Pandemic, labor shortage has grocers investing more in technology

The pandemic and labor shortage is driving grocery retailers to invest more in technology.

Pre-pandemic, grocers spent, on average, 1%–1.5% of their revenue on technology, according to Greg Buzek, president of IHL Group, a retail research firm.

In 2021, he said it increased to 2%, “so we saw this once in a generation bump and that bump is here to stay.”

Self-checkouts, scan and go options, and electronic shelf labels are among the most visible technology investments.

Cybersecurity expert Courtney Radke with Fortinet said he hears the same concern from different retailers.

“I don’t have the people to run my businesses and I certainly don’t have the people to run the technology that I’m trying to put in to better support my workforce so it comes down to how do we gain, retain employees in front of house and then back of house but also make it easier to do things with less people in general,” he said.

IHL Group said retailers reporting sales growth greater than 10% have been spending more on IT for longer than their competitors, allocate more of their existing IT budgets to innovation, and have better digital systems in place.

According to IHL research, grocery and mass merchandise retailers that are more profitable are:

• Growing spend in dedicated inventory location for ecommerce orders fulfilled in store at a growth rate of 411% over the next two years.
• Deploying robotics in inventory operations at a growth rate of 600% in the next two years.