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Shoppers would prefer a one-stop grocery shop, but feel forced to visit several retailers to satisfy their growing wants and needs, according to findings from Progressive Grocer’s 69th Annual Consumer Expenditures Study (CES).
While differentiation has been heralded for replacing the failed “all things to all people” approach to supermarkets, emerging tiers – including fresh, value, and premium – have resulted in “curated” assortments that leave many shoppers making multiple stops throughout the week.
Supermarkets’ share of the grocery dollar continues to slip, down more than six percentage points since 2007, to 54.5 percent of total grocery sales. Supercenters and warehouse clubs, with their large footprints and value positioning, are the big gainers, with a combined 31.3 percent share of the grocery dollar, up from 25.1 percent in 2007. These channels benefited from a combination of strategic geographic growth and the recession, the latter of which forced dramatic changes in buying behavior.
“Shoppers don’t conscientiously define which channel they want to shop – they’re just going where the products they want are available,” said Meg Major, PG chief content editor. Noting the dramatic shift across the grocery landscape during the past decade that underscore PG's 2016 CES research report, Major affirmed: “Supermarkets are in direct competition with every retail channel, including restaurants and subscription services like Blue Apron."
Food Retailers' Resiliency
The good news, however, is that food retailers are extremely resilient. Buoyed by population shifts back to metro areas (80 percent of the population is considered urban), growing adoption of healthier eating, and a willingness to experiment with new formats, footprints and e-commerce solutions, retailers have hardly given up the fight.
With more than $2 trillion in total U.S. grocery sales, a slice of the food pie is a battle well worth fighting for. Food is a major expenditure, trailing only housing and transportation. In total, food accounts for 13 percent of total consumer expenditures, with food at home accounting for 7.8 percent and food away from home accounting for 5.1 percent, according to the Bureau of Labor Statistics. This gap is also narrowing, and there’s strong evidence that grocery retailers understand that they’re vying with restaurants for share of stomach.
The amount of money being spent – and on which products – is also changing. Evidence exists that shoppers are spending more money on fresh and convenient items, with more than half of total store sales coming from the perimeter and adjacent fresh categories, according to PG's 2016 CES results. Sales in the service deli, home to a growing array of fresh-prepared products, are increasing ahead of the rate for the total store.
Health-and-wellness trends are evident throughout the store, including center store, where healthier versions of items such as salty snacks, New Age beverages and nuts are enjoying increased sales. Shoppers are also demonstrating a greater willingness to loosen purse strings for such nonessential items as health and beauty products and alcoholic beverages, both of which have enjoyed sales gains that outpace total store.
Progressive Grocer’s Annual CES features sales data on categories throughout typical grocery stores, as well as deep dives into particular categories, including milk and milk alternatives, eggs, fish and seafood, bread, olive oil, bottled water, salty snacks, snack bars, baby food, sugar and sweeteners, cough/cold/allergy, vitamins and supplements, and pest control.
The full report will be available in the July issue of Progressive Grocer, print and digital editions of which will be available later this month.