Dive Brief:
- Consumers spent more of their holiday food and beverage dollars at wholesale clubs than traditional grocery stores in November, according to the latest Bank of America Consumer Spending Snapshot.
- Last month, which included Thanksgiving food shopping, consumers with active Bank of America accounts spent 2% more at grocery stores compared to November 2015, after flat sales growth in the previous year. In the same time period, consumers spent 2% less at mass-market grocery chains, while spending 22% more at wholesale clubs.
- Spending at wholesale clubs grew; in 2015, it was a 19% increase in the year prior. Point-of-sale retail transactions declined by 4% from the year before, compared to a 2% increase from 2014 to 2015.
Dive Insight:
This data covers only Bank of America card-holding consumers, but the results are still indicative of overarching trends at grocery stores. In particular, consumer spend continues to shift toward online retailers and wholesale clubs, which could be a result of convenience and better pricing.
Competing with wholesale retailers that can sell bulk products at lower prices is one of many challenges traditional grocery stores have to face at all times of year, not just the holidays. But because consumer spending tends to be higher around the holidays, this time of year is critical for all retailers.
Where traditional grocery stores can compete is offering more varieties of individual products within a category, which wholesale clubs often lack. Grocery stores can also stress how buying in bulk could lead to more food waste if consumers or their families can't actually finish all of that food or beverage before it expires. To better compete with online retail, traditional grocery stores can emphasize the freshness of products available around the perimeter of the store, which online retailers may not have.