The Future of Food Retailing in the U.S

• Shifting Demographics Reshaping American Shopping and Eating Patterns
  
  
• Demographic Shifts Suggest Market Opportunities
  
  
• Families with Young Children
  
  
• Hispanics
  
  
• Lower-Income Households
  
  
• Consumers Age 55+
  
  
• Figure 2-1: Projected Percentage Population Growth by Age Group, 2005-2015
  
  
• Table 2-1a: Projected Population of the United States: By Age and Race/Ethnicity, 2000-2020 (in thousands)
  
  
• Table 2-1b: Percentage Change in Projected Population of the United States: By Age and Race/Ethnicity, 2000-2020
  
  
• Tapping into America’s Cultural Diversity
  
  
• Hispanics Growing Rapidly in Population and Buying Power
  
  
• African Americans Over 40 Million Strong
  
  
• Asian Americans the Most Diverse Group
  
  
• Consumers of Kosher and Halal Foods

• Consumers Cooking in More, Dining Out Less
  
  
• Eating On-the-Go Grows
  
  
• Desktop Dining the New Way of Life

• Channel Surfing
  
  
• Table 2-2: Percentage of U.S. Adults Shopping by Channel: 2005-2007
  
  
• Shopping Frequency Declining
  
  
• Table 2-3: Average Trips Per Shopper Per Month by Channel, 2007 vs. 2006
  
  
• Channel Preferences
  
  
• Table 2-4: Primary Store Preferences, 2008 (% of U.S. adults)
  
  
• Wal-Mart, Kroger Are Favorite Stores for Groceries
  
  
• Table 2-5: Shoppers’ Favorite Stores for Groceries, 2008 (% of adult shoppers)
  
  
• Shopping Trip Patterns
  
  
• Shopping Modes
  
  
• Most Consumers Not Loyal to Their Store

• Methodology
  
  
• Shopping Behavior and Attitudes
  
  
• Kids’ Influence on Shopping
  
  
• Shopping and Environmental Issues
  
  
• Consumer Attitudes Toward Food and Cooking
  
  
• Ethnic Food Enthusiasts Growing
  
  
• Figure 2-2: Trended Number of Foreign Food Enthusiasts, 2005-2007 (in millions)
  
  
• Adding Gourmet Flair
  
  
• Figure 2-3: Trended Number of U.S. Gourmet Food Enthusiasts, 2005-2007 (in millions of U.S. adults)
  
  
• Most Americans, Though Time-Pressed, Are Trying to Eat Healthier
  
  
• Figure 2-4: Consumer Attitudes About Healthy Foods and Time Constraints, 2007 (percent of U.S. adults)
  
  
• Attitudes Toward Healthy Foods and Time Constraints
  
  
• Shopper Demographics by Channel
  
  
• Supermarket Shoppers Mostly Average
  
  
• Whole Foods or Trader Joe’s Shoppers Upscale, Educated, Affluent
  
  
• Wal-Mart Supercenters Attract Lower-Middle- to Middle-Class Families
  
  
• Core Mass-Merchandiser Shoppers Female, White and Middle-Age
  
  
• Warehouse Club Shoppers Educated, Upper-Middle-Class to Affluent
  
  
• Drugstores Attract Older Shoppers
  
  
• Convenience Store Shoppers Young, Time-Pressed
  
  
• Dollar Store Shoppers Older, Female
  
  
• The Impact of In-Store Advertising
  
  
• Table 2-6a: Shopper Indexes by Retail Channel by Shopping Behavior and Attitudes, 2007 (U.S. adults)
  
  
• Table 2-6b: Shopper Indexes by Retail Channel by Shopping Behavior and Attitudes, 2007 (U.S. adults)
  
  
• Table 2-7a: Shopper Indexes by Retail Channel by Attitudes About Food and Cooking, 2007 (U.S. adults)
  
  
• Table 2-7b: Shopper Indexes by Retail Channel by Attitudes About Food and Cooking, 2007 (U.S. adults)
  
  
• Table 2-8a: Shopper Indexes by Retail Channel by Attitudes About Nutrition and Time Constraints, 2007 (U.S. adults)
  
  
• Table 2-8b: Shopper Indexes by Retail Channel by Attitudes About Nutrition and Time Constraints, 2007 (U.S. adults)
  
  
• Table 2-9: Top Demographic Indicators (Indexes) by Retail Channel, 2007 (U.S. Adults)
  
  
• Table 2-10a: Shopper Indexes by Retail Channel by In-Store Advertising Impact, 2007 (U.S. adults)
  
  
• Table 2-10b: Shopper Indexes by Retail Channel by In-Store Advertising Impact, 2007 (U.S. adults)

Chapter 3: Retail Trends and Opportunities

• Introduction
  
  
  
  
  
  • Definition of Retail Channels
    
    
  • Total Grocery Sales $859 Billion in 2006
    
    
  • Total Grocery Sales Will Top $1 Trillion by 2011
    
    
  • Food and Beverages Account for 56% of Total Grocery Sales
    
    
  • Supermarkets Account for 56% of 2007 Food and Beverage Sales
    
    
  • The Top 20 U.S. Food Retailers
    
    
  • Recent Mergers and Acquisitions
    
    
  • Table 3-1a: Retail Food and Beverage Channel Statistical Overview: Estimated Share of Food & Beverage Market and Average Food & Beverage Sales Per Store, 2007
    
    
  • Table 3-1b: Retail Food and Beverage Channel Statistical Overview: Typical Store Size, Typical Number of Grocery SKUs and Key Customers, 2007
  
  
  
  
• Trend #1: Multi-Channel Shopping
  
  
  
  
  
  • Consumers Shopping a Growing Range of Retail Venues
    
    
  • The Big Picture
    
    
  • Figure 3-1: Number of Consumer Packaged Goods Channels Shopped: By Percent of Consumers, 2007
  
  
  
  
• Trend #2: Retailers As Restaurateurs
  
  
  
  
  
  • Food Retailers Moving into Foodservice
    
    
  • Figure 3-2: Supermarket Shopper Interest in Ready-to-Eat Meal Solutions, 2007 (percent)
    
    
  • Range of Retailer-Prepared Foods Rapidly Proliferating
    
    
  • Turning Grocery Stores into Restaurants
    
    
  • Faster Food-To-Go
    
    
  • Using Technology to Speed up Service
    
    
  • The Road Ahead: Hybrid Retailers
  
  
  
  
• Trend #3: Lifestyle Stores and Emerging Formats
  
  
  
  
  
  • Food Shopping as Distinctive Experience
    
    
  • Reinventing Store Formats
    
    
  • Store Layouts Are Carefully Planned
    
    
  • Re-Examining the Center Store
    
    
  • Editing SKUs
    
    
  • “Clean Floor” Policies Limit Marketers’ Displays
    
    
  • Niche Formats
    
    
  • Improving the Shopping Experience
    
    
  • Self-Service Checkout is Growing
    
    
  • The Stores of the Future
  
  
  
  
• Trend #4: Thinking Small
  
  
  
  
  
  • Convenience Needs Spur Shift to Smaller Stores
    
    
  • Tesco’s U.S. Entry Heralds Seismic Market Shifts
  
  
  
  
• Trend #5: Store Brand Building
  
  
  
  
  
  • Creating a Store Identity Consumers Connect With
    
    
  • Private Label Ripe with Opportunities
    
    
  • A Key Marketing Strategy
    
    
  • Sourcing and Development
  
  
  
  
• Trend #6: Focusing on Fresh and Natural/Organic
  
  
  
  
  
  • Food Retailers Banking on Fresh, Locally Grown and Natural/Organic Foods
    
    
  • Natural/Organic Foods Still a Huge Opportunity
    
    
  • Natural and Organic in Today’s Market
    
    
  • Room to Grow
    
    
  • Local and Artisanal Foods Are Growing Trends
    
    
  • Varietal and Artisanal
  
  
  
  
• Trend #7: Health and Wellness
  
  
  
  
  
  • Organic/Natural Merging with Broader Wellness Concerns
    
    
  • Growing Health Awareness, Ongoing Trends
    
    
  • Retailers Adding Nutrition Ratings
    
    
  • Food Safety a Growing Issue
    
    
  • Single-Serve Portions
  
  
  
  
• Trend #8: Going Green
  
  
  
  
  
  • Ethical Consumerism on the Rise
    
    
  • Industrywide Changes
    
    
  • Fair Trade
    
    
  • Sustainability Initiatives
    
    
  • PR and Profits
    
    
  • No Longer Just a Niche
    
    
  • Plastic or Paper?
    
    
  • Bottled Water Backlash
    
    
  • Interest in Green Issues Will Only Build
  
  
  
  
• Trend #9: Tapping Ethnic Markets
  
  
  
  
  
  • An Ever-Expanding Range of More Exotic Fare
    
    
  • Hispanic Market Targeting
    
    
  • Bashas’ Food City
    
    
  • Minyard’s Carnival
    
    
  • Rancho Liborio
    
    
  • Publix’s Sabor
    
    
  • Wal-Mart Also Targeting Latinos
  
  
  
  
• Trend #10: In-Store Media
  
  
  
  
  
  • Growth in Retailer-Controlled Media Tracking Technological Advances
    
    
  • On-Cart Capabilities
    
    
  • Radio Frequency Identification Stalls Out
    
    
  • Future of Biometric Payment Kiosks Uncertain
    
    
  • Word-of-Mouth Goes High Tech
  
  
  
  
• Merchandise Opportunities
  
  
  
  
  
  • RTD Tea/Coffee Leads High-Growth Food and Beverage Categories
    
    
  • Figure 3-3: Top 10 Growth Categories in Dollar Sales Percentage Change: 2007 vs. 2006
    
    
  • “Upscale,” “Natural” Lead New Product Claims
    
    
  • Table 3-2: Top Ten Food and Beverage Product Claims: By Number of New Product Reports, 2003, 2006 and 2007
    
    
  • Upscale/Gourmet Positioning
    
    
  • Retailers and Marketers on Board

Chapter 4: Grocery Channel Trends

• Grocery Channel Leads in Food Sales
  
  
• Kroger, Safeway and Supervalu the Leading Supermarket Operators
  
  
• Table 4-1a: Top 10 U.S. Supermarket Chains by Retail Dollar Sales, 2006 (in millions)
  
  
• Table 4-1b: Top 10 U.S. Supermarket Chains by Number or Supermarket Units, 2005 vs.2006
  
  
• Kroger: Solid Strategy Means Solid Gains
  
  
• Safeway - Lifestyle 2.0
  
  
• On the Block?
  
  
• Supervalu Becomes a Major Retailer Through Albertsons Merger
  
  
• Publix Wins Customer Praise
  
  
• Ahold USA Goes Leaner and Meaner
  
  
• Delhaize America Innovates for Growth
  
  
• H. E. Butt Grocery Testing New Concepts
  
  
• A&P on the Ups
  
  
• Winn-Dixie Fighting an Uphill Battle
  
  
• Giant Eagle Tests New Formats
  
  
• Focus on Smaller Independent Supermarkets
  
  
• Supermarkets Lead in All Food & Beverage Categories
  
  
• Many Supermarkets Shift to “Fresh Formats”
  
  
• Table 4-2: Percentage of Traditional Supermarkets Offering Meal Solutions: By Type, 2007 (percent)
  
  
• Playing Both Ends Against the Middle
  
  
• Limited Assortment Chains Making Waves
  
  
• Ethnic Food Markets Evolving
  
  
• Focus on Natural Food Stores
  
  
• Whole Foods: A Natural Leader
  
  
• The Whole Foods Shopping Experience
  
  
• Bigger and Bigger—and Smaller
  
  
• Focus on Gourmet/Specialty Food Stores
  
  
• The Trader Joe’s Experience

Chapter 5: Value Channel Trends

• Supercenters
  
  
  
  
  
  • The Supercenter Format Matures
    
    
  • Focus on Wal-Mart: The Nation’s Largest Food Retailer
    
    
  • The Supercenter Push
    
    
  • Wal-Mart Slipping?
    
    
  • Economies of Scale
    
    
  • Private-Label Pursuits
    
    
  • Fresh and Organic
    
    
  • Market Segmentation
    
    
  • Tapping Hispanics
    
    
  • Looking Ahead
    
    
  • Moving on Target
    
    
  • Meijer: The Regional Supercenter Pioneer
    
    
  • Kmart Still Struggling to Find a Path
  
  
  
  
• Warehouse Clubs
  
  
  
  
  
  • Ongoing Expansion Based on Unique Appeals
    
    
  • In-Store Cachet
    
    
  • Room to Grow
    
    
  • Costco Wholesale Corp.
    
    
  • The Merchandise Mix
    
    
  • Private Label and Organic
    
    
  • Sam’s Club
    
    
  • A New Attitude
    
    
  • BJ’s Wholesale Club
  
  
  
  
• Dollar Stores
  
  
  
  
  
  • Adding More Food to Their Product Mix
    
    
  • Dollar General
    
    
  • Family Dollar
    
    
  • Dollar Tree

Chapter 6: Convenience Channel Trends

• Convenience Stores
  
  
• Changing with the Times
  
  
• Emphasizing Foodservice
  
  
• 7-Eleven Switching to Franchise Culture
  
  
• The British Invasion: A Fresh Approach from Tesco’s Fresh & Easy
  
  
• Focus on Fresh, Healthy
  
  
• Big Brands + Private Label
  
  
• Keeping Costs Down
  
  
• Investors Nervous
  
  
• An Impressive Business Model…
  
  
• But a Slow Start
  
  
• Looking Ahead
  
  
• Other Fresh Ideas in C-Store Retailing
  
  
• Alimentation Couche-Tard, Inc.
  
  
• Famima!!
  
  
• Marvelous Market
  
  
• MoCo Market
  
  
• NexStore Marketplace
  
  
• Sheetz, Inc.
  
  
• Wawa, Inc.
  
  
• Is Wal-Mart in the Running?
  
  
• Home Depot Convenience Stores Stall
  
  
• Drugstores
  
  
  
  
  
  • Competing on the Convenience Front
  
  
  
  
• Vending Machines
  
  
  
  
  
  • Offering Convenience, 24/7
    
    
  • New Vending Developments
    
    
  • Healthier Vended Items for Schools and Workplaces
    
    
  • Fully Automated, Self-Checkout “Mini-Marts”
    
    
  • Different Payment Methods
    
    
  • Ethnic Foods Vending Machines

Chapter 7: Emerging Channel Trends

• Making Online Grocery Shopping Click
  
  
• The FreshDirect Model
  
  
• Websites Increasingly Vital for Consumer Packaged Goods Marketers
  
  
• Farmers’ Markets Are Flourishing
  
  
• Figure 7-1: Growth in Number of Farmers’ Markets, 1994-2006
  
  
• Two Types of Farmers’ Markets
  
  
• The Markets in Off-Season
  
  
• Farmers’ Markets Face a Crop of Challenges
  
  
• Community Supported Agriculture Programs (CSAs)
  
  
• European Food Halls
  
  
• Meal Assembly Kitchens: Cooking Out-Eating In
  
  
• Figure 7-2: Growth in Number of Meal Assembly Kitchens, 2002-2007
  
  
• Other Alternative Channels Target Impulse Sales
  
  
• Grocery Retailing in the Year 2022
  
  
• Made In Transit Factories?

Appendix: Addresses of Selected Industry Associations and Retailers