MADISON, Wis. -- Nontraditional retail channels such as convenience stores, drug stores, farmers markets and online shopping are seeing continued growth and garnering a larger percentage of the food retail market as consumers—particularly millennials and gen Z—view them as viable shopping alternatives to traditional supermarkets and grocers, according to What’s in Store 2016, the annual trends research report recently published by the International Dairy-Deli-Bakery Association (IDDBA).
Among the findings:
- Ecommerce sales for food and consumables will grow 12.1% annually through 2019.
- Despite increased competition, almost 50% of grocery retailers are significantly more optimistic about 2015 than they were a year ago. Top areas of concern are data protection and security; price increases; and benefits, such as minimum wages and the Affordable Care Act.
- As delis are now competing directly with foodservice and garnering ideas, the retail sector is seeing a “premiumization” of cheese, specialty meats and olives, as well as complementary items.
Tim O’Connor, vice president of RetailNet Group, said it is better to look not at traditional channel definitions, but look more at positioning and strategy for the retailers to see who will grow or decline.
“Small-box supermarkets with great proximity to shoppers and progressive fresh stores will grow well,” he said. “Traditional grocers who expect shoppers to keep coming to their stores when so many more convenient and positive experience options are available will see their trips, volume, sales and return on invested capital continue to decline.”
“Where consumers shop for food has changed dramatically, as new retail channels—both brick-and-mortar stores and online marketplaces—create both challenges and opportunities for today’s food retailers,” said Eric Richard, education coordinator for IDDBA. “Whether it’s convenience, cost or specialty products, many of today’s consumers—especially millennials and gen Z—are more apt to shop nontraditional channels. It’s pertinent that retailers understand this evolving retail landscape and omnichannels in order to better connect with shoppers.”
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