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September 6, 2015

Food Retailing | “Roll With It”

Jamie Allebach
Jamie Allebach Chief Executive & Creative Officer

In 1988, the longest running #1 single on the Billboard music charts was “Roll With It” by Steve Winwood, which topped the charts for 4 weeks.

1988 was also the last year the Traditional Grocery channel didn’t lose ground as the overall leader in grocery sales— the Traditional Grocery channel includes Traditional Supermarkets, Fresh Format, Limited-Assortment, Super Warehouse, and Other (Small) Grocery.

With the seeming aberration of a slight (0.3%) sales gain in 2014 being the only uptick in its decades-steady decline, the Traditional Grocery channel has lost dollar share to the Non-Traditional Grocery channel every year since Steve Winwood rolled with it in 1988.

The Non-Traditional Grocery channel is led by Supercenter/Mass and Wholesale Club stores such as BJ’s, Costco, and Sam’s Club, in addition to Dollar, and Drug stores.

Convenience Stores (with & without gasoline) and eCommerce (food and consumables) being the remaining major channels.

As seen below, the highest increases in sales as a percentage of growth are eCommerce, Fresh Format, and Limited-Assortment. These three segments outpace every other segment by a minimum of 2 to 1.

Forecasting
Predicting where the ‘market’ will go (literally) in the future requires a competitive understanding of why and where it has been moving based on evolving shopper behaviors. This is particularly essential for predicting activities in uncharted waters such as eCommerce, which happens to be one of the fastest-growing segments.

WOW-e
eCommerce sales for food and consumables spiked upward by 13.5% in 2014 to $24.4 billion, with companies like Amazon delivering reasonable prices and a quick and easy food shopping experience.

No wonder numerous traditional grocery retailers like Ahold, Albertson’s, Kroger, Safeway, and ShopRite have accelerated their eCommerce offerings in a strategy designed to grab market share from non-web-enabled retailers.

Supercenters and Wholesale Club stores are also capitalizing on the eCommerce option. Meijer recently announced they’ll be expanding their curbside delivery service to all stores, and Costco has been partnering with Instacart in select cities for several years already.

ECommerce Food & Consumable Sales Will Continue A Strong Growth Rate Of 12.1% Per Year.
Source: Willard Bishop

While the Traditional Grocery channel continues to ‘top the charts’ for now, the gap between pushing a shopping cart and keying in a shopping list at places like Peapod is closing steadily. Food for thought … and food marketing action.