The Future of Food Retailing: Value Grocery Shopping in the U.S.

 
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Published Mar 10, 2017 | 303 Pages | Pub ID: LA15139134

The Future of Food Retailing: Value Grocery Shopping in the U.S.

For a large majority and still growing number of Americans, value grocery retailers are where it’s at when it comes to grocery shopping. Supercenters attract 177 million U.S. adults as monthly shoppers (more than traditional supermarkets), wholesale clubs kick in 91 million, dollar stores draw 53 million, and discount/limited-assortment grocery chains like ALDI lay claim to 42 million. And that’s just for starters. As of early 2017, the value grocery industry is heating up for what may be the hottest contest since the advent of Walmart supercenters. Not since Tesco’s Fresh & Easy has a European grocery chain created such a buzz on the other side of the pond prior even to opening its first store, and right now the big word on the street is Lidl. Fresh & Easy was a colossal flop, but there’s no reason to expect anything of the sort from Lidl, a German discount/limited-assortment grocery chains grocer à la Germany-based ALDI. 

Value Grocers Face Diversifying Competition

Fielding more than 10,000 stores in Europe, Lidl has cut into ALDI’s European business and, along with ALDI, forced into deep-discount mode massive competitors in the grocery industry, including Walmart’s Asda U.K. grocery unit. As of early 2017, Lidl plans to open at least 100 U.S. stores per year on its way to a buildout of as many as 2,000 stores. Already on the defensive, ALDI has gone into accelerated expansion mode with the goal of growing its U.S. footprint to nearly 2,000 stores by the end of 2018 and by almost 50% during the next five years, accompanied by a $1.6 billion plan to remodel and expand 1,300 of its U.S. stores by 2020.

Also girding for deep-discount battle is Walmart. In January 2017, Walmart announced plans to add 10,000 U.S. jobs and raise the minimum wage for its U.S. workers, and began testing a new low-price strategy aimed at undercutting ALDI and by extension Lidl. Like Target, Walmart is also investing in smaller grocery retail formats designed to better compete with discount/limited-assortment grocery chains and dollar stores, the latter of which began cutting into Walmart’s bread and butter during the Great Recession. Also contributing to the ramped- up competition is e-commerce, particularly as Walmart and other grocers get serious about taking on Amazon and home delivery grocery services like Fresh Direct and Peapod. Outlaying several billion dollars, Walmart has snatched up online grocery players including Jet.com, Shoebuy.com, and Moosejaw.com, and Walmart, and other value retailers are now implementing “bricks meet clicks” services deigned to coordinate online grocery ordering with in-store pickup as well. Increasingly, such services involve smartphones and apps designed to help shoppers avoid lines and in some cases scan and pay as they go.

Trends & Opportunities in the Value Grocery Retail Industry:

  • As far as value grocery retailers go, Supercenters are the leading industry channel by level of shopper penetration. The overall supercenter trend has been upward due primarily to inroads paved by Walmart. 
  • The U.S. food retailing business has never been more competitive. Food deflation, shakeups among major chains, heightened brick-and-mortar competition, the incursion of e-commerce onto the food retailing, and a number of other trends are putting pressure on a wide array of food retailers. 
  • The ability to offer a convenient shopping experience is now more important than ever, as multiple grocery retail formats evolve new tactics to maximize consumer satisfaction. 
  • The smaller store strategy will be even more important to big-name value grocery retailers, where smaller retail formats fill the gap between big-name competitors and smaller retailers.
  • Mobile payments, apps, and screenless payment are a growing aspect of shopping convenience. The ability to pay wirelessly or by tapping a card on a reader will become crucial to value grocery retailers' tactics to maximize convenience.
  • Natural and organic foods continue to expand across every retail channel in the grocery industry, with natural foods still a powerful force in value grocery retailing. 
  • Millennial and Hispanic consumers are shaping multiple areas of American life, and value grocery retailers are paying attention to these two increasingly overlapping grocery shopper demographic cohorts.

Report Scope

Packaged Facts' The Future of Food Retailing: Value Grocery Shopping in the U.S. is a first-edition report that also explores the future of natural and fresh foods vis-à-vis the value grocery shopper, the impact of private labels and name brands, and the transformative and increasingly overlapping Millennial and Hispanic cohorts. The report profiles value grocery retailers across four sectors—supercenters (e.g., Walmart, SuperTarget, Kmart), wholesale clubs (Costco, Sam’s, BJ’s), dollar stores (Dollar Tree, Family Dollar, Dollar General), and discount/limited-assortment grocery chains (ALDI, Lidl, Food 4 Less)—and analyzes shopper behavior including penetration rates, preferences, cross-shopping at other grocery channels, demographics, and psychographics using trended multi-year Simmons consumer survey data.

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        •   Value Channels in Overall Food Retailing Context, 2014-2016 (monthly number and percent of U.S. adults)
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        •   National Name Brands and the Value Retailer Shopper, 2016 (general index for brand usage among shoppers)

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        •   Patterns by Key Demographics for Value and Other Food Retailing Channels: Millennials vs. Hispanics, 2016 (percent and index)

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        •   Supercenters in Overall Supercenter Context, 2012-2016 (monthly percent of U.S. adults as grocery shoppers)
        •   Supercenters in Overall Supercenter Context, 2012-2016 (monthly number of U.S. adult grocery shoppers in millions)
        •   Overview of Walmart Supercenter vs. SuperTarget or Kmart Shoppers, 2016 (index)
        •   Cross-Shopping Patterns for Value and Other Food Retailing Channels: Walmart, Target, and Kmart, 2016 (percent of shopper base)
        •   Cross-Shopping Patterns for Value and Other Food Retailing Channels: Meijer and Fred Meyer, 2016 (percent of shopper base)

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        •   Walmart Supercenters in Overall Walmart Context, 2012-2016 (monthly percent of U.S. adults as shoppers)
        •   Walmart Customer Base, 2012-2016 (monthly number of U.S. adult grocery shoppers in millions)
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        •   Walmart Supercenter Shopper Demographics, 2016 (number, percent, and index)
        •   Overview of Walmart Supercenter Shopper Demographics, 2004 vs. 2016 (index)

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        •   SuperTarget in Overall Target Context, 2012-2016 (monthly percent of U.S. adults as shoppers)
        •   Target Customer Base, 2012-2016 (monthly number of U.S. adult grocery shoppers in millions)
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        •   SuperTarget Shopper Demographics, 2016 (number, percent, and index)
        •   Overview of SuperTarget Shopper Demographics, 2011 vs. 2016 (index)

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        •   Kmart Customer Base, 2012-2016 (monthly percent and number of U.S. adult grocery shoppers)

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        •   Overview of Kmart Shopper Demographics, 2004 vs. 2016 (index)

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        •   Meijer Customer Base, 2012-2016 (monthly percent and number of U.S. adult grocery shoppers)

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        •   Overview of Meijer Shopper Demographics, 2004 vs. 2016 (index)

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        •   Fred Meyer Customer Base, 2012-2016 (monthly percent and number of U.S. adult grocery shoppers)

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        •   Overview of Fred Meyer Shopper Demographics, 2004 vs. 2016 (index)

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        •   Wholesale Clubs in Overall Wholesale Club Retailer Context, 2014-2016 (monthly percent of U.S. adults shoppers)
        •   Wholesale Clubs in Overall Wholesale Club Retailer Context, 2014-2016 (monthly number of U.S. adult shoppers)
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        •   Overview of Costco vs. Sam's Club or BJ's Food Shoppers, 2016 (index)
        •   Cross-Shopping Patterns for Value and Other Food Retailing Channels: Wholesale Clubs, 2016 (percent of shopper base)

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        •   Costco Food Shopping in Overall Costco Context, 2014-2016 (monthly percent of U.S. adults shoppers)
        •   Costco Food Shopping in Overall Costco Context, 2014-2016 (monthly number of U.S. adult shoppers)

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        •   Costco Food Shopper Demographics, 2016 (number, percent, and index)

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        •   Sam's Club Food Shopping in Overall Sam's Club Context, 2014-2016 (monthly percent of U.S. adults shoppers)
        •   Sam's Club Food Shopping in Overall Sam's Club Context, 2014-2016 (monthly number of U.S. adult shoppers)

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        •   Sam's Club Food Shopper Demographics, 2016 (number, percent, and index)

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        •   BJ's Food Shopping in Overall BJ's Context, 2014-2016 (monthly percent of U.S. adults shoppers)
        •   BJ's Food Shopping in Overall BJ's Context, 2014-2016 (monthly number of U.S. adult shoppers)

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        •   BJ's Food Shopper Demographics, 2016 (number, percent, and index)

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        •   Dollar Stores in Overall Dollar Store Context, 2014-2016 (monthly number & percent of U.S. adults)

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        •   Overview of Dollar Tree vs. Dollar General or Family Dollar Shoppers, 2016 (index)
        •   Cross-Shopping Patterns for Value and Other Food Retailing Channels: Dollar Stores, 2016 (percent of shopper base)

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        •   Family Dollar and Dollar Tree in Context, 2012-2016 (monthly percent of U.S. adult shoppers)
        •   Dollar Tree and Family Dollar in Context, 2012-2016 (monthly number of U.S. adult shoppers)

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        •   Dollar Tree Shopper Demographics, 2016 (number, percent, and index)
        •   Overview of Dollar Tree Shopper Demographics, 2011 vs. 2016 (indexes)

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        •   Family Dollar Shopper Demographics, 2016 (number, percent, and index)
        •   Overview of Family Dollar Shopper Demographics, 2005 vs. 2016 (indexes)

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        •   Percent and Number of Monthly Dollar General Shoppers, 2012-2016 (U.S. adult shoppers)

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        •   Dollar General Shopper Demographics, 2016 (number, percent, and index)
        •   Overview of Dollar General Shopper Demographics, 2005 vs. 2016 (indexes)

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        •   Discount/Limited-Assortment Grocery Chains in Overall Discount/Limited-Assortment Grocery Chain Context, 2014-2016 (monthly number & percent of U.S. adults)

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        •   Cross-Shopping Patterns for Value and Other Food Retailing Channels: ALDI, Save-A-Lot, and Food 4 Less, 2016 (percent of shopper base)

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        •   ALDI Shopper Demographics, 2016 (number, percent, and index)
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        •   Save-A-Lot Shopper Demographics, 2016 (number, percent, and index)
        •   Overview of Save-A-Lot (Onex) Shoppers vs. Shoppers for Selected Supervalu Chains, 2016 (index)

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        •   Food 4 Less Shopper Demographics, 2016 (number, percent, and index)
        •   Overview of Food 4 Less vs. Kroger Shoppers, 2016 (index)

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    •   Psychographic Patterns by Channel or Retailer: "I Go Shopping Frequently " and "I Really Enjoy Any Kind of Shopping," 2016 (percent and index)
    •   Psychographic Patterns by Channel or Retailer: "When I Shop I Usually Visit a Variety of Stores and "A Store's Environment Can Make a Difference in Whether I Shop There," 2016 (percent and index)
    •   Psychographic Patterns by Channel or Retailer: "Am Usually First of My Friends To Shop at New Store" and "Often Go Out of My Way to Find New Stores to Shop At," 2016 (percent and index)
    •   Psychographic Patterns by Channel or Retailer: "Buy Goods Produced by My Country Whenever I Can" and "Would Pay More for Environmentally Friendly Products," 2016 (percent and index)
    •   Psychographic Patterns by Channel or Retailer: "Always Look for Brand Name on Packaged" and "Like to Change Brands Often for the Sake of Variety and Novelty," 2016 (percent and index)
    •   Psychographic Patterns by Channel or Retailer: "Enjoy Shopping With My Children" and "My Children Have a Significant Impact on the Brands I Choose," 2016 (percent and index)
    •   Psychographic Patterns by Channel or Retailer: "When in Store, Often Buy at Spur of Moment " and "Often Use the Internet to Help Plan My Shopping Trips," 2016 (percent and index)
    •   Psychographic Patterns by Channel or Retailer: "Usually Only Shop at Favorite Stores Because They Have the Prices I Like and "Shop Around A Lot To Take Advantage of Specials or Bargains," 2016 (percent and index)
    •   Psychographic Patterns by Channel or Retailer: "Coupon Could Draw Me to a Store Where I Don't Usually Shop" and "Am Drawn to Stores I Normally Don't Shop at by Sales," 2016 (percent and index)
    •   Psychographic Patterns by Channel or Retailer: "Always Look Out for Special Offers" and "Even Though I Didn't Need It Right Then, Would Buy More of a Product on Sale," 2016 (percent and index)

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    •   Psychographic Patterns by Channel or Retailer: "Shopping for Groceries Is a Bore," 2016 (percent and index)
    •   Psychographic Patterns by Channel or Retailer: "I Really Enjoy Cooking" and "The Kitchen Is the Most Important Room in My House," 2016 (percent and index)
    •   Psychographic Patterns by Channel or Retailer: "I Like to Try New Recipes" and "I Usually Refer to Recipes When Cooking," 2016 (percent and index)
    •   Psychographic Patterns by Channel or Retailer: "I Often Read the Recipes on the Food Products That I Buy" and "I Can Be Swayed by Coupons to Try New Products," 2016 (percent and index)
    •   Psychographic Patterns by Channel or Retailer: "I Like to Try Out New Food Products" and "I Am Usually the First of My Friends to Try New Food Products," 2016 (percent and index)
    •   Psychographic Patterns by Channel or Retailer: "Prefer to Eat Foods Without Artificial Additives" and "When Shopping for Food, I Especially Look for Organic or Natural," 2016 (percent and index)
    •   Psychographic Patterns by Channel or Retailer: "I Usually Look for the Freshest Ingredients When I Cook" and "When Shopping for Food, I Make an Extra Effort to Buy Locally Grown," 2016 (percent and index)
    •   Psychographic Patterns by Channel or Retailer: "I Often Eat Store-Made, Pre-Cooked Meals" and "I Often Eat Frozen Dinners," 2016 (percent and index)
    •   Psychographic Patterns by Channel or Retailer: "Simple, Easy to Prepare Foods Are My Favorites" and "Prefer Fast Food to Home Cooking," 2016 (percent and index)
    •   Psychographic Patterns by Channel or Retailer: "I Eat Several Small Meals Throughout the Day" and "Breakfast Is More Important Than Lunch or Dinner," 2016 (percent and index)
    •   Psychographic Patterns by Channel or Retailer: "Lunch Is More Important Than Breakfast or Dinner" and "Dinner Is More Important Than Breakfast or Lunch," 2016 (percent and index)
    •   Psychographic Patterns by Channel or Retailer: "I Often Snack Between Meals" and "I Often Feel I Overeat," 2016 (percent and index)
    •   Psychographic Patterns by Channel or Retailer: "I Frequently Eat Sweets" and "Salted Snacks Are My Favorite," 2016 (percent and index)
    •   Psychographic Patterns by Channel or Retailer: "I Enjoy Eating Foreign Foods" and "I Try to Eat Gourmet Foods Whenever I Can," 2016 (percent and index)
    •   Psychographic Patterns by Channel or Retailer: "I Prefer Foods Cooked With Lots of Spices" an "Prefer the Taste of Food Without a Lot of Spices," 2016 (percent and index)
    •   Psychographic Patterns by Channel or Retailer: "I Like to Try New Drinks" and "I Often Drink Alcoholic Beverages at Restaurants," 2016 (percent and index)
    •   Psychographic Patterns by Channel or Retailer: "Nutritional Value Is Most Important Factor in Which Foods I Eat" and "I Usually Am Quick to Try a New Nutritional Products," 2016 (percent and index)
    •   Psychographic Patterns by Channel or Retailer: "Most of the Time, I Am Trying to Lose Weight by Dieting" and "Normally Count Calories of the Foods I Eat," 2016 (percent and index)
    •   Psychographic Patterns by Channel or Retailer: "Try to Include Plenty of Fiber in My Diet" and "Usually Only Snack on Healthy Foods," 2016 (percent and index)
    •   Psychographic Patterns by Channel or Retailer: "Most Snack Foods Are Not Healthy" and and "Most Frozen Dinners Have Little Nutritional Value," 2016 (percent and index)
    •   Psychographic Patterns by Channel or Retailer: "I Feel Guilty When I Eat Sweets" and "I Feel Guilty When I Eat Fattening Foods," 2016 (percent and index)
    •   Psychographic Patterns by Channel or Retailer: "Nothing Wrong With Indulging in Fattening Foods from Time to Time" and "Eat the Foods I Like Regardless of Calories," 2016 (percent and index)

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