WORK-LIFE BALANCE / OCT. 13, 2014
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Study: Alternative Grocery Stores Flourish as Traditional Supermarkets Diminish

A new study by retail research group Jones Lang LaSalle IP, Inc. (JLL) reveals interesting statistics concerning the United States’ grocery shopping market.

Recent data show how consumer-shopping customs are gradually shifting from unconventional methods. Researchers predict that the grocery landscape will continue to change in the next four years.  

People aren’t just looking to shop at stores like Winn-Dixie and Kroger anymore. Instead, most shoppers are dividing their shopping trips among multiple grocery outlets. Markets that offer low-priced goods, organic produce, wholesale items, and convenient online groceries are also becoming more appealing.

As a result, alternate format stores are increasing in sales and store count, leaving behind traditional supermarkets.

There are a few reasons why such a major shift is occurring.

Three Grocery Channels Appeal to Consumers

According to JLL, consumers started to transform their shopping habits during the recession. Economic and financial issues obviously became a major concern, so shoppers became more spending-conscious. Discounted retail companies including the Dollar Tree and smaller convenience stores were hit hard by consumers who were forced to shop on a budget or wanted to save money. 

Secondly, e-commerce is taking over at high speeds. Shoppers are resorting to the accessibility of buying groceries online and having it delivered to their doorstep. Instacart, for instance, is an independent grocery delivery service located in some of the nation’s most popular cities. Their technique involves hiring personal shoppers for their online customers. Amazon has even jumped on board with a similar trial program called AmazonFresh, which currently delivers in California and Washington.

Lastly, consumers have become more focused on what they eat, and what they desire is organic produce. Health foods are in high demand and so are fresh format grocery stores similar to Wholefoods. Walmart is even working on the expansion of its organic food section. The retail giant now has over 1,600 organic pantry items provided by health food company Wild Oats.

Additional Grocery Channels Prove to be Growing 

Other factors that play a major role in the demise of traditional supermarkets include limited assortment grocery markets, wholesale clubs, supercenters, and pharmaceutical stores.

Places like Aldi provides a variety of low-priced goods, whereas CVS drug store makes most of its profits from selling packaged goods. Walmart’s supercenters are perfect examples of how a big discounted retailer can consolidate durable goods and consumables into one venue. Walmart’s subsidiary-owned membership center, Sam’s Club, appears to be one of the many wholesale clubs that are trending mainly due to the freedom of purchasing food items in bulks. 

Out of all the alternatives, it appears that fresh markets and organic stores will see the highest gain overall. Predicted market shares (1.5 percent increase) and store count stats (62.8 percent change) reveal that they beat out close competitors within the wholesale and supercenter food markets.

Although supercenters will potentially surpass fresh format stores in market shares (1.6 percent increase), they won’t beat these establishments when it comes to improved sales and store counts.

As the new age continues to move forward, traditional grocery markets will experience a drop in market share from 40.2 percent to 37.2 percent as well as a decrease in store numbers by 2.2 percent. 

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