Traditional Grocery Stores in Decline: Report

The food retail landscape is poised to shift dramatically as shoppers gravitate from traditional grocery stores to formats that more closely meet their needs, according to a recent study from Long Grove, Ill.-based consultancy Inmar Willard Bishop Analytics.

“By 2021, dollar share for the traditional grocery channel will reach 44.4 percent, an increase of 0.2 percent,” noted “Future of Food Retailing 2017.” “Shares for nontraditional grocery will drop 0.7 percent to 39.1 percent. The convenience store channel will have a slight increase in shares, reaching 16.5 percent. However, modest changes are often masked by large fluctuations occurring within the channel. For example, the number of traditional supermarkets will decrease by 24.6 percent. This decline is offset by double-digit growth in store counts for fresh-format, limited-assortment, and super warehouse formats.”

What’s more, the report found that grocery ecommerce will grow exponentially as food retailers adopt it faster than other retail sectors have done previously, the study says.

Driving this rapid adoption are the promise of big sales from food and consumables across all channels, which have passed the trillion-dollar mark; the digital acumen of Millennials, who come by it naturally, having been born into the computer age, and now starting families of their own; and time-starved consumers in search of greater convenience.

Tying together these two trends is the growing consumer demand for personalization, but such a strategy must be executed with care.

“Trading partners will fail if they try to be all things to all consumers,” the report cautioned. “The key to building market share and increasing loyalty requires one thing: relevancy. All choices must be relevant to the target audience. Relevancy must be reinforced at every touchpoint along the path-to-purchase continuum. Social media content must focus on relevant activities prior to the start of a purchase cycle. Assortment, merchandising (in-store and online), pricing, promotions and services must all be relevant in order to influence shopper behaviors. Missing the mark in one or two areas will likely result in more ‘channel hopping,’ which further diminishes loyalty.”