowledge with McKinsey’s global expertise and analytical rigour.