Fresh formats, e-commerce to grow fastest through 2017

August 09, 2013

Shoppers will reward retailers that give them food the way they want it—natural, organic, high-quality, fresh, fast and convenient.

From the upcoming issue of Facts, Figures & the Future.

By 2017, traditional grocery stores will lose another 1.6 percentage points of dollar-spend market share to 44.9%—down from 46.5% in 2012.

Though the umbrella figure of traditional grocery stores (including supermarkets, fresh format, limited assortment, super warehouse and other formats) will rise to 40,394 from 40,245, the conventional supermarket count will dip (to 25,821 from 26,257), while fresh-format, limited-assortment and super-warehouse stores will rise.

Simultaneously, convenience stores will gain 1.1 percentage points of dollar-spend market share to 16.0%—up from 14.9% in 2012—as they become even more ubiquitous with 161,342 retail locations. 

Also, non-traditional grocery stores will grow by 0.5 percentage points of dollar-spend market share to 39.1%—up from 38.6% in 2012.

In absolute dollar figures, these projections in The Future of Food Retailing by the Willard Bishop consultancy, show traditional grocery stores will sell $561.1 billion of groceries and consumables in 2017, up from $517.7 billion in 2012. Convenience stores will ring up $199.3 billion in 2017, up from $165.9 billion in 2012. Non-traditional grocery outlets will sell $488.5 billion in 2017, up from $429.3 billion in 2012.

Within the traditional grocery sector, the shift to generally smaller, singular formats escalates as merchants attempt to give consumers the value, freshness and convenience themes they demand. For example, while the traditional supermarket count ebbs, the number of fresh-format stores will increase to 1,285 from 965, the number of limited-assortment stores will increase to 4,002 from 3,774, and the number of super-warehouse stores will increase to 594 from 550, the Bishop data show.

Meanwhile, within the non-traditional grocery sector, the shift to more distinctive, defined formats also escalates. For example, while the conventional mass-market store count dips to 2,772 in 2017 from 3,381 in 2012, the number of wholesale clubs will rise to 1,481 from 1,355, the number of supercenters expands to 4,256 from 3,710, the number of dollar stores leaps to 33,767 from 25,856, and the number of drug stores grows to 24,866 from 22,907, forecasts Bishop.  

Moreover, e-commerce food and consumables sales will continue to grow aggressively at 12.1% annually between now and 2017. Bishop pegs the 2012 figure at $15.9 billion, up 16.9% from 2011, noting that, “Amazon, Peapod and brick-and-mortar entrants into the e-commerce space continue to satisfy consumers’ needs for a quick, easy shopping experience…The assortment and quality of products, along with convenient delivery times, have been key to the growing success of this format. Changing consumers, Amazon’s recent expansion announcement, and new ‘click and collect’ pickup models will help ensure future success.”

Fresh-format stores will exceed e-commerce in food and consumables sales growth between now and 2017, at an annual rate of 13.4% between now and 2017, which reflects consumer demand for natural, organic and fresh high-quality foods, the forecast states.

By comparison, other channels will grow sales at a slower annual pace (figuring in 3.0% annual food inflation): limited assortment stores, 6.2%, dollar stores, 6.0%; convenience stores (with gas), 3.5%; drug stores, 3.4%; wholesale clubs, 3.2%; super-warehouse stores, 2.8%; supercenters, 2.7%; other (small) grocery stores, 2.1%; convenience stores (without gas), 1.9%; military, 1.7%; traditional supermarkets, 0.2%; and mass, -6.8%.