The Future of Food Retailing in the U.S.: Shopper Insights and Market Opportunities, 4th Edition
The retail market for foods and beverages is undergoing some of its greatest changes since supermarkets came to the fore in the 1940s and ’50s. Economic, demographic, lifestyle and technological changes have created not only a fertile environment but the absolute necessity for new concepts to engage shoppers, capture share of stomach, and re-invent food and beverage retailing.
While the greatest competition to supermarkets and grocery stores comes from supersized “one-stop shopping” venues like supercenters and warehouse clubs, the threat has spread out across myriad retail channels, including drugstores, dollar stores, limited assortment chains, and (the elephant in the room) online grocery shopping. Although supermarkets remain the majority force in food shopping, they are no longer calling the shots—a role now shared with Whole Foods and Trader Joe’s on the natural/specialty side, Walmart, club stores, and dollar stores on the value front, and farmers markets and food trucks in trend-setting.
At the same time, 2012 and 2013 have been big years for mergers and acquisitions in the retail food industry, as strategic buyers and private investors seek a way to expand their businesses to additional markets. And while the economy has shown positive signs of recovery in the past year, many consumers remain buffeted if not traumatized by higher gas prices, rising food prices, mounting healthcare costs, and increased payroll taxes. As a result, most are still feeling economically squeezed and spending-shy.
This study provides in-depth analysis of trends in four key retail channels through which foods and beverages are sold:
The data analyzed in Food Shopper Insights are largely derived from Packaged Facts February/March 2013 Food Shopper Insights (FSI) Survey, supplemented by data from our Food Shopper Insights (FSI) Survey conducted in June 2013. Each survey had a sample size of 2,000 U.S. adults who had shopped for groceries within 24 hours of being surveyed. The sample composition is representative of the national population by gender, age bracket, geographic region, race/ethnicity, household income bracket, and presence of children in the household.
While the greatest competition to supermarkets and grocery stores comes from supersized “one-stop shopping” venues like supercenters and warehouse clubs, the threat has spread out across myriad retail channels, including drugstores, dollar stores, limited assortment chains, and (the elephant in the room) online grocery shopping. Although supermarkets remain the majority force in food shopping, they are no longer calling the shots—a role now shared with Whole Foods and Trader Joe’s on the natural/specialty side, Walmart, club stores, and dollar stores on the value front, and farmers markets and food trucks in trend-setting.
At the same time, 2012 and 2013 have been big years for mergers and acquisitions in the retail food industry, as strategic buyers and private investors seek a way to expand their businesses to additional markets. And while the economy has shown positive signs of recovery in the past year, many consumers remain buffeted if not traumatized by higher gas prices, rising food prices, mounting healthcare costs, and increased payroll taxes. As a result, most are still feeling economically squeezed and spending-shy.
This study provides in-depth analysis of trends in four key retail channels through which foods and beverages are sold:
- Grocery—supermarkets, natural food stores, small grocery stores, ethnic markets, specialized food stores, and gourmet/specialty stores;
- Value—supercenters, mass merchandisers, warehouse clubs, dollar stores, and limited assortment stores such as ALDI;
- Convenience—convenience stores and drugstores; and
- Alternative—online grocery services, vending machines, farmers’ markets and community supported agriculture programs (CSAs), and other alternative venues.
The data analyzed in Food Shopper Insights are largely derived from Packaged Facts February/March 2013 Food Shopper Insights (FSI) Survey, supplemented by data from our Food Shopper Insights (FSI) Survey conducted in June 2013. Each survey had a sample size of 2,000 U.S. adults who had shopped for groceries within 24 hours of being surveyed. The sample composition is representative of the national population by gender, age bracket, geographic region, race/ethnicity, household income bracket, and presence of children in the household.
CHAPTER 1: EXECUTIVE SUMMARY
Scope of Report
Report Methodology
Food Shopper Insights
Supercenters, Warehouse Clubs, Dollar Stores Strong Competition for Grocery Trips
Table 1-1: Type of Store(s) Shopped on Most Recent Grocery Shopping Trip, 2013 (percent of grocery shoppers)
Majority Like Their Store, But Only 56% Like Grocery Shopping
85% Perform Some Type of Preparation for Shopping
Saving Money an Important Consideration
Wellness a Concern for Many Grocery Shoppers
Shoppers Seek Specific Nutritional Benefits
Fresh Fruits and Vegetables the Most Important Shopping Draw
Two Out of Three Purchase Store Brands
Store-Prepared Food Items Attract Many Grocery Shoppers
Table 1-2: Type of Products Purchased on Most Recent Grocery Shopping Trip, 2013 (percent of grocery shoppers)
Kids Influence Parents’ Grocery Choices
Figure 1-1: Percent of Parents Agreeing “My Kids Play an Important Role in the Groceries I Choose,” 2013
Retail Trends
Total Retail Food and Beverage Sales Almost $640 Billion in 2013
Table 1-3: U.S. Retail Sales of Foods and Beverages, 2013-2018 (in millions of dollars)
C-Stores Outnumber Supermarkets Almost Five to One
Supermarkets Lead Food and Beverage Market with 53% Share
Figure 1-2: Share of Food and Beverage Dollar Sales by Retail Channel, 2012 (percent)
An Industry in Flux
Consumers Still Spending-Shy
Grocery Sales Trend Higher
The Top 20 U.S. Food Retailers
Table 1-4: Top 20 U.S. Retailers of Foods and Beverages, as of June 2013 (in billions of dollars)
More Types of Stores Focusing on Foods
More Actual Stores
Multi-Channel Shopping
Small Is Big
Private Label Foods & Beverages Top $104 Billion in 2012
Consumers Widely Accepting of Private Label
The Debate Over Loyalty Cards
Technology Changing How Consumers Shop for Groceries
Emphasis on Fresh Foods Continues to Grow
Prepared Foods Drive Store Traffic and Profits
Retailers Becoming Arbiters of Wellness and Nutrition Management
CHAPTER 2 HIGHLIGHTS
CHAPTER 3: FOOD SHOPPER INSIGHTS
Methodology
Shopping Trips: The Basics
Supercenters, Warehouse Clubs, Dollar Stores Strong Competition for Grocery Trips
Table 2-1: Type of Store(s) Shopped on Most Recent Grocery Shopping Trip, 2013 (percent of grocery shoppers)
Six in Ten Spend Less than $100 on Groceries Weekly
Figure 2-1: Average Amount Spent Weekly on Groceries, 2013 (percent of grocery shoppers)
Majority Like Their Store, But Only 56% Like Grocery Shopping
Table 2-2: Attitudes of Grocery Shoppers Toward Grocery Shopping, 2013
Environmental Concerns Affect What Happens in the Aisles of Grocery Stores
Figure 2-2: Percent of Grocery Shoppers Agreeing “‘Green’ Packaging is Important to Me in Choosing Which Groceries I Buy,” 2013
Figure 2-3: Percent of Grocery Shoppers Using Reusable Shopping Bags During Most Recent Grocery Shopping Trip, 2013
Planning Ahead
85% Perform Some Type of Preparation for Shopping
Figure 2-4: Percent of Grocery Shoppers Doing Any Kind of Planning Before Most Recent Grocery Shopping Trip, 2013
Figure 2-5: Percent of Grocery Shoppers Agreeing “I Often Stop by the Grocery Store on the Spur of the Moment,” 2013
Shopping List Is Most Common Preparation Before Shopping Trip
Table 2-3: Type of Planning by Grocery Shoppers Before Most Recent Grocery Shopping Trip, 2013 (percent of grocery shoppers)
Saving Money Remains an Important Consideration
Table 2-4: Retailer Programs Used During Most Recent Grocery Shopping Trip, 2013 (percent of grocery shoppers)
Figure 2-6: Percent of Grocery Shoppers Agreeing “I Buy a Lot of
Groceries That Are On Sale or Promotion,” 2013
Wellness and Nutrition
Wellness a Concern for Many Grocery Shoppers
Table 2-5: Attitudes of Grocery Shoppers Towards Food and Health,2013 (percent of grocery shoppers)
Certain Foods Have a High Wellness Profile
Table 2-6: Attitudes of Grocery Shoppers Towards Healthy Foods,2013 (percent of grocery shoppers)
Whole Grain, Multi-Grain the Most Appealing Characteristics
Table 2-7: Characteristics Sought When Buying Food Products, 2013(percent of grocery shoppers)
Wellness Concerns Help Drive Purchase Decisions for One in Two
Grocery Shoppers
Figure 2-7: Percent of Grocery Shoppers Agreeing “The Groceries I Choose Are Determined in Part by Specific Wellness Goals and Concerns,” 2013
Marketers and Retailers Need to Do More
Table 2-8: Attitudes of Grocery Shoppers Toward Responsibility for Eating Healthfully, 2013 (percent of grocery shoppers)
Nutritional Content of Foods Important
Table 2-9: Attitudes of Grocery Shoppers Toward Nutrition, 2013(percent of grocery shoppers)
Shoppers Seek Specific Nutritional Benefits
Figure 2-8: Frequency of Buying Foods and Beverages for Specific Nutritional Ingredients, 2013
Figure 2-9: Frequency of Buying Foods and Beverages for Specific Health Concerns, 2013
“Low/No/Free” Characteristics Sought When Buying Food Products
Table 2-10: “Low/No/Free” Characteristics Sought When Buying Food Products, 2013 (percent of grocery shoppers)
“High” Characteristics Sought When Buying Food Products
Table 2-11: “High” Characteristics Sought When Buying Food Products, 2013 (percent of grocery shoppers)
Highly Processed Foods an Issue for More than Half of Shoppers
Table 2-12: Attitudes of Grocery Shoppers Toward Highly Processed Foods, 2013 (percent of grocery shoppers)
Health-Enhancing Food and Beverage Products Favored
Table 2-13: Attitudes of Grocery Shoppers Toward Foods Designed to Promote Health and Nutrition, 2013
Food Restrictions Matter to a Substantial Minority
Figure 2-8: Percent of Grocery Shoppers Agreeing, 'Food Restrictions,Food Avoidances, or Food Allergies Play and Important Role in
What My Household Eats,' 2013
Many Shoppers Worried About Food Safety
Table 2-14: Attitudes of Grocery Shoppers Toward Food Safety, 2013
Many Shoppers Skeptical of Label Claims
Table 2-15: Attitudes of Grocery Shoppers Toward Trustworthiness, 2013 (percent of grocery shoppers)
Shoppers Also Avoiding Growth Hormones and GMOs
Table 2-16: Attitudes of Grocery Shoppers Toward Growth Hormones and GMOs, 2013
Which Foods Shoppers Want
Fresh Fruits and Vegetables the Most Important Shopping Draw
Table 2-17: Most Important Products in Choosing a Grocery Store, 2013 (percent of grocery shoppers)
Two Out of Three Purchase Store Brands
Table 2-18: Attitudes of Grocery Shoppers Toward Brands and Store Brands, 2013
Figure 2-9: Percent of Grocery Shoppers Who Bought Store Brand Groceries During Their Most Recent Grocery Shopping Trip, 2013
Store-Prepared Food Items Attract Many Grocery Shoppers
Table 2-19: Type of Products Purchased on Most Recent Grocery Shopping Trip, 2013 (percent of grocery shoppers)
Table 2-20: Attitudes of Grocery Shoppers Toward Ready-to-Eat Meal Items, 2013
Almost Two out of Three Like Trying New Foods
Table 2-21: Attitudes of Grocery Shoppers Toward New, Spicy, and Ethnic Foods, 2013
Figure 2-10: Percent of Grocery Shoppers Who Bought
International/Foreign Groceries During Their Most Recent Grocery Shopping Trip, 2013
Kids Influence Parents’ Grocery Choices
Figure 2-11: Percent of Parents Agreeing “My Kids Play an Important
Role in the Groceries I Choose,” 2013
CHAPTER 3 HIGHLIGHTS
CHAPTER 3: RETAIL OVERVIEW
Introduction
A Broad Selection of Retail Channels
Total Retail Food and Beverage Sales Almost $640 Billion in 2013
Table 3-1: U.S. Retail Sales of Foods and Beverages, 2009-2013 (inmillions of dollars)
Estimates from Other Sources
Figure 3-1: Sales of Food-at-Home and Food-Away-from-Home,1960-2012 (in billions of dollars)
Market Composition
C-Stores Outnumber Supermarkets Almost Five to One
Supermarkets Lead Food and Beverage Market with 53% Share
Figure 3-2: Share of Food and Beverage Dollar Sales by Retail Channel, 2012 (percent)
Government Data Underestimate Sales Through Supercenters, Warehouse Clubs, and Convenience Stores
Figure 3-3: Food-At-Home Sales by Type of Outlet, 2000-2011
Table 3-2: Food-at-Home Sales by Type of Outlet, 1993-2011
Market Outlook
An Industry in Flux
Consumers Still Spending-Shy
10% of Pre-tax Income Goes for Food
Table 3-3: Average Annual Expenditures and Income of All Consumers Units and Percent Changes, 2008-2011
Grocery Sales Trend Higher
Food Prices Projected to Rise 2.5% to 3.5% in 2013
Market Projections
Retail Food and Beverage Sales Will Near $800 Billion by 2018
Table 3-4: U.S. Retail Sales of Foods and Beverages, 2013-2018 (inmillions of dollars)
The Competitive Landscape
The Top 20 U.S. Food Retailers
Table 3-5: Top 20 U.S. Retailers of Foods and Beverages, as of June 2013 (in billions of dollars)
Recent Mergers, Acquisitions, and Divestments
Competition for Retail Sales
More Types of Stores Focusing on Foods
More Actual Stores
Figure 3-4: Net Change in U.S. Store Count for Selected Retail Chains, 2012
Multi-Channel Shopping
Table 3-6: Consumer Packaged Goods Household Penetration by Retail Channel, 2012 (percent)
Store Design
Small Is Big—and More Convenient
Retailers Retrofitting Spaces
Private Label
Total Private Label Foods & Beverages Top $104 Billion in 2012
Table 3-7: U.S. Retail Sales of Private Label Foods and Beverages,2008-2016 (in millions of dollars)
Private Label Penetration Varies by Category and Retailer
Consumers Widely Accepting of Private Label
Loyalty Programs
The Debate Over Loyalty Cards
Gas Rewards
Illustration 3-1: Safeway’s Gas Rewards Points Program
Going Digital
Technology Changing How Consumers Shop for Groceries
Handheld Scanners in Retail Stores
Will Digital Coupons Replace Paper?
Online Grocery Shopping and Home Delivery
Fresh Foods
Emphasis on Fresh Foods Continues to Grow
Refocusing on the Center Store
Natural and Organic Foods Remain a Fast-Growing Area of
Opportunity
Locally Grown Produce
In-Store Foodservice
Prepared Foods Drive Traffic and Profits
Prepared Foods Grow in Popularity and Sophistication
Illustration 3-2: Prepared Foods at King Food Markets’ MarketSquare
Health and Wellness
Retailers Becoming Arbiters of Wellness and Nutrition
Management
In-Store Dietitians a Growing Competitive Weapon for
Supermarkets
Illustration 3-3: Hy-Vee, an In-Store Dietitians Pioneer
Retailers’ Nutrition Ratings
CHAPTER 4 HIGHLIGHTS
CHAPTER 4: GROCERY CHANNEL TRENDS
Grocery Channel Leads Food Sales
Figure 4-1: Growth of Sales at Supermarkets and Grocery Stores, 2000-2011 (percent)
Kroger, Safeway the Largest Supermarket Operators
Table 4-1: Top 10 U.S. Supermarket Chains, 2012 (in billions of dollars, percent, and number)
The Kroger Co.
Illustration 4-1: A Kroger Marketplace Store
Kroger’s Data Advantage
Private Label Another Competitive Strength
Kroger Acquiring Harris Teeter
Using Technology to Improve Customer Service
Safeway Tweaks Store Formats
Lifestyle Format Stung by Recession
Illustration 4-2: Gondolas Add Interest to Safeway’s Lifestyle Stores
Safeway Going Forward
Strong Private Brands Focus
Loyalty Marketing
Online Grocery Delivery Service Not a Growth Vehicle
Supervalu Sells Off Supermarkets; Expands Save-A-Lot Discount Chain
The New, Trimmer Supervalu
Publix a Public Favorite
A Publix Fight with Walmart
Illustration 4-3: A Publix Ad Fights Back at Walmart
Ahold and Delhaize: Two Foreign-Owned Groups
Ahold USA Is Reshaping Retail
Illustration 4-4: Ahold’s Stop & Shop Offers ScanIt!, a Mobile App for
Smartphones
Delhaize America Trims its Portfolio
Bloom, a Concept Ahead of its Time
Illustration 4-5: Shopping Cart Featuring a Map of Bloom’s Innovative
Store Layout
The Natural Foods Channel
Whole Foods Market Continues to Surge
Illustration 4-6: The Crowd at Whole Foods Market’s Detroit Store Opening
Ethical Focus Continues
Will Whole Foods Open a Health Resort?
Natural Foods Competitors Coming Up Fast
Sprouts Farmers Market LLC Plans IPO
Natural Grocers by Vitamin Cottage Also Planning Major Expansion
Fresh Thyme Farmers Market Just Starting Up
The Fresh Market Expanding Westward
Will Wild Oats Return?
The Ethnic Foods Channel
Ethnic Grocery Chains Proliferate
Illustration 4-7: Ethnic Chain Food Bazaar Slogan
The Specialty Food Store Channel
Specialty Food Stores
Trader Joe’s
Illustration 4-8: Whimsical Banner on Trader Joe’s Website
CHAPTER 5 HIGHLIGHTS
CHAPTER 5: VALUE CHANNEL TRENDS
Supercenters, Mass Merchandisers, Warehouse Clubs, and Dollar Stores
Supercenters and Mass Merchandisers
Walmart—The Nation’s Largest Food Retailer
Rebounding from the Recession
Walmart Steps Up Small Formats
Illustration 5-1: Walmart Neighborhood Market Store in Chicago
Walmart Struggles to Keep Shelves Stocked; Upgrades Fresh
Produce
Walmart TV Ads Target Local Grocery Competitors
Walmart Testing Mobile Checkout
…and Home Delivery of Groceries
Target Is Targeting Foods
Target Continues Remodeling Stores to Add Fresh Foods
Target Also Testing Smaller-Format Stores
Target Fashion Ads Spotlight Groceries
Illustration 5-2: Target’s “Everyday Collection: Bake Sale” TV Commercial
Target Testing Social Media to Drive Sales
Warehouse Clubs
Warehouse Clubs Serve Consumers and Businesses
Costco Wholesale Corp.
Illustration 5-3: Costco’s In-House Monthly Magazine, The Costco Connection
Sam’s Club Seeks to Catch Up with Costco in Foods
BJ’s Wholesale Club
Dollar Stores
Dollar Stores Growing Rapidly, Adding More Food
Dollar General: More Locations than Any Other Retailer
Illustration 5-4: Television Commercial Showing Dollar General Market Stores
Family Dollar Carries Mostly Brand Names
Dollar Tree Inc.: $1 All the Time
Limited Assortment Chains
Limited Assortment Grocery Stores Offer Fewer Choices, Bigger Savings
ALDI
Illustration 5-5: Billboard Advertising ALDI Limited Assortment Stores
CHAPTER 6 HIGHLIGHTS
CHAPTER 6: CONVENIENCE CHANNEL TRENDS
Convenience Stores and Drugstores Ramping Up Foods
Convenience Stores
C-Stores Thriving
Foods and Beverages More Than 45% of C-Store In-Store Revenues
C-Stores a Growing Competitor for Foodservice Dollars
7-Eleven Expanding Rapidly
Illustration 6-1: 7-Eleven’s Corporate Webpage
Fresh & Easy: The British Are Leaving
The Fresh & Easy Model
Tesco Also Imported its Own Infrastructure
The Post-Mortem
Illustration 6-2: Fresh & Easy is Telling Customers It’s Still Open
Sheetz and Wawa Enjoy Regional Loyalty
Sheetz, Inc.
Illustration 6-3: TV Commercial Featuring Sheetz’ Touchscreen Menu
Wawa, Inc.
Illustration 6-4: A Wawa Convenience Store
Several Supermarket Chains Also Have C-Stores
Kroger Is One of the Largest C-Store Operators
Giant Eagle Uses Supermarkets and C-Stores to Create Synergies
Drugstores
Food Helps Drugstores Fight Back as Retail Lines Blur
Changes Rooted in Healthcare
Adding Food Is Not Without Risk
Walgreens “Well Experience” Model
Walgreens Creates “Food Oases”
Walgreens “Flagship” Stores Feature Upscale Prepared Foods
Illustration 6-5: Walgreens Flagship Store in Hollywood
Duane Reade Sets Foodservice Examples
CVS Caremark Clustering Stores into Eight Types
Rite Aid’s “Wellness” Stores Integrate Pharmacy and Front-End
CHAPTER 7 HIGHLIGHTS
CHAPTER 7: ALTERNATIVE CHANNEL TRENDS
Online Shopping
Online Grocery Services
Online Grocery Business Models
Who Grocery-Shops Online
The Major Online Players: AmazonFresh, FreshDirect, and Peapod
AmazonFresh Expands to Los Angeles
Illustration 7-1: AmazonFresh Has Expanded its Grocery Delivery to Los Angeles
Profitable? Or a Strategic Foot in the Door?
FreshDirect Focuses on Premium Fresh Foods
Illustration 7-2: FreshDirect’s Website Focuses on Premium Fresh Foods
Peapod Uses Supermarkets to Fulfill Orders
Illustration 7-3: A Peapod Mobile Ad in Philadelphia
Other Online Grocery Services
Alice.com: Direct-to-Consumer from CPG Marketers
Illustration 7-4: The Pantry Section on Alice.com
CobornDelivers: Partnering with General Mills for Frozen Meals
Illustration 7-5: The Website for Betty Crocker Kitchens
FarmStores.com
Google Pilots Google Shopping Express in San Francisco
Instacart Making Waves in San Francisco Bay Area
Illustration 7-6: Instacart Lets Shoppers Choose From Brick-and-Mortar Stores
mySupermarket Lets Consumers Comparison-Shop Groceries
Illustration 7-7: Pantry Categories Available on mySupermarket.com
MyWebGrocer.com: Marketing Services for Brick-and-Mortar Grocers
Relay Foods: Consumers Pick-Up from Delivery Trucks
Illustration 7-8: Relay Foods’ Online Service Delivery Trucks
Safeway, Inc.: Online Shopping and Delivery from Some Local Stores
Walmart To Go Grocery Delivery Service in Beta Tests
Illustration 7-9: Walmart To Go Coupon
U.K. Is Most Developed Market for Online Grocery Shopping
France: Retailers Offer Drive-Through Pick-Up Points
Illustration 7-10: A Chronodrive Location in France
Japan: Seven & I and 7-Eleven Offer Online Grocery Services
South Korea: Tesco’s Home Plus Launches Virtual Supermarkets
Illustration 7-11: Demonstration of Tesco’s HomePlus Mobile Shopping App
China: Yihaodian Pioneers “Augmented Reality” Stores
Illustration 7-12: Browsing Items in Yihaodian’s Virtual Supermarket
Vending Machines
Vending Machines Offer Convenience 24/7
Micro Markets
Illustration 7-13: A Canteen Vending Micro Market
Healthier Products Coming to Vending Machines
Vending Machines that Sell Fresh Fruit and Vegetables
Customizable Combos
Illustration 7-14: Coca-Cola’s Freestyle Vending Machine
Farmers Markets and Community Supported Agriculture
Farmers’ Market Count Grows 68% since 2008, to Over 7,800
Figure 7-1: Growth in Number of Farmers’ Markets, 1994-2012
Two Types of Farmers’ Markets
Illustration 7-15: Preston Maring, MD, the Kaiser Permanente Physician Who Started Its Hospital-Based Farmers Markets
Community Supported Agriculture Programs (CSAs)
Other Alternative Venues
Pop-Up Stores
Illustration 7-16: Giant Food’s Pop-Up Supermarket at Dover Speedway
Food Trucks
Other Alternative Channels Target Impulse Sales
Scope of Report
Report Methodology
Food Shopper Insights
Supercenters, Warehouse Clubs, Dollar Stores Strong Competition for Grocery Trips
Table 1-1: Type of Store(s) Shopped on Most Recent Grocery Shopping Trip, 2013 (percent of grocery shoppers)
Majority Like Their Store, But Only 56% Like Grocery Shopping
85% Perform Some Type of Preparation for Shopping
Saving Money an Important Consideration
Wellness a Concern for Many Grocery Shoppers
Shoppers Seek Specific Nutritional Benefits
Fresh Fruits and Vegetables the Most Important Shopping Draw
Two Out of Three Purchase Store Brands
Store-Prepared Food Items Attract Many Grocery Shoppers
Table 1-2: Type of Products Purchased on Most Recent Grocery Shopping Trip, 2013 (percent of grocery shoppers)
Kids Influence Parents’ Grocery Choices
Figure 1-1: Percent of Parents Agreeing “My Kids Play an Important Role in the Groceries I Choose,” 2013
Retail Trends
Total Retail Food and Beverage Sales Almost $640 Billion in 2013
Table 1-3: U.S. Retail Sales of Foods and Beverages, 2013-2018 (in millions of dollars)
C-Stores Outnumber Supermarkets Almost Five to One
Supermarkets Lead Food and Beverage Market with 53% Share
Figure 1-2: Share of Food and Beverage Dollar Sales by Retail Channel, 2012 (percent)
An Industry in Flux
Consumers Still Spending-Shy
Grocery Sales Trend Higher
The Top 20 U.S. Food Retailers
Table 1-4: Top 20 U.S. Retailers of Foods and Beverages, as of June 2013 (in billions of dollars)
More Types of Stores Focusing on Foods
More Actual Stores
Multi-Channel Shopping
Small Is Big
Private Label Foods & Beverages Top $104 Billion in 2012
Consumers Widely Accepting of Private Label
The Debate Over Loyalty Cards
Technology Changing How Consumers Shop for Groceries
Emphasis on Fresh Foods Continues to Grow
Prepared Foods Drive Store Traffic and Profits
Retailers Becoming Arbiters of Wellness and Nutrition Management
CHAPTER 2 HIGHLIGHTS
CHAPTER 3: FOOD SHOPPER INSIGHTS
Methodology
Shopping Trips: The Basics
Supercenters, Warehouse Clubs, Dollar Stores Strong Competition for Grocery Trips
Table 2-1: Type of Store(s) Shopped on Most Recent Grocery Shopping Trip, 2013 (percent of grocery shoppers)
Six in Ten Spend Less than $100 on Groceries Weekly
Figure 2-1: Average Amount Spent Weekly on Groceries, 2013 (percent of grocery shoppers)
Majority Like Their Store, But Only 56% Like Grocery Shopping
Table 2-2: Attitudes of Grocery Shoppers Toward Grocery Shopping, 2013
Environmental Concerns Affect What Happens in the Aisles of Grocery Stores
Figure 2-2: Percent of Grocery Shoppers Agreeing “‘Green’ Packaging is Important to Me in Choosing Which Groceries I Buy,” 2013
Figure 2-3: Percent of Grocery Shoppers Using Reusable Shopping Bags During Most Recent Grocery Shopping Trip, 2013
Planning Ahead
85% Perform Some Type of Preparation for Shopping
Figure 2-4: Percent of Grocery Shoppers Doing Any Kind of Planning Before Most Recent Grocery Shopping Trip, 2013
Figure 2-5: Percent of Grocery Shoppers Agreeing “I Often Stop by the Grocery Store on the Spur of the Moment,” 2013
Shopping List Is Most Common Preparation Before Shopping Trip
Table 2-3: Type of Planning by Grocery Shoppers Before Most Recent Grocery Shopping Trip, 2013 (percent of grocery shoppers)
Saving Money Remains an Important Consideration
Table 2-4: Retailer Programs Used During Most Recent Grocery Shopping Trip, 2013 (percent of grocery shoppers)
Figure 2-6: Percent of Grocery Shoppers Agreeing “I Buy a Lot of
Groceries That Are On Sale or Promotion,” 2013
Wellness and Nutrition
Wellness a Concern for Many Grocery Shoppers
Table 2-5: Attitudes of Grocery Shoppers Towards Food and Health,2013 (percent of grocery shoppers)
Certain Foods Have a High Wellness Profile
Table 2-6: Attitudes of Grocery Shoppers Towards Healthy Foods,2013 (percent of grocery shoppers)
Whole Grain, Multi-Grain the Most Appealing Characteristics
Table 2-7: Characteristics Sought When Buying Food Products, 2013(percent of grocery shoppers)
Wellness Concerns Help Drive Purchase Decisions for One in Two
Grocery Shoppers
Figure 2-7: Percent of Grocery Shoppers Agreeing “The Groceries I Choose Are Determined in Part by Specific Wellness Goals and Concerns,” 2013
Marketers and Retailers Need to Do More
Table 2-8: Attitudes of Grocery Shoppers Toward Responsibility for Eating Healthfully, 2013 (percent of grocery shoppers)
Nutritional Content of Foods Important
Table 2-9: Attitudes of Grocery Shoppers Toward Nutrition, 2013(percent of grocery shoppers)
Shoppers Seek Specific Nutritional Benefits
Figure 2-8: Frequency of Buying Foods and Beverages for Specific Nutritional Ingredients, 2013
Figure 2-9: Frequency of Buying Foods and Beverages for Specific Health Concerns, 2013
“Low/No/Free” Characteristics Sought When Buying Food Products
Table 2-10: “Low/No/Free” Characteristics Sought When Buying Food Products, 2013 (percent of grocery shoppers)
“High” Characteristics Sought When Buying Food Products
Table 2-11: “High” Characteristics Sought When Buying Food Products, 2013 (percent of grocery shoppers)
Highly Processed Foods an Issue for More than Half of Shoppers
Table 2-12: Attitudes of Grocery Shoppers Toward Highly Processed Foods, 2013 (percent of grocery shoppers)
Health-Enhancing Food and Beverage Products Favored
Table 2-13: Attitudes of Grocery Shoppers Toward Foods Designed to Promote Health and Nutrition, 2013
Food Restrictions Matter to a Substantial Minority
Figure 2-8: Percent of Grocery Shoppers Agreeing, 'Food Restrictions,Food Avoidances, or Food Allergies Play and Important Role in
What My Household Eats,' 2013
Many Shoppers Worried About Food Safety
Table 2-14: Attitudes of Grocery Shoppers Toward Food Safety, 2013
Many Shoppers Skeptical of Label Claims
Table 2-15: Attitudes of Grocery Shoppers Toward Trustworthiness, 2013 (percent of grocery shoppers)
Shoppers Also Avoiding Growth Hormones and GMOs
Table 2-16: Attitudes of Grocery Shoppers Toward Growth Hormones and GMOs, 2013
Which Foods Shoppers Want
Fresh Fruits and Vegetables the Most Important Shopping Draw
Table 2-17: Most Important Products in Choosing a Grocery Store, 2013 (percent of grocery shoppers)
Two Out of Three Purchase Store Brands
Table 2-18: Attitudes of Grocery Shoppers Toward Brands and Store Brands, 2013
Figure 2-9: Percent of Grocery Shoppers Who Bought Store Brand Groceries During Their Most Recent Grocery Shopping Trip, 2013
Store-Prepared Food Items Attract Many Grocery Shoppers
Table 2-19: Type of Products Purchased on Most Recent Grocery Shopping Trip, 2013 (percent of grocery shoppers)
Table 2-20: Attitudes of Grocery Shoppers Toward Ready-to-Eat Meal Items, 2013
Almost Two out of Three Like Trying New Foods
Table 2-21: Attitudes of Grocery Shoppers Toward New, Spicy, and Ethnic Foods, 2013
Figure 2-10: Percent of Grocery Shoppers Who Bought
International/Foreign Groceries During Their Most Recent Grocery Shopping Trip, 2013
Kids Influence Parents’ Grocery Choices
Figure 2-11: Percent of Parents Agreeing “My Kids Play an Important
Role in the Groceries I Choose,” 2013
CHAPTER 3 HIGHLIGHTS
CHAPTER 3: RETAIL OVERVIEW
Introduction
A Broad Selection of Retail Channels
Total Retail Food and Beverage Sales Almost $640 Billion in 2013
Table 3-1: U.S. Retail Sales of Foods and Beverages, 2009-2013 (inmillions of dollars)
Estimates from Other Sources
Figure 3-1: Sales of Food-at-Home and Food-Away-from-Home,1960-2012 (in billions of dollars)
Market Composition
C-Stores Outnumber Supermarkets Almost Five to One
Supermarkets Lead Food and Beverage Market with 53% Share
Figure 3-2: Share of Food and Beverage Dollar Sales by Retail Channel, 2012 (percent)
Government Data Underestimate Sales Through Supercenters, Warehouse Clubs, and Convenience Stores
Figure 3-3: Food-At-Home Sales by Type of Outlet, 2000-2011
Table 3-2: Food-at-Home Sales by Type of Outlet, 1993-2011
Market Outlook
An Industry in Flux
Consumers Still Spending-Shy
10% of Pre-tax Income Goes for Food
Table 3-3: Average Annual Expenditures and Income of All Consumers Units and Percent Changes, 2008-2011
Grocery Sales Trend Higher
Food Prices Projected to Rise 2.5% to 3.5% in 2013
Market Projections
Retail Food and Beverage Sales Will Near $800 Billion by 2018
Table 3-4: U.S. Retail Sales of Foods and Beverages, 2013-2018 (inmillions of dollars)
The Competitive Landscape
The Top 20 U.S. Food Retailers
Table 3-5: Top 20 U.S. Retailers of Foods and Beverages, as of June 2013 (in billions of dollars)
Recent Mergers, Acquisitions, and Divestments
Competition for Retail Sales
More Types of Stores Focusing on Foods
More Actual Stores
Figure 3-4: Net Change in U.S. Store Count for Selected Retail Chains, 2012
Multi-Channel Shopping
Table 3-6: Consumer Packaged Goods Household Penetration by Retail Channel, 2012 (percent)
Store Design
Small Is Big—and More Convenient
Retailers Retrofitting Spaces
Private Label
Total Private Label Foods & Beverages Top $104 Billion in 2012
Table 3-7: U.S. Retail Sales of Private Label Foods and Beverages,2008-2016 (in millions of dollars)
Private Label Penetration Varies by Category and Retailer
Consumers Widely Accepting of Private Label
Loyalty Programs
The Debate Over Loyalty Cards
Gas Rewards
Illustration 3-1: Safeway’s Gas Rewards Points Program
Going Digital
Technology Changing How Consumers Shop for Groceries
Handheld Scanners in Retail Stores
Will Digital Coupons Replace Paper?
Online Grocery Shopping and Home Delivery
Fresh Foods
Emphasis on Fresh Foods Continues to Grow
Refocusing on the Center Store
Natural and Organic Foods Remain a Fast-Growing Area of
Opportunity
Locally Grown Produce
In-Store Foodservice
Prepared Foods Drive Traffic and Profits
Prepared Foods Grow in Popularity and Sophistication
Illustration 3-2: Prepared Foods at King Food Markets’ MarketSquare
Health and Wellness
Retailers Becoming Arbiters of Wellness and Nutrition
Management
In-Store Dietitians a Growing Competitive Weapon for
Supermarkets
Illustration 3-3: Hy-Vee, an In-Store Dietitians Pioneer
Retailers’ Nutrition Ratings
CHAPTER 4 HIGHLIGHTS
CHAPTER 4: GROCERY CHANNEL TRENDS
Grocery Channel Leads Food Sales
Figure 4-1: Growth of Sales at Supermarkets and Grocery Stores, 2000-2011 (percent)
Kroger, Safeway the Largest Supermarket Operators
Table 4-1: Top 10 U.S. Supermarket Chains, 2012 (in billions of dollars, percent, and number)
The Kroger Co.
Illustration 4-1: A Kroger Marketplace Store
Kroger’s Data Advantage
Private Label Another Competitive Strength
Kroger Acquiring Harris Teeter
Using Technology to Improve Customer Service
Safeway Tweaks Store Formats
Lifestyle Format Stung by Recession
Illustration 4-2: Gondolas Add Interest to Safeway’s Lifestyle Stores
Safeway Going Forward
Strong Private Brands Focus
Loyalty Marketing
Online Grocery Delivery Service Not a Growth Vehicle
Supervalu Sells Off Supermarkets; Expands Save-A-Lot Discount Chain
The New, Trimmer Supervalu
Publix a Public Favorite
A Publix Fight with Walmart
Illustration 4-3: A Publix Ad Fights Back at Walmart
Ahold and Delhaize: Two Foreign-Owned Groups
Ahold USA Is Reshaping Retail
Illustration 4-4: Ahold’s Stop & Shop Offers ScanIt!, a Mobile App for
Smartphones
Delhaize America Trims its Portfolio
Bloom, a Concept Ahead of its Time
Illustration 4-5: Shopping Cart Featuring a Map of Bloom’s Innovative
Store Layout
The Natural Foods Channel
Whole Foods Market Continues to Surge
Illustration 4-6: The Crowd at Whole Foods Market’s Detroit Store Opening
Ethical Focus Continues
Will Whole Foods Open a Health Resort?
Natural Foods Competitors Coming Up Fast
Sprouts Farmers Market LLC Plans IPO
Natural Grocers by Vitamin Cottage Also Planning Major Expansion
Fresh Thyme Farmers Market Just Starting Up
The Fresh Market Expanding Westward
Will Wild Oats Return?
The Ethnic Foods Channel
Ethnic Grocery Chains Proliferate
Illustration 4-7: Ethnic Chain Food Bazaar Slogan
The Specialty Food Store Channel
Specialty Food Stores
Trader Joe’s
Illustration 4-8: Whimsical Banner on Trader Joe’s Website
CHAPTER 5 HIGHLIGHTS
CHAPTER 5: VALUE CHANNEL TRENDS
Supercenters, Mass Merchandisers, Warehouse Clubs, and Dollar Stores
Supercenters and Mass Merchandisers
Walmart—The Nation’s Largest Food Retailer
Rebounding from the Recession
Walmart Steps Up Small Formats
Illustration 5-1: Walmart Neighborhood Market Store in Chicago
Walmart Struggles to Keep Shelves Stocked; Upgrades Fresh
Produce
Walmart TV Ads Target Local Grocery Competitors
Walmart Testing Mobile Checkout
…and Home Delivery of Groceries
Target Is Targeting Foods
Target Continues Remodeling Stores to Add Fresh Foods
Target Also Testing Smaller-Format Stores
Target Fashion Ads Spotlight Groceries
Illustration 5-2: Target’s “Everyday Collection: Bake Sale” TV Commercial
Target Testing Social Media to Drive Sales
Warehouse Clubs
Warehouse Clubs Serve Consumers and Businesses
Costco Wholesale Corp.
Illustration 5-3: Costco’s In-House Monthly Magazine, The Costco Connection
Sam’s Club Seeks to Catch Up with Costco in Foods
BJ’s Wholesale Club
Dollar Stores
Dollar Stores Growing Rapidly, Adding More Food
Dollar General: More Locations than Any Other Retailer
Illustration 5-4: Television Commercial Showing Dollar General Market Stores
Family Dollar Carries Mostly Brand Names
Dollar Tree Inc.: $1 All the Time
Limited Assortment Chains
Limited Assortment Grocery Stores Offer Fewer Choices, Bigger Savings
ALDI
Illustration 5-5: Billboard Advertising ALDI Limited Assortment Stores
CHAPTER 6 HIGHLIGHTS
CHAPTER 6: CONVENIENCE CHANNEL TRENDS
Convenience Stores and Drugstores Ramping Up Foods
Convenience Stores
C-Stores Thriving
Foods and Beverages More Than 45% of C-Store In-Store Revenues
C-Stores a Growing Competitor for Foodservice Dollars
7-Eleven Expanding Rapidly
Illustration 6-1: 7-Eleven’s Corporate Webpage
Fresh & Easy: The British Are Leaving
The Fresh & Easy Model
Tesco Also Imported its Own Infrastructure
The Post-Mortem
Illustration 6-2: Fresh & Easy is Telling Customers It’s Still Open
Sheetz and Wawa Enjoy Regional Loyalty
Sheetz, Inc.
Illustration 6-3: TV Commercial Featuring Sheetz’ Touchscreen Menu
Wawa, Inc.
Illustration 6-4: A Wawa Convenience Store
Several Supermarket Chains Also Have C-Stores
Kroger Is One of the Largest C-Store Operators
Giant Eagle Uses Supermarkets and C-Stores to Create Synergies
Drugstores
Food Helps Drugstores Fight Back as Retail Lines Blur
Changes Rooted in Healthcare
Adding Food Is Not Without Risk
Walgreens “Well Experience” Model
Walgreens Creates “Food Oases”
Walgreens “Flagship” Stores Feature Upscale Prepared Foods
Illustration 6-5: Walgreens Flagship Store in Hollywood
Duane Reade Sets Foodservice Examples
CVS Caremark Clustering Stores into Eight Types
Rite Aid’s “Wellness” Stores Integrate Pharmacy and Front-End
CHAPTER 7 HIGHLIGHTS
CHAPTER 7: ALTERNATIVE CHANNEL TRENDS
Online Shopping
Online Grocery Services
Online Grocery Business Models
Who Grocery-Shops Online
The Major Online Players: AmazonFresh, FreshDirect, and Peapod
AmazonFresh Expands to Los Angeles
Illustration 7-1: AmazonFresh Has Expanded its Grocery Delivery to Los Angeles
Profitable? Or a Strategic Foot in the Door?
FreshDirect Focuses on Premium Fresh Foods
Illustration 7-2: FreshDirect’s Website Focuses on Premium Fresh Foods
Peapod Uses Supermarkets to Fulfill Orders
Illustration 7-3: A Peapod Mobile Ad in Philadelphia
Other Online Grocery Services
Alice.com: Direct-to-Consumer from CPG Marketers
Illustration 7-4: The Pantry Section on Alice.com
CobornDelivers: Partnering with General Mills for Frozen Meals
Illustration 7-5: The Website for Betty Crocker Kitchens
FarmStores.com
Google Pilots Google Shopping Express in San Francisco
Instacart Making Waves in San Francisco Bay Area
Illustration 7-6: Instacart Lets Shoppers Choose From Brick-and-Mortar Stores
mySupermarket Lets Consumers Comparison-Shop Groceries
Illustration 7-7: Pantry Categories Available on mySupermarket.com
MyWebGrocer.com: Marketing Services for Brick-and-Mortar Grocers
Relay Foods: Consumers Pick-Up from Delivery Trucks
Illustration 7-8: Relay Foods’ Online Service Delivery Trucks
Safeway, Inc.: Online Shopping and Delivery from Some Local Stores
Walmart To Go Grocery Delivery Service in Beta Tests
Illustration 7-9: Walmart To Go Coupon
U.K. Is Most Developed Market for Online Grocery Shopping
France: Retailers Offer Drive-Through Pick-Up Points
Illustration 7-10: A Chronodrive Location in France
Japan: Seven & I and 7-Eleven Offer Online Grocery Services
South Korea: Tesco’s Home Plus Launches Virtual Supermarkets
Illustration 7-11: Demonstration of Tesco’s HomePlus Mobile Shopping App
China: Yihaodian Pioneers “Augmented Reality” Stores
Illustration 7-12: Browsing Items in Yihaodian’s Virtual Supermarket
Vending Machines
Vending Machines Offer Convenience 24/7
Micro Markets
Illustration 7-13: A Canteen Vending Micro Market
Healthier Products Coming to Vending Machines
Vending Machines that Sell Fresh Fruit and Vegetables
Customizable Combos
Illustration 7-14: Coca-Cola’s Freestyle Vending Machine
Farmers Markets and Community Supported Agriculture
Farmers’ Market Count Grows 68% since 2008, to Over 7,800
Figure 7-1: Growth in Number of Farmers’ Markets, 1994-2012
Two Types of Farmers’ Markets
Illustration 7-15: Preston Maring, MD, the Kaiser Permanente Physician Who Started Its Hospital-Based Farmers Markets
Community Supported Agriculture Programs (CSAs)
Other Alternative Venues
Pop-Up Stores
Illustration 7-16: Giant Food’s Pop-Up Supermarket at Dover Speedway
Food Trucks
Other Alternative Channels Target Impulse Sales
