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Grocery Retailing - US - November 2017

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

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