Closing out the year and looking ahead to the first quarter of 2022, grocery manufacturers and retailers are predicting continued dollar sales growth as they navigate rising costs and supply chain challenges, make changes to in-store space allocation and focus on investments in digital commerce, according to “Advantage Sales Outlook October 2021,” based on two new surveys by Advantage Sales, a division of Advantage Solutions.

Among the report’s findings are:

  • Six in 10 manufacturers and seven in 10 retailers expect higher dollar sales in the fourth quarter of 2021 compared to a year ago. Manufacturers and retailers agree price increases will be the top driver of dollar sales growth.
  • Outside of price increases, more manufacturers than retailers say improved supply will drive growth. Retailers point to elevated levels of in-home consumption and increased consumer spending.
  • To mitigate rising costs, nine in 10 manufacturers are planning or have taken at least one price increase since the pandemic started. One half have taken one increase. One-fourth are planning or have taken a second. Nearly one-sixth are planning or have taken three or more. Most price increases have been reflected in the list price.
  • Manufacturers are more optimistic than retailers about supply levels. While one-third of manufacturers expect supply levels to top 90% in the last quarter of 2021, none of the surveyed retailers do.
  • More than half of retailers are expanding their fresh category offering. Four in 10 plan to trim space devoted to tobacco and general merchandise.
  • Manufacturers say retailers that are winning online are leveraging new shopper fulfillment options, are focusing on online shopper experience and services, and have a retail media network. Nearly all retailers surveyed say they have increased their digital investments this year compared to 2019.
  • Seven in 10 manufacturers plan to reduce traditional trade spending in the next six months. Their top reasons include supply constraints, diverting funds to digital investments and cost increases.

“Advantage Sales Outlook October 2021” is based on responses by 79 consumer packaged goods manufacturers and 36 grocery retailers to online surveys conducted September 13 through September 23, 2021 by SMARTeam, Advantage Sales’ consumer packaged goods research and insights team.

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