Market share

Will supermarkets’ grocery market share be short-lived?


Bolstered by last year’s pandemic storage and the ensuing home grocery trend, supermarkets are expected to dominate non-traditional retail competitors in terms of grocery market share until 2025 at least, according to Inmar Intelligence’s 2021 report on the future of food retailing.

Inmar, based in Winston-Salem, North Carolina, predicts the dollar share of the traditional grocery retail channel – conventional supermarkets, fresh formats, limited-assortment stores, “super warehouse” chains and grocery stores in the United States. coin – will increase from 0.6% to 45% by 2025, up from 44.4% in 2020.

Meanwhile, non-traditional retailers – supercentres, mass merchants, wholesale clubs, dollar / extreme value stores, drugstores and military commissioners – will see their dollar share of grocery stores increase by 1.7%. to 42.1% in 2025, compared to 40.4% in 2020. The dollar share of grocery stores is expected to decrease from 2.3% to 12.9% compared to 15.2% during this period.

“There will be a global return to pre-pandemic channel trends, with notable exceptions in the new format [supermarket], the formats of mass distribution and wholesale clubs, for which the past year indicates a crucial change ”, the Future of Food Retailing Report noted. “The significant sales growth of the traditional grocery channel in 2020 will help the channel maintain its dollar share through 2025, increasing slightly to 45%. However, this bump will only be a delay and not a reversal of the rise in the dollar’s share of non-traditional groceries for decades, which is expected to reach 42.1% in 2025. In addition, the growth of the he traditional and non-traditional grocery shopping will come at the expense of convenience. format.”

Among traditional segments, Inmar expects the strongest growth from limited-assortment grocers (e.g. Aldi, Lidl, Trader Joe’s, Save A Lot), estimating a five-year compound annual growth rate (CAGR) of 6 % through 2025. This is followed by five-year CAGRs of 5.1% for wholesale clubs (eg Costco, BJ’s, Sam’s Club), 4% for fresh grocery sizes (eg. e.g. Whole Foods, Wegmans, The Fresh Market, Mariano’s), 3.6% for dollar / extreme value stores (e.g. Dollar General, Dollar Tree, Family Dollar), 2.4% for mass traders (e.g. eg traditional stores Walmart, Target, Kmart), 2.2% for supercentres (eg Walmart Supercenter, SuperTarget, Meijer, Kroger Marketplace), 1.7% for traditional supermarkets and 1.6% for local grocery stores .

“Although one of the biggest winners in pandemic sales, traditional supermarkets are not expected to maintain significant growth over the next five years. The gradual decrease in pandemic sales will protect this format from a significant drop in the dollar’s share. However, the expected CAGR of 1.7% from 2021 to 2025 will fall slightly below the inflation rate (2%), ”noted Inmar in his study. “Almost all of the retailers in this format have reported strong sales growth in 2020 and have offered some expansion in digital capabilities, in quantity if not in quality. However, few mainstream supermarkets have been able to take advantage of it in a way that will extend the pandemic-induced expansion of consumer needs to long-term increases in buyer engagement or loyalty. “

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Until 2025, Inmar predicts compound annual decreases of 9.6% for super-warehouse grocery stores (e.g. Smart & Final, Food 4 Less, Cub Foods), 4.9% for pharmacies and 3, 2% for military commissioners. Fuel will be a factor for convenience stores, as those who do not sell gasoline have a CAGR of 1.2% over the next five years compared to a compound annual decline of 1.1% for those with gas stations. .

The expansion of brick and mortar will be a key growth driver, according to Inmar’s analysis. The number of traditional grocery stores is expected to increase by 4.2%, from 40,616 in 2020 to 42,322 in 2025, driven by limited assortment stores (+ 38.3%) and fresh formats (+ 11%), whose dollar share is expected to increase by 1% and 0.3%, respectively. The commercial footprint of conventional supermarkets is expected to grow only 1.5%, from 25,034 stores in 2020 to 25,412 in 2025, with the dollar’s share falling 0.1%.

“In the traditional grocery store, the limited assortment and fresh formats are expected to revert to high versions of their pre-pandemic growth trends,” Inmar explained in the report. “As a result, both will gain shares slightly but remain below 5% of the total share in 2025 dollars. Growth of both formats will depend on their ability to retain pandemic buyers based on the promised benefits of low price (limited assortment). ) and quality products (fresh formats). “

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In non-traditional grocery, Inmar fixes the overall growth in the number of stores at 3.7%, from 64,934 in 2020 to 67,306 in 2025. The main segments of the brick and mortar expansion are expected to be wholesale clubs (+ 5.1%, for growth in the dollar share of 2.1%), supermarkets (+ 6.7%, for growth in dollar share of 0.2%) and dollar / extreme value stores (+ 9.3%, for dollar share growth of 0.3%). The number of Supercenter stores is expected to grow by just 0.5% through 2025, but this channel’s dollar share will increase slightly by 0.6%, maintaining its place on clubs as the leader in non-traditional grocery stores. .

“Among the formats of the non-traditional grocery channel, the wholesale club is expected to experience the largest positive sales CAGR from 2021 to 2025 at 5.1%, which will increase the dollar share of the format by two points. to 11.9% in 2025. This is a higher growth rate. for the format than one would expect without the pandemic-inspired increase in club memberships and high membership retention at wholesale club retailers, ”observed Inmar. “With the second highest projected rate of increase in this channel, the dollar / extreme value format is expected to maintain trend sales growth at a 3.6% CAGR from 2021 to 2025, as the retailers’ value proposition of this segment remains consistent before-, mid- and post-pandemic.

The online grocery boom triggered by the pandemic in 2020 has been a game-changer in the food retail arena, especially in traditional and non-traditional grocery channels, noted Jim Hertel, vice-president. senior chairman of Inmar, a provider of data-driven technology services to retailers and manufacturers. Last year, online grocery and consumable sales jumped 48.9% to $ 119 billion, thanks to a 74% increase in online food and beverage sales.

“Digital acceleration is affecting the long-term growth plans of food retailers and manufacturers,” Hertel explained. “Consumers have the convenience at their fingertips with the ability to order groceries online, but in-store sales are returning to pre-pandemic levels. So, for all retailers, now is the time to build loyalty through digital hybrid experiences. These personalized commitments on digital and tailor-made and thoughtful in-store experiences will make it possible to meet expectations now, which will strengthen long-term loyalty. “

Looking ahead, Inmar estimates an 18% five-year CAGR for the online grocery channel – including Amazon, third-party vendors like Instacart and Shipt, pure online grocers, and retailer-branded services – up to ‘in 2025. That would translate to the equivalent of 15-20% of the dollar’s share of groceries in 2025.

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Supercenters and mass merchandise stores gained popularity during last year’s online grocery surge, according to Inmar, quickly adopting an omnichannel approach.

“For the retail format, the engagement in e-commerce in 2020 has helped reverse previous expectations of declining sales over the next five years,” the report said. “By capitalizing on the successful adoption of omnichannel solutions, this format is expected to experience an additional 2.4% sales CAGR from 2021 to 2025, while the supercentre is expected to achieve a 2.2% sales CAGR. The continued growth of e-commerce will benefit both of these formats by thwarting the return to less inflated basket sizes.

In 2020, traditional grocery store sales increased 10.9% year-over-year to $ 623.3 billion, from $ 562.3 billion, Inmar reported. That growth came just ahead of the 9.2% gain in non-traditional grocery stores to $ 566.4 billion and was well above the 1.5% increase in convenience stores to $ 212.9 billion.

Conventional supermarkets (+ 12.5%), followed by fresh formats (+ 11.5%), limited assortment stores (+ 7.6%) and corner grocery stores (+ 2%). Sales fell 11.8% for super-warehouse grocery stores. Mass merchants have punctuated the field in non-traditional grocery stores, with sales growth of 20.1% in 2020. Next come wholesale clubs (+ 14%), supercentres (+ 9.1%), dollar value stores / extremes (+ 2.3%) and military commissioners (+ 0.6%). Drugstore sales contracted 0.7% last year.

Annual sales of groceries and consumables grew 8.8% from 2019 totals, aggregated across all formats, despite a 0.6% drop in the total number of stores – thanks to the ‘Rising home meals and product consumption amid widespread closures and rising product prices, “Inmar said in his report. In addition, online sales of grocery items and consumables grew 48.9% in 2020 as many consumers first engaged in digital grocery shopping and retailers rushed to offer alternative options to in-store purchases. “


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