A presentation from NRF 2022: Retail’s Big Show with Sajal Kohli, Senior Partner and Global Leader of Consumer Goods and Retail Practice, McKinsey & Company

1. Sajal Kohli
Senior Partner and Global Leader of
Consumer Goods and Retail Practice,
McKinsey & Company
North American
Grocery Retailing
in the age of
ecommerce:
Trends for 2022

2. Grocery in
2022 –
Perspective
on the year
ahead

3. This is an unprecedented moment in time to be a grocer
58%
2019-2021 growth in
the grocery online
channel, with some
operators experiencing
triple digit growth
8.7%
increase in food-at-
home expenditures
(2019-2020); ~4x the
historical growth rate
4.5x
Shareholder value
creation since March
2020 vs. previous 22
months
86%
increase in cash on
hand between Q3
2019 and Q3 2021
-16.8%
reduction in food-
away-from-home
(2019-2020); without
rebounding fully in
2021

4. What
themes
are shaping
2022?
Rise of the value conscious consumer (grocery
prices rose 6.5% in 2021), who are looking to eat
healthier
1
Consumers elevated omnichannel expectations
(expecting personalization and seamless engagement)
2
Emergence of the socially conscious consumer
(72% of millennial parents likely loyal to brand/store
that promotes ESG practices)
3
The “Great Retirement” (7% more retirees in Oct ’21
vs. Jan ’20) coupled with automation
4
Unparalleled investment that is expanding
capabilities and driving disruption (VC-backed
global grocery startups raised $10B in first 6 months of
2021 alone)
5

5. 1| Most
consumers are
waiting for their
finances and
routines to come
back
to normal
~56%
of consumers believe the economy will be impacted
for at least 6 to 12 months
~49%
of consumers are still waiting for their personal/
household finances to return to normal
of consumers are still waiting for their routines to
return to normal
~61%

6. 1| Consumers
will be value
conscious in
2022, while
trying to keep
healthier eating
habits
39%
plan on focusing more on eating healthy
and nutrition
36%
plan to increase spending in naturally
healthy products
45%
of consumers will look for ways to save
money when grocery shopping
29%
will be actively looking for promotions

7. 2| Consumers want a consistent omnichannel
experience, however they decide to engage
Omnichannel offer is now table-
stakes with customers….
…and focus now shifts to omnichannel
excellence
Customers expect a seamless value proposition
across online and in-store – in a way that fits
their various shopping missions
Bar is rising on user experience of the app –
quick selection and access are most important
factors driving user experience
Loyalty and personalization are becoming key
boosters for basket size and purchase frequency
Ways and reasons to engage in omnichannel
are evolving
Most grocers now have an online offer
to complement their in-store offer
Grocers are growing their share of
wallet by 10-20%+ with omnichannel
shoppers as consumers blend online
and in-store

8. 3| Emergence of socially conscious consumers is driving
Fortune 500 companies to act
76%
of consumers buy or
boycott brands based
on values
$30 trillion
sustainably invested
globally, up 10x since 2004
>50%
of global GDP is
generated in countries
with Net Zero carbon
mandates
44%
of Fortune 500 companies
integrating ESG into core
business strategy
Companies are engaging with the public
on ESG at scale
Global retailers with public Science-Based Targets
Total number of retailers
1
4
18
41
2017 18 19 2020

9. 4| The “Great Retirement” plus accelerating automation
are changing the landscape of the retail workforce
Participation rate in the workforce is
consistently below pre-COVID-19 levels….
62
64
60
63
61
17 18
16 20
2015 19 2021
-1.6 pp
US civilian labor force participation rate, 16+
Percent, through August 2021
~35%
of automation potential is expected to be adopted
by 2030 in post-COVID-19 scenario, displacing ~6M
FTE
~61%
of total working hours in Retail involve tasks that
are >60% automatable
~54%
current work activities can be automated across the
Retail sector
…and we are seeing investment in
automation accelerating

10. 10
JPMorgan Chase has embarked
upon a 5-year, $350 million
initiative, “New Skills at Work.”
Walmart has invested $5B in up-skilling
initiatives over four years. “Live Better U” enables
any employee to earn college credits online
Google partnered with Coursera to create
an IT support professional certificate
under their specifications
Amazon is committing $1.2B through
2025 to provide free college education
to employees
4| Leading organizations have already made big, bold
bets on reskilling in response to changing workforce
requirements

11. 5| Unparalleled investment is expanding capabilities and
driving disruption in the Food ecosystem
Grocers are
developing
partnerships to
respond to the
“new normal”…
…while the broader
ecosystems
continues to shift
Drive efficiencies in reach/
last mile and costs
Last mile Cost / sourcing
Modernize tech stack and
drive automation
Offer new, innovative value
propositions E-grocery: partnerships
to offer Instant / 15 min
delivery
Meal innovation: Fresh
meals prepared at ghost
kitchens
Format innovation: To-
go formats integrated
with gas pumps
Multiple at scale marketplaces
competing with grocers
3P providers offering 1P
Emergence of instant
commerce
+ + +
+ + +
+ + +

12. Questions
for grocery
leaders?
Omnichannel is table-stakes. How do you continue to
build your digital and advanced analytics capabilities
toward omnichannel excellence?
2
ESG is gaining importance and consumers are voting
with their feet. Where are you with your
commitments?
3
Talent is under pressure – do you have a model in
place to attract and replace those leaving the
industry?
4
Forward-thinking partnerships are proliferating. Are
you creatively looking to push capabilities in the face
of new competition/disruptors?
5
1 Consumer habits are changing and here to stay. How
do you pivot to cater to these evolving needs?

13. Thank You!