Over the last several years, a growing number of retail companies have been applying digital tools in creative ways that allow them to unlock exponential growth.

As they grow faster than historically, they are also creating challenges that many are not prepared to address or overcome, resulting in bigger performance gaps than seen in the past.

Brick Meets Click focuses on 10 trends that will be important to grocery retailers and brands in 2022.

1. Digitalization emerges as a more important source of competitive advantage

Why now? Machine learning makes it easier to analyze data, and the cloud makes communicating it faster and more efficient than ever before.

What it means: Companies that have digitized their business can be more agile and keep up with the changing needs of customers – and the competition.

2. More companies discover their growth is driven by hyper localization.

Why now? Companies are looking for white space to grow, and digital tools make it easier to identify small, under-served pockets of demand.

What it means: It’s time to take a closer look at what your customers are looking for but not finding, and to evaluate whether that under-served demand is a profitable growth opportunity.

3. Inflation causes changes in pricing strategy and other business practices.

Why now? Inflation is happening at a higher rate than in past decades and creating situations where innovation can deliver meaningful savings.

What it means: Inflation creates more opportunities for agile companies to win a competitive advantage at the expense of less agile companies.

4. Price becomes a more challenging part of the retailer’s value equation.

Why now? It’s getting more difficult to impact a retailer’s reputation for value by comparing prices without giving customers other reasons to believe that they’re lower than the competition.

What it means: Customers need help understanding why a retailer’s prices are lower because they don’t buy enough of the same items to create their own “known value item” list.

5. CPGs increase the number of brands and products they sell exclusively to one retailer.

Why now? CPGs need to get more merchandising attention for product launches and leverage the influence of social media within the retailer’s ecosystem.

What it means: The larger retail chains will have a temporary competitive advantage from being the only place customers can buy these exclusive products. Other retailers need to look for similar opportunities to offset that advantage.

6. Grocery delivery becomes more affordable.

Why now? There’s been an increase in the number of lower-cost, autonomous vehicle options suited to this application that are being tested and/or rolled out in various markets.

What it means: Offering grocery delivery to customers in a store’s trading area becomes more practical for any retailer who wants to use this to generate incremental sales.

7.  Grocery pickup options expand with new models.

Why now? The growing popularity of pickup is prompting innovation from companies around the world.

What it means: Automated systems will handle more staging and transfer of completed online orders, and in some instances, be done remotely from the store.

8. Inventory optimization becomes "mission-critical."

Why now? Inflation is making it more profitable to increase inventory turnover.

What it means: Increased pressure for longer payment terms and a greater focus on innovative ways to increase inventory turns.

9. The growth of hard discounters disrupts more market areas.

Why now? Aldi is on track to reach its growth target of 2,500 stores by the end of 2022, while both Lidl and Save-a-Lot have installed stronger management teams and are implementing new growth strategies.

What it means: As hard discounters establish stronger positions in a growing number of markets, value-oriented shoppers will have even more choices about where to buy low-priced groceries.

10. Amazon Fresh pushes further into "attribute-driven" assortments as a way to reinvent the grocery shopping experience.

Why now? After operating Fresh stores for 15 months, Amazon has discovered the power of building store-specific assortments based on product attributes.

What it means: Amazon is looking beyond brands to understand what product attributes its customers – in each store – want to buy, so they can meet customer needs with fewer items by building assortments based on the attributes that each SKU offers.