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
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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,, and, 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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