Amazon is preparing to expand AmazonFresh while looking for that elusive last mile solution. It has been widely reported that Amazon will by the end of 2014 have opened or be in position to open 20 more markets delivering groceries and maybe much more.
Inside industry experts including Bricks Meets Clicks Founder Bill Bishop don’t expect on line ordering of groceries to garner a lion’s share of the market. However, “At the close of 2013, the online sector had a 3.3 percent share of total grocery dollars, according to Brick Meets Click research…
Ten years from now, that market share could range from 6.7 percent on the conservative side to 16.9 percent on the aggressive side,” the report showed according to Bishop.
Those are not big numbers today or any time soon however the grocery sector overall has capitulated 15% of its market share over the past 10 years to new non-traditional avenues of distributions according to research from the Food Marketing Institute (FMI).
With more and more new non-traditional fresh food retailers selling Ready-2-Eat and Heat-N-Eat fresh prepared grocerant niche food, companies the ilk of Publix, Safeway, and Albertson’s will have a harder time maintaining their current share of the market. Even if Amazon only garners 2.5% of the market place that’s a smaller pie for everyone else to share, particularly regional chains.
Amazon is not alone its quest for grocery dollars. Walgreens with 7,875+ locations continues to remodel stores finding success selling fresh prepared food, meal components and legacy CPG’s foods. The seemingly endless new entrants into the fresh prepared Ready-2-Eat and Heat-N-Eat grocerant niche can only be seen as a shot across the bow of legacy regional grocery stores that they have to adapt to this new world order or simply fade away.
Bill Bishop believes it’s a matter of the food sector being "over-stored". Which means the pure amount of retail square footage is too great for the population size is happening in virtually every region of the country according to Bishop.
Companies the ilk of Trader Joes, Pinkies Liquor stores, Sprouts, Wawa, Sheetz, 7 Eleven and Walgreens are all selling fresh prepared food. Each increasingly offers mix and match meal component bundling that is highly regarded by consumers. Thus creating another diverted purchase for legacy regional grocery stores. Combine these diverted sales with online shopping where according to IBISWorld, online grocery is a $6 billion business and is expected to reach nearly $9.5 billion in 2017 and its clear grocery shopping is evolving faster than many legacy regional retailers.Visit: www.FoodserviceSolutions.us if you are interested in learning how Foodservice Solutions 5P’s of Food Marketing can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization or you can learn more at Facebook.com/Steven Johnson, Linkedin.com/in/grocerant or twitter.com/grocerant