Grocery Sector Bifurcation Taking a Toll on Legacy Retailers

Kroger, Safeway, and Publix each seem stuck in the middle of the retail grocery sector.  It just might be that fresh prepared food the answer finding profitable differentiation? There can be no doubt that in 2014 Grocerant niche Ready-2-Eat and Heat-N-Eat fresh prepared food has garnered favor with consumers according to Foodservice Solutions® Grocerant Guru™. Legacy grocery retailers are increasingly finding consumer’s migration either to the high end or low end of grocery space and within each space fresh prepared food is has become even more available.

With limited success Safeway, and Kroger have introduced and delivered qualify fresh prepared food consistently.  However each has done it as an afterthought rather than an enhanced consumer focus. Publix is interesting for they have implemented fresh prepared food with regional differentiation however when it comes to operation consistency with fresh prepared food they come up a bit short.

Credit Suisse, recently published a report that found “discounters controlled 22.7% of the US retail food business in 2013, up from 16.9% in 2003. That market share came directly from traditional supermarkets, which saw their market share slip from 30.7% to 26.7% over the same time period.”  Companies the ilk of Aldi, with 1275+ and WinCo are helping drive the migration according to Foodservice Solutions®.

At the other end of the spectrum Wegmans, Whole Foods, and Trader Joes have be garnering share while building more and more new units. The Credit Suisse study found that at the higher end have experienced some “nibbling away at the business too, driving their share of retail grocery sales up from 1.1% in 2003 to 2.8% in 2013. So, at current rates Safeway, Publix and Kroger should expect to capitulate another 10% of market share in as few as 5 years.

Whether it is the 65 Inch HDTV Syndrome or Millennials desire for discovery that are driving the change it makes little difference.  The undercurrents in food retail all point to expanded fresh prepared food offerings will continue to drive top line sales and bottom line profits. With more and more non-traditional points of fresh food distribution cropping up legacy grocery retailers that today are stuck in the middle, must evolve faster or risk capitulating additional market share.

Invite Foodservice Solutions® to complete a Migration Marketing assessment, grocerant program assessment. No other foodservice research or marketing company has focused on the Grocerant niche since 1991.  For brand, product placement, menu positioning assistance simply call Foodservice Solutions® 1-253-759-7869 or visit: www.FoodserviceSolutions.us .