The pandemic has officially passed, the worldwide logistics problems that followed are under better control, and the US economy continues to add jobs at record paces.

But labor problems are still front and center for many industries, and retail grocery remains one of the hardest hit. 

There are still significant labor challenges facing retailers and their supplier partners today, said Brian Numainville, principal of Lake Success, N.Y.-based The Feedback Group.

Finding and retaining staff, for instance, is a major issue. Many workers either left the workforce during the pandemic or shifted to other opportunities with better compensation. That, Numainville said, has made it difficult for grocery stores to find enough staff.

A related challenge is rising wages. As the labor market tightens – it’s currently near a 50-year low - workers are demanding higher wages. This is putting pressure on grocery retailers’ margins.

Retailers are responding with not only higher wages but efforts to improve working conditions and investments in automation technology for increased efficiency.

Other challenges retailers and their supplier partners are facing include supply chain disruptions, rising food prices and inflation, all of which impact profitability.

As in many other industries, technology will play a key role in helping the grocery industry cope with labor-related issues going forward, Numainville said.

But investments in technology have to be combined with an equally strong investment in employees.

“Automation technology, robotics, AI and increased use of data analytics are some tools that can help retailers cope with fewer workers and help increase efficiency. Paying close attention to employees and their feedback will also be important as retaining staff becomes even more important than ever before.”

The Feedback Group is tracking an exponentially increased demand for employee surveys to help retailers understand staff perceptions of working for their organizations.

“We expect this to continue into the foreseeable future,” Numainville said.

Labor solutions = new product development

Food companies plan to invest a lot more in new product development this year, and they’re citing labor-saving tools and techniques as one of the big reasons why.

That’s among the findings in a new report from Westminster, Colo.-based TraceGains, 2023 Food and Beverage CPG Innovation, a survey of nearly 300 food and beverage professionals that explores the state of new product development and the shift to outsourcing as a way to contain costs and keep up with evolving consumer preferences.

According to the report, nearly all (86%) professionals responsible for food production and supply chain management feel overworked. Plagued by staffing shortages and operational inefficiencies, more brands are accelerating their use of contract manufacturers (co-mans). They’re also investing more in new product development (NPD), embracing digital tools to automate manual processes, and expanding their global footprint to diversify their supplier bases.

“At TraceGains, we’re always taking the industry’s pulse for new insight and our latest survey shows that in 2023 brands are taking proactive measures to remain competitive – whether that’s on the production side or R&D with new recipes,” said Gary Iles, the company’s senior vice president of marketing and business development. “Rather than allow market conditions to overrun their business, more brands are taking matters into their own hands. The future looks bright for brands that remain focused on putting consumers first by bringing new products to market faster and more cost-effectively.”

While private and national CPG brands rolled out fewer products in 2020 and 2021, companies are jumpstarting R&D efforts after years of supply chain disruptions. As many brands seek to regain a market advantage and meet evolving consumer preferences post-pandemic, TraceGains data confirm the expected rise in NPD.

Nearly two-thirds (64%) of respondents plan on investing more in NPD over the next 12 months. More than two-thirds (67%) plan to modify multiple recipes (six or more).

One-third (33%) anticipate the need to modify anywhere from six to 20 recipes, representing a 6% jump from the TraceGains June 2022 survey.