Grocery Retailing - US - February 2013

SCOPE AND THEMES
What you need to know
Definition
Data sources
Sales data
Consumer survey data
Advertising creative
Abbreviations and terms
Abbreviations
Terms
EXECUTIVE SUMMARY
The market
Weathering the economic uncertainty with positive outlook
Figure 1: Fan chart forecast of MULO sales of groceries, at current prices, 2009-17
Supermarkets capture the lion’s share of the grocery retail sales
Figure 2: MULO sales, by retail channel, at current prices, 2012
Market factors
The impact of aging Boomers and engaged Millennials
Figure 3: U.S. population, by generation, 2012
Role of grocery retailers in health and wellness
Coupons move into a new era
Figure 4: Use of cents-off coupons, by type of retailer, selected years 2006-12
Supermarkets sustain competitive advantage in the crowded grocery retailing market
The consumer
Six in 10 shoppers claim take sole responsibility for household grocery shopping
Figure 5: Grocery shopping responsibility, November 2012
Supermarkets achieve “most often” patronage for food and drink
Figure 6: Retailers and channels shopped for food/drink, November 2012
Mass merchandisers and club stores most-often channel to shop for nonfood items
Figure 7: Retailers and channels shopped for nonfood/drink groceries, November 2012
Increased spending at big-box/club stores and supermarkets
Figure 8: Spending more than last year on groceries at selected channels, November 2012
Coupons are popular tool to save grocery expenditures
Figure 9: Saving strategies when grocery shopping, November 2012
Lower prices remain king in grocery shopping, but not alone
Figure 10: Attitudes and behaviors toward grocery shopping, November 2012
Grocery shoppers would welcome coupon and promotion customizations
Figure 11: Innovations and improvements sought in the grocery shopping experience, November 2012
What we think
ISSUES IN THE MARKET
What are the potential implications of divergent generational shopping behaviors on grocery retailing?
How can grocery retailers close the generational gap?
How can supermarkets stay competitive against deep-discounted channels?
In what innovative ways can grocery channels improve their relevance to shoppers?
INSIGHTS AND OPPORTUNITIES
Demographic shift translates into different ways to succeed
Primary grocery shoppers demand more local food
Capital investment focused on technology could leverage brand loyalty
Obesity prevalence presents abundant market opportunities
Figure 12: Adult and childhood obesity rates, 2011
Attention to a healthy lifestyle can encourage grocery shopping
TREND APPLICATIONS
Trend: The Nouveau Poor
Trend: Without a Care
Inspire 2015 trends
Access Anything Anywhere
MARKET SIZE AND FORECAST
Key points
Stronger outlook for groceries
Figure 13: MULO sales and forecast of groceries, at current prices, 2009-17
Figure 14: MULO sales and forecast of groceries, at inflation-adjusted prices, 2009-17
Fan chart forecast
Figure 15: Fan chart forecast of MULO sales of groceries, at current prices, 2009-17
MARKET DRIVERS
Key points
Creating oases in food deserts has the potential to spur growth
Coupons more accessible and usable via better targeting and mobile apps
Figure 16: Use of cents-off coupons, by retailer type, selected years 2006-12
Leveraging private labels/store brands to boost sales and brand loyalty
Increasing consumer confidence influences more spending on groceries
Figure 17: University of Michigan’s index of consumer sentiment, November 1978-2012
The direction of grocery retailing influenced by shifting generational demographics
Figure 18: U.S. population, by generation, 2012
Figure 19: U.S. population, by age, 2008-18
Figure 20: Share of population by generation, by race/Hispanic origin, 2012
SEGMENT PERFORMANCE
 OVERVIEW
Key points
Supermarkets dominate sales, but show weakest growth
Figure 21: MULO sales and forecast of groceries, by retail channel, at current prices, 2009-17
Figure 22: MULO sales and forecast of groceries, by retail channel, at current prices, 2009-17
Food and drink dominate retail grocery sales
Figure 23: MULO sales of groceries, by product segment, at current prices, 2009-12
 SUPERMARKETS
Key points
Supermarkets’ retail sales receipt will post a moderate growth
Figure 24: MULO sales and forecast of groceries sold at supermarkets, at current prices, 2009-17
Product segmentation at supermarkets
Supermarkets’ competitive advantage lies in food and drink
Household supplies and general merchandise the weakest sales generation
HBC small representation posted the highest growth
Figure 25: MULO sales of groceries sold at supermarkets, by product segment, at current prices, 2009-12
 DRUG STORES
Key points
Drug stores show the highest outlook for growth through 2017
Figure 26: MULO sales and forecast of groceries sold at drugstores, at current prices, 2009-17
Product segmentation at drug stores
Food and drink showed strong sales growth
Household supplies/general merchandise
Naturally, HBC dominates
Figure 27: MULO sales of groceries sold at drugstores, by product segment, at current prices, 2009-12
 OTHER MULO CHANNELS
Key points
Other MULO prospered during the post-recession era
Figure 28: MULO sales and forecast of groceries sold at other MULO, at current prices, 2009-17
Product segmentation through other MULO channels
Figure 29: MULO sales of groceries sold at other MULO, by product segment, at current prices, 2009-12
RETAILER PROFILES
Traditional supermarkets
Ahold USA
Delhaize America
Giant Eagle
Kroger
Publix Super Markets
Safeway
Figure 30: Safeway’s private label brands and positioning, January 2013
Supervalu
Figure 31: Supervalu’s store banners, number of stores, and key markets, January 2013
Wegmans
Whole Foods Market
Trader Joe’s
Market threats and opportunities for traditional supermarkets
Mass merchandisers and supercenters
Target
Walmart
Meijer
Market threats and opportunities for mass merchandisers
Warehouse clubs
Costco
Sam’s Club
BJ’s Wholesale Club
Market threats and opportunities for warehouse clubs
Drug stores
Walgreens
Duane Reade
CVS
Rite Aid
Market threats and opportunities for drug stores
Dollar stores and discount food stores
ALDI
Bottom Dollar
Food 4 Less
Save-A-Lot
Dollar General
Dollar Tree
Family Dollar
Market threats and opportunities for dollar stores and discount food stores
Online retailers
Amazon.com
Peapod.com
FreshDirect.com
Market threats and opportunities for online retailers
Other notable grocery retailers
Farmers markets
Figure 32: Number of operating farmers markets in the U.S., 2002-12
INNOVATIONS AND INNOVATORS
Shopmuting I: Peapod’s virtual store
Figure 33: Peapod’s virtual stores, October 2012
Shopmuting II: Walmart’s ‘Food Truck’
Figure 34: Walmart’s “food truck” in New York City, June 2012
Direct order: ‘farm to table’
Figure 35: Relay Foods’ shopping and ordering, 2013
Digital coupons management: Passbook
Figure 36: Passbook App: Walgreens’ Balance Reward and Target Mobile Coupons, September 2012
Gourmet food-sample subscription service: Walmart’s Goodies
Figure 37: Walmart—Goodies Co., November 2012
Robotic kiosks 24/7 access
Figure 38: Kroger’s Shop 24 Robotic Store, February 2012
Revamping search engine: Polaris by Walmart
SOCIAL MEDIA—GROCERY RETAILING
Key points
 SOCIAL MEDIA METRICS
Figure 39: Key performance indicators, January 2013
Market overview
Brand usage and awareness
Figure 40: Brand usage and awareness of grocery retailing brands, November 2012
Interaction with grocery retailing brands
Figure 41: Interaction with grocery retailing brands, November 2012
Online conversations
Figure 42: Select grocery retailing brands’ share of conversations, Dec. 28, 2012-Jan. 27, 2013
Figure 43: Conversations by brand by day, Dec. 28, 2012-Jan. 27, 2013
Where are people talking about grocery retailing brands?
Figure 44: Selected grocery retailing brands’ share of brand conversations, by page type, Dec. 28, 2012-Jan. 27, 2013
What are people talking about?
Figure 45: Types of conversations concerning selected grocery retailing brands, Dec. 28, 2012-Jan. 27, 2013
Figure 46: Types of conversation regarding selected grocery retailing brands, by day, Dec. 28, 2012-Jan. 27, 2013
Figure 47: Types of conversation regarding selected grocery retailing brands, by type of website, Dec. 28, 2012-Jan. 27, 2013
 ANALYSIS BY BRAND
Whole Foods Market
Figure 48: Whole Foods—key social media indicators, Jan. 28, 2013
Key online campaigns
What we think
Kroger
Figure 49: Kroger—key social media indicators, Jan. 28, 2013
Key online campaigns
What we think
Safeway
Figure 50: Safeway—key social media indicators, Jan. 28, 2013
Key online campaigns
What we think
Walmart
Figure 51: Walmart—key social media indicators, Jan. 28, 2013
Key online campaigns
What we think
Target
Figure 52: Target—key social media indicators, Jan. 28, 2013
Key online campaigns
What we think
Costco
Figure 53: Costco—key social media indicators, Jan. 28, 2013
Key online campaigns
What we think
Albertsons Market
Figure 54: Albertsons market—key social media indicators, Jan. 28, 2013
Key online campaigns
What we think
MARKETING STRATEGIES
 INNOVATIVE WAYS TO IMPROVE THE SHOPPING EXPERIENCE
Strategy: Stimulating grocery shopping with fuel loyalty programs
Figure 55: VG’s Grocery, “Savings Report,” July 2012
Strategy: Promoting online delivery ‘sampling’
Figure 56: Peapod, “$20 Off Your First Delivery Order,” January 2013
Strategy: Offering ways to eat healthier food choices and recipe ideas
Figure 57: Whole Foods, “sales flyer: the whole deal,” January 2013
 PROMOTING GROCERY SHOPPING SAVING STRATEGIES
Strategy: Buying fresh, wholesome produce without hurting the budget
Figure 58: Aldi, “Don't Pay More,” October 2012
Strategy: Comparing price with the competition to stimulate sales
Figure 59: Walmart, “Heavy Savings,” August 2012
Strategy: Encouraging saving behaviors with sales flyers
Figure 60: Dollar General Market, “Dollar General’s Sales Flyer,” January 2013
Strategy: Appealing to the budget-conscious grocery shoppers
Figure 61: Save-A-Lot, “Importance of Dollar,” July 2012
Strategy: Increasing foot traffic for grand opening through mail coupons
Figure 62: Aldi, “Aldi truth #12: we don’t match other stores’ prices because that would mean raising ours,” January 2013
 POSITIONING BRANDS BY ALIGNING WITH CONSUMERS’ ATTITUDES/BEHAVIORS TOWARD GROCERY SHOPPING
Strategy: Supporting local organizations—show shoppers that you care
Figure 63: Whole Foods, “Whole Foods Market Chicago: bright pink,” January 2013
Strategy: Exuding style in grocery shopping
Figure 11: Target, “The Everyday Collection. By Target: Dominate that PTA Bake Sale,” January 2013
Strategy: Giving shoppers the convenience of ‘one-stop’ shopping
Figure 64: Fred Meyer, “Thanksgiving,” November 2012
GROCERY SHOPPING DECISION MAKERS
Key points
Baby Boomers and Gen Xers most likely be the sole grocery shoppers
Figure 65: Grocery shopping responsibility, by generation, November 2012
Don’t forget the men—half share responsibility for grocery shopping
Figure 66: Grocery shopping responsibility, by gender, November 2012
Figure 67: Grocery shopping responsibility, by gender and age, November 2012
Sharing shopping responsibilities increases with income
Figure 68: Grocery shopping responsibility, by household income, November 2012
RETAILERS AND CHANNELS SHOPPED FOR FOOD/DRINK
Key points
Primary shoppers most often shop at supermarkets for food/drink
Figure 69: Retailers and channels shopped for food/drink, November 2012
Older generations remain loyal to supermarkets
Figure 70: Retailers and channels shopped for food/drink, by generation, November 2012
Figure 71: Retailers and channels most often shopped for food/drink, by generation, November 2012
For food/drink shopping, little variance in store-type patronage by gender
Figure 72: Retailers and channels shopped for food/drink, by gender, November 2012
Figure 73: Retailers and channels most often shopped for food/drink, by gender and age, November 2012
Income impacts sources of food/drink groceries
Figure 74: Retailers and channels shopped for food/drink, by household income, November 2012
Figure 75: Retailers and channels most often shopped for food/drink, by household income, November 2012
RETAILERS AND CHANNELS SHOPPED FOR NONFOOD/DRINK
Key points
Big-box stores are “most shopped at” for home essentials and HBC
Figure 76: Retailers and channels shopped for nonfood/drink groceries, November 2012
Mass merchandisers and club stores win over Millennials and Gen Xers
Figure 77: Retailers and channels shopped for nonfood/drink groceries, by generation, November 2012
Figure 78: Retailers and channels most often shopped for nonfood/drink groceries, by generation, November 2012
Men and women buy household essentials/HBC at multiple channels, but most use Walmart
Figure 79: Retailers and channels shopped for nonfood/drink groceries, by gender, November 2012
Figure 80: Retailers and channels most often shopped for nonfood/drink groceries, by gender and age, November 2012
Higher income groups continue to buy household items at supercenters/club stores
Figure 81: Retailers and channels shopped for nonfood/drink groceries, by household income, November 2012
Figure 82: Retailers and channels most often shopped for nonfood/drink groceries, by household income, November 2012
CHANGE IN GROCERIES SPENDING AT SELECTED RETAIL CHANNELS
Key points
Increased spending at big-box/club stores and supermarkets
Figure 83: Change in spending this year vs. last at selected retailers/channels, November 2012
Millennials, Gen Xers spend more on groceries through almost all channels
Figure 84: Spending more than last year at selected retailers/channels, by generation, November 2012
Female primary grocery shoppers spend more on grocery spending
Figure 85: Spending more than last year at selected retailers/channels, by gender, November 2012
Regardless of income, primary shoppers increase spending at discount stores
Figure 86: Spending more than last year at selected retailers/channels, by household income, November 2012
Changes in grocery expenditures associated with presence of children
Figure 87: Spending more than last year at selected retailers/channels, by parents with children and age of children, November 2012
GROCERY SHOPPING SAVING STRATEGIES
Key points
Primary shoppers mostly use coupons to save grocery expenditures
Figure 88: Saving strategies when grocery shopping, November 2012
Variances in saving strategies across generations
Figure 89: Saving strategies when grocery shopping, by generation, November 2012
Female grocery shoppers adhere to saving strategies
Figure 90: Saving strategies when grocery shopping, by gender, November 2012
Finding ways to save is on everyone's mind, even the richest
Figure 91: Saving strategies when grocery shopping, by household income, November 2012
Money-saving strategies exercised at all channels, regardless of product type
Figure 92: Retailers and channels shopped for food/drink, by saving strategies when grocery shopping, November 2012
Figure 93: Retailers and channels shopped for nonfood/drink groceries, by saving strategies when grocery shopping, November 2012
ATTITUDES AND BEHAVIORS TOWARD GROCERY SHOPPING
Key points
Price and convenience are essential to encourage shopping
Figure 94: Attitudes and behaviors toward grocery shopping, by generation, November 2012
Women drawn to convenience, price, and store experience
Figure 95: Attitudes and behaviors toward grocery shopping, by gender, November 2012
Income correlates with consumers’ attitudes to grocery shopping
Figure 96: Attitudes and behaviors toward grocery shopping, by household income, November 2012
INNOVATIONS AND IMPROVEMENTS SOUGHT IN THE GROCERY SHOPPING EXPERIENCE
Key points
Coupon and promotion customizations are most sought after
Figure 97: Innovations and improvements sought in the grocery shopping experience, November 2012
Variations in demand for innovations by generations leads to opportunities
Figure 98: Innovations and improvements sought in the grocery shopping experience, by generation, November 2012
Women keen for improvement in their shopping experience
Figure 99: Innovations and improvements sought in the grocery shopping experience, by gender, November 2012
IMPACT OF RACE AND HISPANIC ORIGIN
Key points
Black grocery shoppers tend to take sole responsibility for groceries
Figure 100: Grocery shopping responsibility, by race/Hispanic origin, November 2012
Regardless of race, shoppers most likely buy food/drinks at supermarkets
Figure 101: Retailers and channels shopped for food/drink, by race/Hispanic origin, November 2012
Figure 102: Retailers and channels most often shopped for food/drink, by race/Hispanic origin, November 2012
For nonfood/drink products, high patronage at mass merchandisers/club stores
Figure 103: Retailers and channels shopped for nonfood/drink groceries, by race/Hispanic origin, November 2012
Figure 104: Retailers and channels most often shopped for nonfood/drink groceries, by race/Hispanic origin, November 2012
Black shoppers show highest likelihood of increased spend at Walmart
Figure 105: Spending more than last year at selected retailers/channels, by race/Hispanic origin, November 2012
Black and Hispanic shoppers most likely to switch channels for better deals
Figure 106: Saving strategies when grocery shopping, by race/Hispanic origin, November 2012
Blacks more influenced by price; Hispanics by store experience/convenience
Figure 107: Attitudes and behaviors toward grocery shopping, by race/Hispanic origin, November 2012
Customized coupons are most favored by whites; Hispanic welcome more integration of digital technology in their shopping experience
Figure 108: Innovations and improvements sought in the grocery shopping experience, by race/Hispanic origin, November 2012
APPENDIX – OTHER USEFUL CONSUMER TABLES
Grocery shopping decision makers
Figure 109: Grocery shopping responsibility, by region, November 2012
Retailers and channels shopped for food/drink
Figure 110: Retailers and channels shopped for food/drink, by gender and age, November 2012
Figure 111: Retailers and channels shopped for food/drink, by marital/relationship status, November 2012
Figure 112: Retailers and channels most often shopped for food/drink, by marital/relationship status, November 2012
Figure 113: Retailers and channels shopped for food/drink, by parents with children and age, November 2012
Figure 114: Retailers and channels shopped for food/drink, by region, November 2012
Figure 115: Retailers and channels most often shopped for food/drink, by region, November 2012
Retailers and channels shopped for nonfood/drink
Figure 116: Retailers and channels shopped for nonfood/drink groceries, by gender and age, November 2012
Figure 117: Retailers and channels shopped for nonfood/drink groceries, by marital/relationship status, November 2012
Figure 118: Retailers and channels most often shopped for nonfood/drink groceries, by marital/relationship status, November 2012
Figure 119: Retailers and channels shopped for nonfood/drink groceries, by parents with children and age of children, November 2012
Figure 120: Retailers and channels most often shopped for nonfood/drink groceries, by parents with children and age of children, November 2012
Figure 121: Retailers and channels shopped for nonfood/drink groceries, by region, November 2012
Figure 122: Retailers and channels most often shopped for nonfood/drink groceries, by region, November 2012
Change in spend in grocery shopping
Figure 123: Spending the same/more than last year at selected retailers/channels, by generation, November 2012
Figure 124: Spending the same/more than last year at selected retailers/channels, by gender and age, November 2012
Figure 125: Spending more than last year at selected retailers/channels, by gender and age, November 2012
Figure 126: Spending the same/more than last year at selected retailers/channels, by household income, November 2012
Figure 127: Spending the same/more than last year at selected retailers/channels, by region, November 2012
Figure 128: Spending more than last year at selected retailers/channels, by region, November 2012
Figure 129: Spending the same/more than last year at selected retailers/channels, by marital/relationship status, November 2012
Figure 130: Spending more than last year at selected retailers/channels, by marital/relationship status, November 2012
Figure 131: Spending the same/more than last year at selected retailers/channels, by parents with children and age of children, November 2012
Figure 132: Spending the same/more than last year at selected retailers/channels, by race/Hispanic origin, November 2012
Attitudes and behaviors toward grocery shopping
Figure 133: Attitudes and behaviors toward grocery shopping, by household income, November 2012
Figure 134: Attitudes and behaviors toward grocery shopping, by marital/relationship status, November 2012
Figure 135: Attitudes and behaviors toward grocery shopping, by parents with children and age of children, November 2012
Figure 136: Attitudes and behaviors toward grocery shopping, by region, November 2012
Money-saving strategies in grocery shopping
Figure 137: Saving strategies when grocery shopping, by region, November 2012
Figure 138: Saving strategies when grocery shopping, by gender and age, November 2012
Figure 139: Saving strategies when grocery shopping, by marital/relationship status, November 2012
Innovations and Improvements Sought in the Grocery Shopping Experience
Figure 140: Innovations and improvements sought in the grocery shopping experience, by gender and age, November 2012
Figure 141: Innovations and improvements sought in the grocery shopping experience, by marital/relationship status, November 2012
Figure 142: Innovations and improvements sought in the grocery shopping experience, by parents with children and age of children, November 2012
Figure 143: Innovations and improvements sought in the grocery shopping experience, by household income, November 2012
Figure 144: Innovations and improvements sought in the grocery shopping experience, by region, November 2012
APPENDIX – SOCIAL MEDIA – GROCERY RETAILING
Brand usage or awareness
Figure 145: Brand usage or awareness, November 2012
Figure 146: Walmart usage or awareness, by demographics, November 2012
Figure 147: Safeway usage or awareness, by demographics, November 2012
Figure 148: Albertsons usage or awareness, by demographics, November 2012
Figure 149: Kroger usage or awareness, by demographics, November 2012
Figure 150: Target usage or awareness, by demographics, November 2012
Figure 151: Costco usage or awareness, by demographics, November 2012
Figure 152: Whole foods market usage or awareness, by demographics, November 2012
Interaction with grocery retailing brands
Figure 153: Activities done, November 2012
Figure 154: Walmart—Activities done, by demographics, November 2012
Figure 155: Walmart—Activities done, by demographics, November 2012
Figure 156: Safeway – Activities done, by demographics, November 2012
Figure 157: Safeway – Activities done, by demographics, November 2012
Figure 158: Albertsons – Activities done, by demographics, November 2012
Figure 159: Albertsons – Activities done, by demographics, November 2012
Figure 160: Kroger – Activities done, by demographics, November 2012
Figure 161: Kroger – Activities done, by demographics, November 2012
Figure 162: Target – Activities done, by demographics, November 2012
Figure 163: Target – Activities done, by demographics, November 2012
Figure 164: Costco – Activities done, by demographics, November 2012
Figure 165: Costco – Activities done, by demographics, November 2012
Figure 166: Whole foods market– Activities done, by demographics, November 2012
Figure 167: Whole foods market – Activities done, by demographics, November 2012
APPENDIX – TRADE ASSOCIATIONS