Changes to the global grocery retail market are happening fast. Trends that emerged during the pandemic are persisting, reshaping the industry. Consider this: in December 2019, the percentage of e-commerce grocery sales in the US market was slightly under 4 percent; it’s now in the low teens and is expected to reach roughly 25 percent by 2030. The adoption of online grocery is expected to be even higher in parts of Europe.
In this episode of the McKinsey on Consumer and Retail podcast, three McKinsey experts share insights from their latest research on the global grocery retail industry. An edited transcript of their conversation with host Monica Toriello follows. Subscribe to the podcast .
Monica Toriello: Today we’re going to hear about the state of grocery retail all around the world. McKinsey’s Retail Practice has undertaken a huge research effort that encompassed surveys of more than 30,000 consumers and more than 100 grocery CEOs globally about what’s happening in grocery and what the future of the sector might look like. We’ll hear from the regional leaders of this research to tell us about what they’re seeing in Asia, Europe, and North America.
First up is Bill Aull, a partner who leads McKinsey’s office in Charlotte, North Carolina. Bill has expertise in a number of retail and consumer packaged goods (CPG) topics, including merchandising, category management, and strategy. Bill, thanks for being here—and tell us one or two things that you get at every trip to the grocery store. For me, it’s seltzer water and some kind of dried fruit. What is it for you?
Bill Aull: Great to be here. At the grocery store, I always get cream cheese, eggs, and some sort of grainy bread.
Monica Toriello: Next up is Dymfke Kuijpers, a senior partner who leads our Consumer Practice in Asia and our work in consumer tech in the region. Dymfke is a Dutch national who’s been based in Singapore for the past five years. Dymfke, nice to have you with us. And tell us one thing you can’t leave the grocery store without.
Dymfke Kuijpers: Very nice to be here, Monica. I never leave the grocery store without stone berries. They’re the best indication of the supply chain of the grocer.
Monica Toriello: That’s good to know. Last but not least, Daniel Läubli is a senior partner based in Zurich. He leads McKinsey’s work in grocery globally and coleads our Retail Practice in Europe. His areas of expertise include strategy, store operations, and advanced analytics. Welcome to the podcast, Daniel, and tell us what your grocery must-have is.
Daniel Läubli: Monica, great to be here. My grocery must-have is dark Swiss chocolate. I eat at least a pack a day, so whenever I go shopping, I need a lot of that. How consumer behavior has changed
Monica Toriello: All of us, to some extent, are grocery shoppers; we’re all consumers. So let’s start this conversation with the consumer. Broadly speaking, when consumers shop for groceries these days, they notice that prices are higher. And they’re trying to stretch their budgets, so they’ve become more value conscious, as your grocery reports have said—but you’ve also said they want to eat healthier and they care about sustainability. There’s some tension between those things, because healthier foods and sustainable products tend to be not the cheapest options. Bill, let’s start with North America : Is the picture that I’ve painted an accurate picture of the consumer?
Bill Aull: It is. The bar is raised in terms of what grocers have to do to deliver on value, and the consumer really isn’t willing to sacrifice what they perceive to be value in fresh goods. The challenge for many grocers is to figure out how to deliver on that. The bar’s higher, and it costs more to do business.
One thing you didn’t mention is that, at least in the US, consumers continue to accelerate their demand for e-commerce and e-commerce services, which adds expense for grocers. That demand is just as high as the desire for value and freshness.
Dymfke Kuijpers: If you look at Asia, we always say there’s no such thing as Asia. There are distinct countries and big differences in consumer optimism and consumer spending, with northern Asia typically less optimistic than, say, India. Consumers in India are the most optimistic about economic recovery after the pandemic and have the highest willingness to spend. That said, to your point, inflation is hitting, and unlike at the beginning of the pandemic […]
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