According to the annual State of Grocery Europe survey, pressure on costs and margins is a major issue for food businesses in Europe.
In particular, the annual “State of Grocery Europe” survey examines the most widespread trends that will affect the sector of its stores and food chains Europe from 2024 onwards.
The Piraeus Chamber of Commerce and Industry, in its announcement regarding the research findings, recalls that this year’s report, “Signs of Hope – The State of Grocery Retail 2024 in Europe”, is a continuation of a collaboration between McKinsey and EuroCommerce and has designed to provide executives with a comprehensive view of the market and future trends.
For the purpose of the report, more than 12,000 consumers in 11 European countries and more than 30 food industry executives from more than 15 countries across Europe were asked, while CEOs of large chains were interviewed, answering that they are more optimistic and less pessimistic.
The publication combines EuroCommerce’s policy and industry knowledge with McKinsey’s global expertise and analytical rigor. It is the intent of this report to provide new insights and perspectives to help food marketers avoid the impact of ongoing uncertainties and take advantage of future growth opportunities.
The eight main trends in the European food market
According to the survey results, 70% of European food businesses cite addressing cost and margin pressure as a top priority among the eight key trends. The return of polarization is the second trend, with 1 in 5 consumers in Europe intending to switch grocery stores in the next 3 months, while 1 in 2 continue to look for ways to save money.
The battle for the largest share of food in the stomach will continue, with 2.5 times faster growth expected in food eaten away from home than overall consumption. Sustainability has made progress, but there is still a long way to go, with only 29% of the top 10 retailers meeting their targets.
Online is the liberation from offline, with 37% of online shoppers going to different stores online than offline. Consumers are ‘clicking’ on social networks, with 20 of the top 30 European food chains already having an established social media business in their retail business.
“Conversational commerce” is bringing the next wave of analytics, while promising AI use cases can unlock 10-20% of the value of advanced AI analytics.
Finally, the eighth trend is to make retail a talent and skills occupation once more, following the 29.4% increase in 2024 in job vacancies, up from 2.2% in 2023. In general, the CEOs of of major food chains are less pessimistic regarding market conditions in 2024 than last year and see signs of hope.
More generally, as the EBEP reports, the food market sector, throughout Europe, continues, even following the first quarter of 2024, to be concerned with price inflation, which in 2023 closed at an average of 12.8%, thus reaching the highest level since the end of World War II.
So while adverse market conditions are squeezing consumer wallets and profit margins are being squeezed by rising costs, there are still signs of hope.
THE inflation since the start of the year has stabilised, real wages are recovering and fewer consumers are showing any intention of bucking their habits, with some sectors of the retail trade even moving upwards.
Regarding the expectations for the current year, it is estimated that following a stable first half, the situation will improve in the second half, as high interest rates will be limited and geopolitical tensions will not worsen the overall situation.
According to the protothema, the president of EBEP Vassilis Korkidissaid: “In our country, according to the latest data published by ELSTAT, the general index of sales volume in retail last month showed a drop of 9.8% compared to last year, while it also decreased by 3.8% and the general index of turnover at constant prices.
The largest drop of 20.3% in the sales volume index was recorded in department stores, while food and beverage stores were down 8% and “Super Markets” were down 6%. An important research element for the Greek agri-food sector is that a large part of the products we consume, from meat to fruits and vegetables, are imported from neighboring or third countries. The time has come for Europe to reduce its agro-food dependence and regain its food sufficiency through increased production in its 27 member countries.”
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