Current U.S. Grocery Retailing Trends
The latest statistics from the U.S. Commerce Department provide very clear insights into the current trends taking place in the industry. The highlights of our most recent analysis are as follows:
- The U.S. grocery market grew to $645 billion last year from $568 billion in 2007, representing a growth of $77 billion, or 14 percent, over the four-year period. However, most of this growth (90 percent) was inflationary.
- Supermarket sales of foods and groceries grew from $343 billion in 2007 to $380 billion in 2011, i.e. +11 percent. As a result of this below-average growth rate, the Supermarket share of the total grocery market slipped again from 59.2 percent in 2010 to 58.9 percent in 2011 (see Figure 1).
- The really interesting news is that the rate of decline in the supermarket share is slowing markedly; only -1.3 percent between 2007 and 2011 (-0.325 percent per year) versus -5.8 percent between 2002 and 2007 (-1.160 percent per year).
- The supermarket industry's performance is being bolstered by growth formats such as Aldi, Fresh & Easy, Save-A-Lot, Sprouts, The Fresh Market, Trader Joe's, and Whole Foods, as well as by high-performing traditional chains such as Harris Teeter, HEB, Kroger, Publix, Wegmans, and Winco.
- The growth formats can no longer be described as "alternative formats;” they are central to the future viability of the U.S. supermarket industry.
- Warehouse clubs and supercenters (WCS) remain the key competitor to supermarkets, despite all the coverage of dollar and drug stores, the latter of which only account for 1.5 percent market shares nationwide. However, the market share gained by WCS retailers such as BJ's, Costco, Kmart, Sam's, Target, and Walmart is slowing as a result of the improving skills of supermarket retailers and reduced supercenter openings by Target and Walmart.
These trends reflect a dynamic, ever-changing industry in which, to survive and prosper, retailers must "keep their finger on the pulse" of opportunities by giving priority to market research and analysis.