“I think we’re going to see more demand. We’re going to see some aggressiveness,” Weinswig said in an interview after the FMI Midwinter keynote. / Photo: Russell Redman
Deborah Weinswig, CEO and founder of Coresight Research, says grocery retail is well positioned for 2023 despite the volatile business environment.
Key economic indicators, particularly an improvement in inflation, as well as trends such as strong home-cooking demand and consumers’ return to shopping in stores, were already working in favor of grocery retailers through the first half of the year. Yes, Weinswig said.Interview Winsight Grocery Business At the FMI Midwinter Executive Conference in Orlando, Florida.
“I think inflation will come down. [Ukraine] War had begun and no one was ready for it. And there was a very difficult supply chain on top of an already difficult supply chain. It’s not 100 percent, but many of them have been resolved,” said Weinswig, who was a star Wall Street analyst for consumer staples and discretionary sectors, including food, pharmaceuticals and mass retail channels. “As China opens up its economy, the forecast for GDP growth is starting to look very different. So I think we will see more demand.
Indeed, just days after Weinswig’s comment, the US Department of Commerce reported GDP growth of 2.9% in the fourth quarter of 2022 and 2.1% for the full year, beating most observers’ estimates. US consumer spending also increased 2.1% for the quarter and he 2.8% for the full year.
Weinswig is a little concerned about the housing market, but he doesn’t expect a recession this year and is optimistic about the outlook for grocery retail stocks.
“The data don’t look like that,” she explained, referring to the looming recession. You can see they’ve raised their estimates in the last week or so, and for the first time in my career, we’ve seen real wage growth at lower income levels, and we’re seeing the unemployment rate fall again in December. So what I’m seeing doesn’t worry me, [although] I’m worried about the softening of house prices and of course the market.
“So I think 2023 is going to be better than people expect,” she pointed out. [companies] You can monetize it. Stocks should also see great performance. ”
Closing in on the supermarket market is the proposed $24.6 billion merger between Kroger and Albertsons, Weinswig said. The deal, announced in mid-October, isn’t expected to go through until after 2024 due to extensive antitrust reviews, but the grocery retailer is weighing its options, she said.
“I think this will be a game changer,” Weinwig said of the Kroger Albertsons deal. [geographic] overlap. There may be a few stores that sell, but in the end it fits surprisingly well. There’s Walmart, Costco, Target, and whatever the name of this new company is, Kroger Albertsons, and Amazon. So you end up getting some behemoths. They continue to perform well because they can invest in innovation. Tech companies will want to invest in them. Brands will want to partner with them.
“I’m more concerned about boutique brands, regional or super-regional brands. I cited solutions like the Purchasing Group of “Or even merge,” she added.
A big tailwind for the grocery sector is the continued acceptance of consumers to eat at home. This is a trend that many analysts, Wall Street, and industry executives expected to fade away as the pandemic recedes, but it remains a strong trend.
“That’s why I loved covering the industry. You get what you want, when you want it, exactly how you want it,” Weinswig says of the grocery store. “I don’t have to go to restaurants.” She sees it as a social occasion.
In Coresight’s hometown of Manhattan, only about 40% are returning to the office regularly after the pandemic restrictions are lifted.
“If 60% of people in New York don’t go to the office, that’s the majority. [returning to the office]But when we go to the office, when we first go virtual, people bring lunch because they’re used to it. ”
Similarly, she believes the consumer focus on “food as medicine” is a plus for pharmacies, nutritionists/nutritionists, and grocery stores that can use digital content to promote health. I’m here.
“When consumers have access to data about themselves, they can make more informed decisions about healthy eating,” she said. “We’ll look into this more in the future. As a result, people will rethink the grocery store not just as a place to buy food, but as a place to be healthy.”
As consumers spend more time in brick-and-mortar stores, the trend toward eating at home and a return to in-store shopping is likely to prompt grocery retailers to experiment more, Weinswig said. She cited technologies such as artificial intelligence, computer vision, digital shelf labels, retail media and personalization solutions.
“I have never seen personalization as hot as it is in 2023,” Weinswig said at recent events including FMI Midwinter in New York and the National Retail Federation’s Retail “Big Show.” rice field. “The average retailer accounts for about 7% of consumer spending. We can make good recommendations, and we can also make better use of vendor spend in a personalized way.It’s like everyone wins because everything becomes more efficient.”
On the e-commerce front, Weinswig does not expect 2023 to be a profitable year for online groceries.
“Because it’s the last mile, I wouldn’t,” she says, adding that while drone delivery seems like an alternative, the device’s load capacity for groceries is minimal. If you are [buy online, pickup in store], you are still choosing a companion.incredibly difficult [to achieve profitability]It takes a completely different kind of infrastructure to make it happen. ”
In FMI’s mid-winter keynote on ‘grocery resilience’ in difficult economic times, Weinswig identified six actions grocery players should take now. These include focusing on market share rather than margins, using retail media to monetize data, and powering on-the-go food sales. Increase loyalty through social responsibility (including addressing food insecurity), reduce food waste and grow private brands.
“E-commerce is great and a great place to start your shopping journey and do your research, but making that transaction a physical score is currently winning out for consumers, retailers, brands and others. Weinswig says. her presentation. “And I think it will continue.”