State of Grocery Europe 2022

Over the past two years, grocery retailers responded by becoming more efficient, resilient, and innovative. They will be tested in 2022 by a number of new challenges, from increased inflation and the enduring rise of e-commerce to evolving consumer preferences. This report highlights new insights and perspectives that will help grocery retailers navigate these market headwinds.

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2022 Overview

Article

State of Grocery Europe 2022: Navigating the market headwinds
– Retailers must be prepared to take bold actions and keep investing in key areas such as online, new profit pools, analytics, sustainability, and people.
Interview

Trends and tribulations: An interview with Matthias Wunderlin
– Migros Supermarkets’ chief commercial officer weighs in on the Grocery retail market and changing consumer preferences.

Ten emerging trends

Ten key trends shaping the grocery industry in 2022 and beyond
Download the ten trends

Deep dive articles

Article

The next S-curve of growth: Online grocery to 2030
– Traditional grocery retailers should now determine which value propositions to focus on, define a scalable operating model, and consider partnerships to complement their historic strengths.
Interview

Meeting rising online demand: An interview with Ocado’s Melanie Smith
– The CEO of Ocado Retail UK discusses the evolving competitive landscape and what’s ahead for online.
Article

Instant Grocery: Will it stay or will it go?
– Retailers must determine whether they want to capture market share in instant delivery and how to further differentiate their other e-commerce propositions.
Interview

I want it now: An interview with Gorillas CEO Kağan Sümer
– Instant delivery has already made its presence felt. One of the disrupters shares his aspiration and what it will take to get there.
Article

Grocers’ sustainability opportunity in transforming the food system
– This moment of truth requires leadership from CEOs and a transformational focus throughout organizations.
Interview

Meeting the moment: An interview with Marina Caprotti
– The executive chair of Esselunga Italy discusses the latest initiatives in her organization’s decades-long commitment to sustainability.
Article

Crisis or opportunity? How grocers can build stronger people models
– A focus on the employee experience, digitalization, and reskilling can make the grocery workforce an even more valuable source of competitive advantage—if retailers invest in getting it right.
Interview

Empowering your people: An interview with Cláudia Azevedo
– Sonae’s CEO discusses why upskilling, reskilling, and a sense of purpose are critical to a high-performing workforce.
Article

Pushing granular decisions through analytics
– Advanced analytics has the potential to transform grocery operations, but many retailers struggle to harness these capabilities to improve performance. Two emerging use cases could point the way.
Interview

Analytics-fueled growth: An interview with Adam Manikowski
– Zabka’s managing director discusses the role of analytics in expansion, operational efficiency, and speed.
Article

Growing beyond groceries: The ecosystem expansion
– Grocers are in a unique position to move beyond their core retail offerings. It can be challenging to build an ecosystem, but the rewards may be worth the effort.

About the research

In its inaugural year, Disruption and Uncertainty—The State of Grocery Retail 2021: Europe marks a partnership between McKinsey & Company and EuroCommerce designed to provide executives with a comprehensive view on an industry forced to adapt at unprecedented speed. We surveyed more than 10,000 consumers and around 50 grocery executives across Europe. We interviewed six industry thought leaders and pioneers. We combined EuroCommerce’s policy and sector knowledge with McKinsey’s global expertise and analytical rigor.

Topics

The state of the grocery retail industry—review of 2020 | Grocery Retail in 2021 | Channel shifts | Changes in price and value | Lifestyle agendas drive food demand | Efficiency and new value pools

The state of the grocery retail industry—review of 2020

Article

A year like no other for European grocery retailers: The state of the industry post 2020

– The coronavirus pandemic has reshaped the European grocery-retail landscape at unprecedented speed and scale. Five major forces at the heart of this change came together and reinforced one another.

The speed and magnitude of these changes will reshuffle the cards and create new winners and losers. Grocery retailers that take bold moves to address major shifts, such as online or health, have a unique opportunity to win market shares.

Daniel Läubli Co-Leader of McKinsey’s European Retail Practice

Grocery Retail in 2021

Article

The path forward for European grocery retailers

– COVID-19 changed the market in unprecedented ways in the past months. Now evolving consumer demands also require grocery retailers to adopt new strategies to increase performance and pursue growth.

What we see, both in consumer demand patterns and in the grocery industry response, is a new level of discontinuity—and we have no reason to believe that things will cool down soon.

Tobias Wachinger Senior Partner at McKinsey

Channel shifts

49%

of CEOS

think that the market situation will worsen in 2021 compared with 2020
Interview

Building ecosystems around physical and online grocery offerings: An interview with Per Strömberg
– ICA’s CEO explains how the Swedish grocery retailer is expanding its physical and online ecosystem by analyzing consumer... behavior to see what nonfood items customers seek.
Article

E-commerce is shifting how European grocery retailers seek profitable growth
– Winning online was a priority for growth in grocery retail even before the onset of the pandemic. Now, with the increase in online... shopping, e-commerce acceleration and profitability have become top priorities for many European grocers.
Interview

Doubling online grocery capacity during the pandemic: An interview with Matthew Simister
– Tesco’s Central Europe CEO shares how the grocery chain will continue to gain market share by meeting customers’ increasing... expectations for value in quality, freshness, and pricing.
Article

Will brick-and-mortar supermarkets survive in Europe?
– In a fragmented customer landscape full of pandemic-related disruptions, supermarkets must adapt to remain competitive and rediscover... their distinctive offering.

Changes in price and value

37%

of consumers

plan to look for ways to save money while grocery shopping
Interview

Sustainability and health are top of mind for today’s grocery retailers: An interview with Frans Muller
– Ahold Delhaize’s president and CEO explains how the Belgian grocer has prioritized employees’ mental health, leveraged... digital personalization tools to help consumers make healthy and sustainable food choices, and connected with the community through local initiatives.
Article

Value-for-money perception must go beyond price for European grocers
– The days of competing on price alone are long gone, and the value-for-money perception of many European supermarket chains has... been under extreme pressure. Our research shows that perception is driven by several factors that need to be addressed.

Lifestyle agendas drive food demand

30%

of consumers

intend to spend more on healthy eating in 2021
Article

The path forward for sustainability in European grocery retail
– Though grocers have focused on product safety and hygiene during the pandemic, sustainability remains a key priority for consumers... and grocery CEOs alike. Now, grocers should focus on how to deliver against their commitments and empower consumers to make sustainable choices.
Interview

Sustainability and growth go hand in hand: An interview with Mikko Helander
– Kesko’s CEO explains why the Finnish company, which has a goal of becoming carbon neutral by 2025, views sustainability... as an integral part of its success story.

Efficiency and new value pools

13%

annual growth of investments in warehouse automation

Speed in IT becomes a differentiator
Article

Prioritizing flexibility in tech strategies can unlock new value for grocers
– As European grocers realize that embracing new technology is core to their strategy, flexibility is the key to successful transformation.... It’s not always about what retailers are doing in tech adoption, but how.
Interview

Unleashing technology to meet shifting grocery demand: An interview with Christoph Eltze
– REWE Digital’s chairman explains how the German e-grocery leader views IT as an avenue for the company to expand its click-and-collect... services and create innovative last-mile delivery solutions.
Interview

Enhancing customers’ grocery journey through digitization: An interview with Igor Shekhterman
– X5’s CEO explains how the grocery retailer is harnessing big data, AI, and digital tools to better understand what consumers... want.
Article

Grocers can fuel growth with advanced analytics
– Organizational maturity will be a critical element for grocery retailers seeking to unlock the full potential of analytics.
Article

Automation in European grocers’ supply chains has reached its tipping point
– Automation in grocery warehouses has significantly accelerated, thanks to several trends. Now is the time for retailers to reassess... their automation strategies.

About the Editors

Gemma D’Auria is a senior partner in McKinsey’s Dubai office; Franck Laizet is a senior partner in the Paris office; Daniel Läubli is a partner in the Zurich office; Virginia Simmons is a senior partner in the London office and the managing partner of McKinsey’s UK and Ireland offices; Rickard Vallöf is a partner in the Oslo office; and Tobias Wachinger is a senior partner in the Munich office. Jean-Albert Nyssens is the chief economist for EuroCommerce, and Christian Verschueren is the director-general of EuroCommerce.

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