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Grocery Retailing - US - November 2015

Retailers across channels are battling for a share of wallets and cash registers, creating what might be the most “crowded” segment in retail. Consumers are enjoying these options and fulfilling their grocery shopping needs by bouncing around to multiple stores that most definitely include nonsupermarkets. As such, traditional supermarkets are struggling to maintain, let alone grow, market share. In addition to shopping around in search of the best prices, product selections and service/experiences, consumers are increasingly turning to their computers and mobile devices to order groceries online.

This report focuses on all retail channels that provide grocery products including traditional supermarkets, warehouse clubs, natural markets (eg, Whole Foods Market and Trader Joe’s), drug stores, dollar stores, convenience stores, internet retailers (eg, Peapod and FreshDirect), and farmers markets.

Groceries are defined as products such as food, beverages, cleaning products, household goods (eg, toilet paper, garbage bags), and/or personal care products (eg, lotions, vitamins, and pharmacy products).

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • The issues
          • Grocery to surpass $700 billion within next five years
            • Figure 1: Total US MULO sales and fan chart forecast of groceries, at current prices, 2010-20
          • Supermarkets struggling to stay relevant
            • Figure 2: Retailers shopped for groceries, August 2015
          • Online grocery shopping poised to take off
            • Figure 3: Select attitudes toward shopping for groceries online, November 2013 and August 2015
          • The opportunities
            • Think small
              • Figure 4: Reasons for choosing primary grocery retailer, August 2015
            • Go digital
              • Figure 5: Grocery shopping behaviors and desired improvements in technology, by age, August 2015
            • Leverage emotion to enhance in-store experience
              • Figure 6: Desired innovations or improvements related to experience when grocery shopping, By gender, August 2015
            • What it means
            • The Market – What You Need to Know

              • Forecast positive for grocery market
                • Supermarkets versus “all other”
                  • Changing consumer preferences and needs require grocers to be nimble
                  • Market Size and Forecast

                    • MULO grocery sales expected to rise steadily
                      • Figure 7: Total US MULO sales and fan chart forecast of groceries, at current prices, 2010-20
                      • Figure 8: Total US MULO sales and forecast of groceries, at current prices, 2010-20
                  • Market Breakdown

                    • Other MULO sales surpass supermarkets
                      • Figure 9: Total US MULO sales and forecast of groceries, by retail channel, at current prices, 2010-20
                      • Figure 10: Market share of total US MULO sales and forecast of groceries, by retail channel, at current prices, 2013, 2015, and 2020
                    • Food and drink account for two thirds of sales
                      • Figure 11: Total US MULO sales of groceries, by category, at current prices, 2010-20
                      • Figure 12: Total US MULO category market share of groceries, by segment, at current prices, 2015 (est)
                  • Market Factors

                    • Palettes expand as US population diversifies
                      • Figure 13: Population aged 18 or older, by race and Hispanic origin, 2010-20
                      • Figure 14: Foreign-born consumers in the US, by country/region of origin, 2012
                    • Grocers cater to those with special diets and shifting attitudes towards being healthier
                      • Organic and natural claims maintain wide appeal; premium pricing may be met with increasing resistance
                        • Local movement creates need for transparency and authenticity
                          • Increased fragmentation leads to mergers and acquisitions
                          • Key Players – What You Need to Know

                            • Retailers are wading their way through current waters
                              • Beyond the sole grocery store
                                • It’s a digital world after all
                                • What’s Working?

                                  • Sales of Leading Grocery Retailers and Wholesalers
                                    • Figure 15: Top retailers, January 2015
                                  • Profiles of leading retailers
                                  • What’s Struggling?

                                    • Supermarkets taking a hit from other MULO
                                      • Many barriers to online grocery shopping adoption
                                          • Figure 16: Limitations to food/drink shopping online, March 2015
                                      • What’s Next?

                                        • “It’s not a question of if, it’s a question of when”
                                          • Smart technology
                                            • Figure 17: Grocery shopping behaviors and desired improvements related to technology, by age, August 2015
                                          • Prepared meals, meal kits, and other subscription services
                                            • Online grocery shopping and pickup services
                                            • The Consumer – What You Need to Know

                                              • Supermarkets and Walmart top grocers shopped, but for how long?
                                                • Location, location, location
                                                  • Online grocery shopping still low, but growing
                                                    • Innovating around experience
                                                    • Who is the Primary Grocery Shopper?

                                                        • Figure 18: Primary grocery shopper profile, by key demographics, August 2015
                                                      • Many consumers find grocery shopping enjoyable
                                                        • Figure 19: Profile of grocery enthusiasts, by key demographics, August 2015
                                                      • In their words
                                                        • I enjoy grocery shopping
                                                          • Grocery shopping is not my favorite activity
                                                          • Retailers Shopped

                                                            • It’s a journey, not a destination
                                                              • Figure 20: Retailers shopped for groceries, August 2015
                                                            • Supermarkets not getting fair share of younger consumers
                                                              • Figure 21: Retailers shopped for groceries, by gender and age, August 2015
                                                            • Retailers must continue innovating to maintain or grow share
                                                              • In their words
                                                              • Reasons for Choosing Primary Grocery Retailer

                                                                • Loyal to a location, not a brand
                                                                  • Figure 22: Reasons for choosing primary grocery retailer, August 2015
                                                                • Small store formats help address the proximity issue
                                                                  • Employees can take on more of an expert/consultant role
                                                                    • Figure 23: Reasons for choosing primary grocery retailer, by generations, August 2015
                                                                    • Figure 24: Reasons for choosing primary grocery retailer, by Hispanic origin, August 2015
                                                                  • Do loyalty cards drive loyalty?
                                                                    • Important role
                                                                      • Not much influence
                                                                      • Changes in Grocery Spending

                                                                        • Consumers spend on average about $110 per week on groceries
                                                                          • Figure 25: Average grocery expenditures per week, April 2014-June 2015
                                                                        • Nearly half of shoppers are spending more online
                                                                          • Figure 26: Changes in grocery spending, by retailer type, August 2015
                                                                        • Why the changes?
                                                                        • Attitudes toward Online Grocery Shopping

                                                                          • High interest, slow adoption
                                                                            • Figure 27: Select attitudes toward shopping for groceries online, November 2013 and August 2015
                                                                            • Figure 28: Select attitudes toward shopping for groceries online, by select demographics, August 2015
                                                                          • High usage and interest in click-and-collect services
                                                                              • Figure 29: Attitudes toward using in-store pickup services for items purchased online, August 2015
                                                                            • In their words
                                                                              • Open-minded
                                                                                • Not interested
                                                                                • Grocery Shopping Behavior

                                                                                  • Planned versus impromptu
                                                                                    • Figure 30: Grocery shopping behavior, August 2015
                                                                                  • Preparation stage focused on finding the right price(s)
                                                                                      • Figure 31: Grocery shopping behavior, by generations, August 2015
                                                                                    • Coupons discovered in-store are gaining ground
                                                                                      • Figure 32: Shopper attitudes around coupons, January 2014
                                                                                  • The Grocery Shopping Process Revealed

                                                                                    • Desired Innovations and/or Improvements

                                                                                      • Grocery shopping offers rich emotional territory to tap into
                                                                                          • Figure 33: Desired innovations or improvements when grocery shopping, August 2015
                                                                                        • CHAID analysis
                                                                                          • Figure 34: Desired innovations or improvements when grocery shopping – CHAID – Tree output, August 2015
                                                                                        • How to drive brand preference and engagement: in their words
                                                                                        • Appendix – Data Sources and Abbreviations

                                                                                          • Data sources
                                                                                            • Sales data
                                                                                              • Fan chart forecast
                                                                                                • Consumer survey data
                                                                                                  • Consumer qualitative research
                                                                                                    • Abbreviations and terms
                                                                                                      • Abbreviations
                                                                                                        • Terms
                                                                                                        • Appendix – The Market

                                                                                                          • Total MULO sales of groceries
                                                                                                            • Figure 35: Total US MULO sales and forecast of groceries, at inflation-adjusted prices, 2010-20
                                                                                                          • Supermarket sales
                                                                                                            • Figure 36: Total US supermarket sales of groceries, at inflation-adjusted prices, 2010-20
                                                                                                            • Figure 37: Total US supermarket sales of groceries, by category, at current prices, 2010-20
                                                                                                          • Other MULO sales
                                                                                                            • Figure 38: Total US sales of groceries through other MULO retailers*, at inflation-adjusted prices, 2010-20
                                                                                                            • Figure 39: Total US sales of groceries through other MULO retailers*, by category, 2010-20
                                                                                                          • Additional data
                                                                                                            • Figure 40: Distribution of expenditures for food for off-premise consumption, 1995-2015
                                                                                                            • Figure 41: Household size, by race and Hispanic origin, 2012
                                                                                                            • Figure 42: Percentage of people aged 20 or older who are obese, by gender, 2001-04 to 2009-12
                                                                                                        • Appendix – The Consumer

                                                                                                          • CHAID methodology
                                                                                                            • Figure 43: Desired innovations or improvements when grocery shopping – CHAID – Table output, August 2015
                                                                                                            • Figure 44: General attitudes/opinions toward shopping, food, nutrition, April 2014-June 2015
                                                                                                            • Figure 45: Average grocery expenditures per week, 2011-15, April 2014-June 2015
                                                                                                            • Figure 46: Number of times shopped at any supermarket in last four weeks, April 2014-June 2015
                                                                                                            • Figure 47: Influence of advertising when shopping, always refer to, April 2014-June 2015
                                                                                                            • Figure 48: Regular coupon use by method, January 2015

                                                                                                        Companies Covered

                                                                                                        • Walmart Stores (USA)

                                                                                                        Grocery Retailing - US - November 2015

                                                                                                        £3,174.67 (Excl.Tax)