Revealed: The UK’s top grocery innovators and what’s key to their success

Pressures are finally easing for the grocers, who have spent a gruelling few years firefighting spiralling inflation, the cost-of-living crisis, the much-maligned business rates system and supply chain disruption.  

But consumer confidence remains in flux. After years of financial strain, it reached its highest rate since 2021 in June, with more than a third (36%) of UK shoppers ‘comfortable’, according to a Kantar survey. However, confidence took a drastic fall in September, reflecting consumer nervousness about the withdrawal of winter fuel payments and a clear warning about further difficult decisions.

And after 14 years of Conservative rule, a Labour government at No 10 leaves many retailers optimistic for change to come, notably through manifesto points vowing to tackle retail crime, reform the apprenticeship levy and replace the business rates system.  

So, with bluer skies on the horizon, where should UK grocery be investing to remain at the forefront of supermarket success? 

1. Boosting in-store experiences 

The buzzword for bricks and mortar is experience. 

It’s not rocket science that good customer experience encourages repeat purchases and increased basket spend.

But while the majority of grocers are rolling out ambitious store upgrade programmes or seeking to expand their bricks-and-mortar footprints through new openings, the implementation of tech to streamline processes and improve efficiencies is where we are seeing the most innovation.  

From harnessing technological advancements to support productivity and speed up fulfilment to hyper-personalising loyalty schemes, the rollout of tech investment seeks to improve employee and customer experiences alike.  

And there are examples shown by all of the major grocery players:  

• In May, Sainsbury’s unveiled a five-year partnership with Microsoft, which will see its frontline staff using AI to help with shelf replenishment, saving time and ensuring sales opportunities are not missed.  
• The Co-op introduced AI technology to monitor its self-checkouts after incidents of retail crime in stores reportedly soared by 44% in 2023. The convenience specialist launched 200 secure tills kiosks, locked cabinets for bottles of spirits and the AI tech across its stores by February 2024.  
• M&S staff have used hand-held devices since September 2023 to create a more “connected-store environment, giving store colleagues prioritised tasks to quickly bring shelves into full planogram compliance”. The tools work by combining data from cameras affixed to shelves with information about which products sell best in which positions, as well as warehouse stock data.  

2. Advancing beyond the aisles with retail media 

One huge opportunity the grocers have tapped into, providing an advantageous alternative revenue stream, is retail media.  

In 2023, retail media spend was up by 12% according to IAB and PwC, and it’s expected to make up one-fifth of digital ad spend in 2024.  

The Co-op is spearheading the trend, having launched its own retail media network in January, becoming the first convenience brand in the UK to do so.

The network aims to help brands “reach new and wider audiences” while “improving advertising relevancy” for its shoppers – wins all round if it pays off.  

Early results are positive; research by the Co-op and Circana published in June revealed that convenience retail media is providing sales across the business and surrounding grocery stores with up to a “fourfold” increase.  

Elsewhere, Tesco agreed a landmark partnership with GroupM – the world’s biggest media-buying business – in June as it expands its retail media empire.

The collaboration aims to deliver best-in-class data-led solutions, education and innovation across all facets of retail media. 

Innovations continue when it comes to ad formats at Tesco, too, for example with the addition of ad placements on its Scan As You Shop handsets. 

Handsets have been in use by Tesco consumers since 2012, allowing customers to scan items as they add them to their baskets and pay at dedicated self-service checkouts at the end.  

As of 2023, digital media functionality has been added in the form of both full-screen splash ads and regularly refreshed banner ads.

The rollout allows brand advertisers to deliver targeted messages to customers as they navigate the physical store, whereas such targeting had previously only been available online.  

3. Diversifying and delighting 

Grocers are long past selling just fruit and veg. From investments in fashion and homewares to banking and electricals, traditional food and beverage retailers are diversifying their offerings, differentiating themselves from their rivals and delighting their customers.  

One of the biggest growth areas is fashion. Own-brand labels are nothing new for supermarket chains, from George at Asda to Morrisons’ Nutmeg, but grocers are also increasingly harnessing the power of partnerships to expand their reach and give own-brand ranges a boost.  

Sainsbury’s, for example, launched an online fashion marketplace in May last year, expanding its partnerships with brands including Sosandar, Little Mistress and Finery.  

Meanwhile, in June, fast-fashion retailer In The Style announced an in-store collaboration with Tesco’s own-brand F&F range. The collaboration will be available across more than 300 Tesco stores, with prices ranging from £12.50 to £39.50.  

F&F head of design Ben Lee said the collaboration was focused on elevating fabric and quality to ensure the longevity of clothing.  

“Separates have been a key trend for versatility and multiple ways to wear, so this collection is focused on that with some great styles than can be mixed and matched with others in this edit or anything else in our F&F range,” he explained.