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Grocery Retailing - US - November 2017

"Given the essential nature of groceries, the industry remains somewhat protected from outside influencers that can cause wide variances in sales. However, food deflation has put a damper on sales and squeezed profits the past two years, causing some price wars. Channel switching is frequent in the industry, as consumers shop around for the lowest prices and/or look to fulfill all their needs. Common areas of strategic focus include improvements to produce and other fresh products, an increased emphasis on private label brands, investments in e-commerce and how to evolve into a lifestyle brand rather than merely a place to conduct transactions."

- Diana Smith, Associate Director - Retail & Apparel

This report will look at the following areas:

  • Food deflation has dampened sales but brighter outlook expected
  • Online marketplace has yet to take off
  • Price wars contribute to channel-shifting

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • Overview
          • The issues
            • Food deflation has dampened sales but brighter outlook expected
              • Figure 1: MULO sales and fan chart forecast of groceries, at current prices, 2012-22
            • Online marketplace has yet to take off
              • Figure 2: General online shopping behavior, August 2017
            • Price wars contribute to channel-shifting
              • Figure 3: Purchase incidence by channel – Shopping the same or more, August 2017
            • The opportunities
              • Play up freshness
                • Figure 4: Select items shopped at supermarkets/discount grocers*, August 2017
              • Invest in e-commerce
                • Figure 5: Buy online and pick up at store behavior, August 2017
              • Add a personal touch
                • Figure 6: Desired improvements, by generation, August 2017
              • What it means
              • The Market – What You Need to Know

                • Food deflation impedes sales
                  • Supermarkets have more work to do
                    • Away from home food consumption could threaten grocers’ sales
                      • It’s not all food and drinks
                        • Americans endeavor to lead healthier lifestyles
                        • Market Size and Forecast

                          • MULO sales escalate in spite of falling food costs
                            • Figure 7: MULO sales and fan chart forecast of groceries, at current prices, 2012-22
                            • Figure 8: MULO sales and forecast of groceries, at current prices, 2012-22
                        • Market Breakdown

                          • Gap widens between supermarkets and “all others”
                            • Figure 9: MULO sales and forecast of groceries, by segment, at current prices, 2012-22
                            • Figure 10: Percentage of total MULO grocery sales, by segment, at current prices, 2012-22
                          • Grocery more than food and drink
                            • Figure 11: MULO sales of groceries, by category, at current prices, 2011-21
                          • Supermarkets not getting fair share of household goods and HBC
                            • Figure 12: Percentage of MULO sales of groceries, by category and segment, at current prices, 2017
                            • Figure 13: Total MULO percentage of sales of groceries, by category, by segment, at current prices, 2017
                        • Market Perspective

                          • Food at home on top for now
                            • Figure 14: Share of food expenditures for food at home and food away from home, 2007-17
                          • Meal kits: opportunity or new competitive channel?
                            • Figure 15: Attitudes toward meal kits, by generation, August 2017
                          • In their words
                            • Key players and efforts at retail
                            • Market Factors

                              • Nearly three quarters of Millennials solely responsible for grocery shopping
                                • Figure 16: US population by generation, 2017
                              • Increasing diversity influencing American palette
                                • Figure 17: Purchase incidence by channel – Shopping more, by race and Hispanic origin, August 2017
                                • Figure 18: Purchase location, by race and Hispanic origin, December 2016
                              • Food deflation continues
                                • Figure 19: Changes in at home food price indexes, 2016-18
                              • Already fierce competitive landscape sees even more entrants
                                • Americans’ attempts to eat healthier impact retailer choices
                                  • The acquisition that rocked the grocery world
                                  • Key Players – What You Need to Know

                                    • Top five grocers garner over a half billion in sales
                                      • Foodservice in grocery retail becomes commonplace
                                        • Big guys are pressuring the little guys
                                          • Amazon implements immediate change with newly acquired Whole Foods
                                            • Lidl and Aldi set to expand
                                            • Company Sales of Grocery Retailers

                                              • No major changes among the top 10
                                                  • Figure 20: Top US grocery retailers, 2017
                                              • What’s Trending?

                                                • Supermarkets beef up foodservice programs
                                                  • Hy-Vee
                                                    • Mariano’s
                                                      • Wegman’s
                                                        • Kroger
                                                          • Grocery bars a new opportunity for alcohol brands
                                                            • Private label not so private
                                                              • In their words: private label brands
                                                              • What’s Struggling?

                                                                • Small, independent grocers need to find their niche
                                                                • What’s Next?

                                                                  • Amazon bought Whole Foods; Now what?
                                                                      • Figure 21: Amazon Locker at Whole Foods Market, Chicago, September 2017
                                                                    • Consumer reaction
                                                                      • What’s going on with Lidl and Aldi?
                                                                        • Voice-controlled orders are the future
                                                                        • The Consumer – What You Need to Know

                                                                          • Many consumers like to grocery shop
                                                                            • Men share the responsibility
                                                                              • Value chains see gains
                                                                                • Online shopping still lags
                                                                                  • Supermarkets evolve to become more lifestyle-oriented
                                                                                  • Grocery Shopper Profile

                                                                                      • Two thirds of consumers do all the shopping
                                                                                        • Figure 22: Grocery shopping responsibility, August 2017
                                                                                        • Figure 23: Grocery shopping responsibility, by key demographics, August 2017
                                                                                      • Men play a big role
                                                                                        • Millennials take on more responsibility
                                                                                          • Enjoyment for grocery shopping leads consumers into stores
                                                                                            • Figure 24: Grocery shopping enjoyment, by gender and age and race and Hispanic origin, August 2017
                                                                                        • Purchase Incidence by Channel

                                                                                            • Value-oriented stores and Amazon attract more shoppers
                                                                                              • Figure 25: Purchase incidence by channel – Any shopping, August 2017
                                                                                              • Figure 26: Purchase incidence by channel, August 2017
                                                                                            • Lower income consumers going outside traditional grocery stores in search of better prices
                                                                                              • Figure 27: Purchase incidence by channel – Shopping more, by age and income, August 2017
                                                                                            • Majority of Blacks and Hispanics shopping more at value-oriented stores
                                                                                              • Figure 28: Purchase incidence by channel – Shopping more, by race and Hispanic origin, August 2017
                                                                                            • In their words: where they shop
                                                                                            • Channels Shopped by Item

                                                                                                • Nearly three in 10 shoppers go to at least three stores
                                                                                                  • Figure 29: Number of stores shopped, August 2017
                                                                                                  • Figure 30: Three or more stores shopped, by generation and Hispanic generation, August 2017
                                                                                                • In their words: why they shop around
                                                                                                  • Supermarkets have an opportunity to redefine fresh
                                                                                                    • Figure 31: Correspondence analysis – Channels shopped by item, August 2017
                                                                                                    • Figure 32: Channels shopped by item, August 2017
                                                                                                • Online Shopping Attitudes and Behaviors

                                                                                                    • One third of adults have purchased groceries online
                                                                                                      • Figure 33: General online shopping behavior, August 2017
                                                                                                      • Figure 34: Online buyer profile, by key demographics, August 2017
                                                                                                    • Why aren’t more people buying groceries online?
                                                                                                      • What are retailers doing to build e-commerce?
                                                                                                        • Click and collect a big hit
                                                                                                          • Figure 35: Buy online and pick up at store behavior, August 2017
                                                                                                          • Figure 36: Buy online and pick up at store behavior, by parental status, August 2017
                                                                                                        • Delivery continues to evolve
                                                                                                          • Figure 37: Willingness to pay for grocery delivery services, by gender and age and household income, August 2017
                                                                                                        • In their words: thoughts on ordering groceries online
                                                                                                        • Spending and Shopping Frequency

                                                                                                          • Spending
                                                                                                            • Average weekly grocery spending hovers at $108
                                                                                                              • Figure 38: Average grocery expenditures per week, April 2016-May 2017
                                                                                                            • In their words
                                                                                                              • Frequency
                                                                                                                • Supermarkets draw the most weekly shoppers
                                                                                                                  • Figure 39: Shopping frequency per channel, August 2017
                                                                                                              • Grocery Shopping Process

                                                                                                                  • Pre-planning
                                                                                                                    • One quarter of shoppers use tools to plan shopping trips
                                                                                                                      • Figure 40: Food and drink shopping technology usage and awareness – Currently using, by generation, August 2016
                                                                                                                      • Figure 41: Top sources of coupons, ever used, April 2016-May 2017
                                                                                                                    • In their words
                                                                                                                      • In-store shopping
                                                                                                                        • Stuck in a routine
                                                                                                                          • In their words
                                                                                                                          • Desired Improvements

                                                                                                                              • More than just a place to shop
                                                                                                                                • Figure 42: Foodservice concept interest, August 2017
                                                                                                                              • In their words: experiential retailing
                                                                                                                                • Millennials interested in ways to save time
                                                                                                                                  • Figure 43: Desired improvements, by generation, August 2017
                                                                                                                                • TURF analysis reveals many opportunities to maximize reach
                                                                                                                                  • Figure 44: TURF analysis – Desired improvements, August 2017
                                                                                                                              • Appendix – Data Sources and Abbreviations

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

                                                                                                                                                      • Figure 45: MULO sales and forecast of groceries, at inflation-adjusted prices, 2012-22
                                                                                                                                                      • Figure 46: MULO sales and fan chart forecast of supermarkets, at current prices, 2012-22
                                                                                                                                                      • Figure 47: MULO sales and fan chart forecast of other MULO, at current prices, 2012-22
                                                                                                                                                      • Figure 48: MULO sales of groceries, by segment, at current prices, 2015 and 2017
                                                                                                                                                      • Figure 49: Supermarket sales of groceries, at current prices, 2012-17
                                                                                                                                                      • Figure 50: Supermarket sales of groceries, at inflation-adjusted prices, 2012-17
                                                                                                                                                      • Figure 51: Sales of groceries through other MULO retailers*, at current prices, 2012-22
                                                                                                                                                      • Figure 52: Sales of groceries through other MULO retailers*, at inflation-adjusted prices, 2012-22
                                                                                                                                                      • Figure 53: Supermarket sales of groceries, by category, at current prices, 2012-17
                                                                                                                                                      • Figure 54: Sales of groceries through other MULO retailers*, by category, 2012-17
                                                                                                                                                      • Figure 55: MULO sales of food and drink, by retail channel, 2012-17
                                                                                                                                                      • Figure 56: MULO sales of household goods, by retail channel, 2012-17
                                                                                                                                                      • Figure 57: MULO sales of HBC products, by retail channel, 2012-17
                                                                                                                                                      • Figure 58: Population by race and Hispanic origin, 2012-22
                                                                                                                                                      • Figure 59: Distribution of generations by race and Hispanic origin, 2017
                                                                                                                                                      • Figure 60: Distribution of expenditures for food for off-premise consumption, by retail channel, 1996-2016
                                                                                                                                                  • Appendix – The Consumer

                                                                                                                                                      • Figure 61: Choosing a non-supermarket location, March 2015
                                                                                                                                                      • Figure 62: Categories purchased at supermarkets/discount grocers, August 2017
                                                                                                                                                      • Figure 63: Categories purchased at mass merchandisers, August 2017
                                                                                                                                                      • Figure 64: Categories purchased at drug stores, August 2017
                                                                                                                                                      • Figure 65: Categories purchased at online-only retailers, August 2017
                                                                                                                                                      • Figure 66: Categories purchased at warehouse clubs, August 2017
                                                                                                                                                      • Figure 67: Categories purchased at organic/natural grocers, August 2017
                                                                                                                                                      • Figure 68: Number of times shopped at any supermarket in last four weeks, April 2016-May 2017
                                                                                                                                                      • Figure 69: Where coupons are redeemed, April 2016-May 2017
                                                                                                                                                      • Figure 70: Sources of coupons, ever use, April 2016-May 2017
                                                                                                                                                      • Figure 71: Types of coupons used, April 2016-May 2017
                                                                                                                                                      • Figure 72: Supermarkets/food stores shopped in past four weeks, April 2016-May 2017
                                                                                                                                                      • Figure 73: Shopping – Any reference, by generation, Winter 2017
                                                                                                                                                      • Figure 74: Table – TURF analysis – Desired improvements, August 2017
                                                                                                                                                    • Additional qualitative responses
                                                                                                                                                      • Meal kits
                                                                                                                                                        • Private label brands
                                                                                                                                                          • Where consumers shop
                                                                                                                                                            • Grocery budgeting
                                                                                                                                                              • Pre-planning process
                                                                                                                                                                • In-store shopping process
                                                                                                                                                                  • Experiential retailing

                                                                                                                                                                  Companies Covered

                                                                                                                                                                  To learn more about the companies covered in this report please contact us.

                                                                                                                                                                  Grocery Retailing - US - November 2017

                                                                                                                                                                  US $3,995.00 (Excl.Tax)