Report: Traditional supermarkets will decrease by 25% over the next few years
- The number of traditional supermarkets in the U.S. will decrease 24.6% by 2021, according to a recent report from Inmar Willard Bishop Analytics cited by Store Brands. But super warehouse formats, limited assortment and fresh-focused stores will see double-digit growth.
- Online grocery shopping will continue to grow at a rapid pace, driven by millennials and consumers looking for convenient solutions, Inmar Willard Bishop noted. The report also stressed the importance of differentiation in the marketplace, warning that "trading partners will fail if they try to be all things to all consumers.”
- "Assortment, merchandising (in-store and online), pricing, promotions and services must all be relevant in order to influence shopper behaviors,” the report stated. “Missing the mark in one or two areas will likely result in more ‘channel hopping,’ which further diminishes loyalty.”
In an over-stored industry that’s seeing discounters, specialty retailers and other alternative formats muscle in, traditional grocers are on the chopping block. Long the dominant players in grocery, these large, one-stop shops are having a hard time adjusting to consumers’ fresh-first, channel-hopping habits and renewed focus on price.
Large chains like Food Lion, Albertsons and Southeastern Grocers’ Winn-Dixie and Bi-Lo brands are under considerable pressure these days. Aside from shifting consumer preferences, the industry may very well be seeing a price war take shape between Walmart, discounters Aldi and Lidl, and now Amazon. Kroger, which has long managed to stay above the fray, has seen its stock battered in recent weeks.
These chains have considerable resources to draw upon, however, and are updating their stores in an effort to stay relevant. The ones that have it particularly rough are regional chains, which often don’t have strong financial backing on which to fall back.
Marsh, which used to be a dominant player in the Midwest grocery market, failed to muster a timely response to competitors that encroached on its turf over the past decade. When it did finally respond, the company overextended itself with new stores and remodels rather than retrenching and focusing on the basics. Likewise, Central Grocers’ wholesale operations, along with its Strack & Van Til and Ultra Foods locations, recently bowed to competitive pressures.
Some regional grocers like health-focused Hy-Vee are well positioned for the future. But many are caught in an increasingly dangerous “middle ground,” according to Willard Bishop’s Craig Rosenbloom, and will likely go under as industry pressures intensify.
“In grocery retail today, you have to stay out of that unsustainable middle ground,” Rosenblum recently told Food Dive. “If you’re not differentiating, you’re dying.”
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