MADISON, Wis. -- Alternative and non-traditional food retail channels are increasing nationwide, competing against traditional supermarkets and grocers for a share of the lucrative retail food market. Among these are fresh-format stores, small-box retailers, drug stores, convenience stores, discounters/dollar stores and warehouse stores.
Among the food retail channel trends detailed in What's in Store 2015, the annual trends report of the International Dairy-Deli-Bakery Association (IDDBA):
- Non-traditional channels such as drug stores are meeting shoppers' needs through fresh offerings and grab-and-go lunchtime strategies, while convenience stores are providing customers with more variety and healthy items, according to Tim O'Connor, vice president of RetailNet Group. Additionally, small-box formats, while at a disadvantage because of limited product selection, have the advantage of proximity over big-box operators.
- Traditional food retail channels will experience a decrease market share of 1.2 percentage points by 2018 (44.8%), while non-traditional grocery and convenience store channels will command 40.1% and 15.1% of the market, respectively, Willard Bishop projects.
- Non-supermarket channels fueled almost all growth in food retailing over the past 17 years, with supercenter sales almost twice those of supermarkets per square foot, according to Booz & Co.
- 77% of respondents purchased groceries from a non-grocer in the past 12 months, while 96% said they would make such a purchase in the next 12 months, according to a study by King Retail Solutions and the University of Arizona.
- The online global grocery market will reach $100 billion by 2018, projected The Boston Consulting Group.
"Everyone has gone after the food market because of the trip frequency it provides," O'Connor said.
Findings in IDDBA's Engaging the Evolving Shopper: Serving the New American Appetite show that while the grocery store is still the most commonly visited retail type (82% of respondents said they shopped one within the past three months), alternative channels such as freestanding bakeries and butchers are also serving fresh perimeter shoppers. This is especially true among millennials, who shop in an average of 4.2 channels to get their foods (compared to 3.3 channels for baby boomers).
"Eating is an experience for millennials, and their quest for local, fresh and trendy food products and flavors leads them to a variety of different retail channels," said Eric Richard, education coordinator for IDDBA. "By getting a pulse on what specifically these generational shoppers are looking for, retailers can capture an even larger portion of their spending power by offering those products."
IDDBA is a nonprofit membership organization serving the dairy, deli, bakery, cheese and supermarket foodservice industries.
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