The Future of Food Retailing in the U.S

Table of Contents

Chapter 1: Executive Summary

• Scope and Methodology
  • Scope of Report
  • Report Methodology
• Consumer Demographics and Shopping Behavior
  • Economic Slowdown Changing How People Shop
  • Shifting Demographics Reshaping American Shopping and Eating Patterns
  • Consumers Cooking in More, Dining Out Less
  • Shopping Behavior and Attitudes
  • Most Americans Trying to Eat Healthier
  • Figure 1-1: Consumer Attitudes About Healthy Foods and Time Constraints, 2007 (percent of U.S. adults)
• Retail Trends and Opportunities
  • Trend #1: Multi-Channel Shopping
  • Trend #2: Retailers as Restaurateurs
  • Trend #3: Lifestyle Stores and Emerging Formats
  • Trend #4: Thinking Small
  • Trend #5: Store Brand Building
  • Trend #6: Focusing on Fresh
  • Trend #7: Health and Wellness
  • Trend #8: Going Green
  • Trend #9: Tapping Ethnic Markets
  • Trend #10: In-Store Media
• Retail Trends by Channel
  • Supermarkets Shifting to "Fresh Formats"
  • Supercenter Format Maturing
  • Warehouse Clubs: Room to Grow
  • Dollar Stores Adding More Food to Their Product Mix
  • Convenience Stores Changing with the Times
  • Drugstores Also Competing on Convenience Front
  • Vending Machines Offer Convenience, 24/7
  • Making Online Grocery Shopping Click
  • Farmers' Markets Are Flourishing
  • Figure 1-2: Growth in Number of Farmers' Markets, 1994-2006

Chapter 2: Consumer Demographics and Shopping Behavior

• Overview
• Economic Slowdown Changing How People Shop
• Good Value the Most Important Factor in Choosing a Grocery Store

• Consumer Demographics
  • Shifting Demographics Reshaping American Shopping and Eating Patterns
  • Demographic Shifts Suggest Market Opportunities
  • Families with Young Children
  • Hispanics
  • Lower-Income Households
  • Consumers Age 55+
  • Figure 2-1: Projected Percentage Population Growth by Age Group, 2005-2015
  • Table 2-1a: Projected Population of the United States: By Age and Race/Ethnicity, 2000-2020 (in thousands)
  • Table 2-1b: Percentage Change in Projected Population of the United States: By Age and Race/Ethnicity, 2000-2020
  • Tapping into America' s Cultural Diversity
  • Hispanics Growing Rapidly in Population and Buying Power
  • African Americans Over 40 Million Strong
  • Asian Americans the Most Diverse Group
  • Consumers of Kosher and Halal Foods
• Meal Procurement Trends
  • Consumers Cooking in More, Dining Out Less
  • Eating On-the-Go Grows
  • Desktop Dining the New Way of Life
• Shopping Trends
  • Channel Surfing
  • Table 2-2: Percentage of U.S. Adults Shopping by Channel: 2005-2007
  • Shopping Frequency Declining
  • Table 2-3: Average Trips Per Shopper Per Month by Channel, 2007 vs. 2006
  • Channel Preferences
  • Table 2-4: Primary Store Preferences, 2008 (% of U.S. adults)
  • Wal-Mart, Kroger Are Favorite Stores for Groceries
  • Table 2-5: Shoppers' Favorite Stores for Groceries, 2008 (% of adult shoppers)
  • Shopping Trip Patterns
  • Shopping Modes
  • Most Consumers Not Loyal to Their Store
• Consumer Behavior and Attitudes
  • Methodology
  • Shopping Behavior and Attitudes
  • Kids' Influence on Shopping
  • Shopping and Environmental Issues
  • Consumer Attitudes Toward Food and Cooking
  • Ethnic Food Enthusiasts Growing
  • Figure 2-2: Trended Number of Foreign Food Enthusiasts, 2005-2007 (in millions)
  • Adding Gourmet Flair
  • Figure 2-3: Trended Number of U.S. Gourmet Food Enthusiasts, 2005-2007 (in millions of U.S. adults)
  • Most Americans, Though Time-Pressed, Are Trying to Eat Healthier
  • Figure 2-4: Consumer Attitudes About Healthy Foods and Time Constraints, 2007 (percent of U.S. adults)
  • Attitudes Toward Healthy Foods and Time Constraints
  • Shopper Demographics by Channel
  • Supermarket Shoppers Mostly Average
  • Whole Foods or Trader Joe' s Shoppers Upscale, Educated, Affluent
  • Wal-Mart Supercenters Attract Lower-Middle- to Middle-Class Families
  • Core Mass-Merchandiser Shoppers Female, White and Middle-Age
  • Warehouse Club Shoppers Educated, Upper-Middle-Class to Affluent
  • Drugstores Attract Older Shoppers
  • Convenience Store Shoppers Young, Time-Pressed
  • Dollar Store Shoppers Older, Female
  • The Impact of In-Store Advertising
  • Table 2-6a: Shopper Indexes by Retail Channel by Shopping Behavior and Attitudes, 2007 (U.S. adults)
  • Table 2-6b: Shopper Indexes by Retail Channel by Shopping Behavior and Attitudes, 2007 (U.S. adults)
  • Table 2-7a: Shopper Indexes by Retail Channel by Attitudes About Food and Cooking, 2007 (U.S. adults)
  • Table 2-7b: Shopper Indexes by Retail Channel by Attitudes About Food and Cooking, 2007 (U.S. adults)
  • Table 2-8a: Shopper Indexes by Retail Channel by Attitudes About Nutrition and Time Constraints, 2007 (U.S. adults)
  • Table 2-8b: Shopper Indexes by Retail Channel by Attitudes About Nutrition and Time Constraints, 2007 (U.S. adults)
  • Table 2-9: Top Demographic Indicators (Indexes) by Retail Channel, 2007 (U.S. Adults)
  • Table 2-10a: Shopper Indexes by Retail Channel by In-Store Advertising Impact, 2007 (U.S. adults)
  • Table 2-10b: Shopper Indexes by Retail Channel by In-Store Advertising Impact, 2007 (U.S. adults)

Chapter 3: Retail Trends and Opportunities

• Introduction
  • Definition of Retail Channels
  • Total Grocery Sales $859 Billion in 2006
  • Total Grocery Sales Will Top $1 Trillion by 2011
  • Food and Beverages Account for 56% of Total Grocery Sales
  • Supermarkets Account for 56% of 2007 Food and Beverage Sales
  • The Top 20 U.S. Food Retailers
  • Recent Mergers and Acquisitions
  • Table 3-1a: Retail Food and Beverage Channel Statistical Overview: Estimated Share of Food & Beverage Market and Average Food & Beverage Sales Per Store, 2007
  • Table 3-1b: Retail Food and Beverage Channel Statistical Overview: Typical Store Size, Typical Number of Grocery SKUs and Key Customers, 2007
• Trend #1: Multi-Channel Shopping
  • Consumers Shopping a Growing Range of Retail Venues
  • The Big Picture
  • Figure 3-1: Number of Consumer Packaged Goods Channels Shopped: By Percent of Consumers, 2007
• Trend #2: Retailers As Restaurateurs
  • Food Retailers Moving into Foodservice
  • Figure 3-2: Supermarket Shopper Interest in Ready-to-Eat Meal Solutions, 2007 (percent)
  • Range of Retailer-Prepared Foods Rapidly Proliferating
  • Turning Grocery Stores into Restaurants
  • Faster Food-To-Go
  • Using Technology to Speed up Service
  • The Road Ahead: Hybrid Retailers
• Trend #3: Lifestyle Stores and Emerging Formats
  • Food Shopping as Distinctive Experience
  • Reinventing Store Formats
  • Store Layouts Are Carefully Planned
  • Re-Examining the Center Store
  • Editing SKUs
  • "Clean Floor" Policies Limit Marketers' Displays
  • Niche Formats
  • Improving the Shopping Experience
  • Self-Service Checkout is Growing
  • The Stores of the Future
• Trend #4: Thinking Small
  • Convenience Needs Spur Shift to Smaller Stores
  • Tesco' s U.S. Entry Heralds Seismic Market Shifts
• Trend #5: Store Brand Building
  • Creating a Store Identity Consumers Connect With
  • Private Label Ripe with Opportunities
  • A Key Marketing Strategy
  • Sourcing and Development
• Trend #6: Focusing on Fresh and Natural/Organic
  • Food Retailers Banking on Fresh, Locally Grown and Natural/Organic Foods
  • Natural/Organic Foods Still a Huge Opportunity
  • Natural and Organic in Today' s Market
  • Room to Grow
  • Local and Artisanal Foods Are Growing Trends
  • Varietal and Artisanal
• Trend #7: Health and Wellness
  • Organic/Natural Merging with Broader Wellness Concerns
  • Growing Health Awareness, Ongoing Trends
  • Retailers Adding Nutrition Ratings
  • Food Safety a Growing Issue
  • Single-Serve Portions
• Trend #8: Going Green
  • Ethical Consumerism on the Rise
  • Industrywide Changes
  • Fair Trade
  • Sustainability Initiatives
  • PR and Profits
  • No Longer Just a Niche
  • Plastic or Paper?
  • Bottled Water Backlash
  • Interest in Green Issues Will Only Build
• Trend #9: Tapping Ethnic Markets
  • An Ever-Expanding Range of More Exotic Fare
  • Hispanic Market Targeting
  • Bashas' Food City
  • Minyard' s Carnival
  • Rancho Liborio
  • Publix' s Sabor
  • Wal-Mart Also Targeting Latinos
• Trend #10: In-Store Media
  • Growth in Retailer-Controlled Media Tracking Technological Advances
  • On-Cart Capabilities
  • Radio Frequency Identification Stalls Out
  • Future of Biometric Payment Kiosks Uncertain
  • Word-of-Mouth Goes High Tech
• Merchandise Opportunities
  • RTD Tea/Coffee Leads High-Growth Food and Beverage Categories
  • Figure 3-3: Top 10 Growth Categories in Dollar Sales Percentage Change: 2007 vs. 2006
  • "Upscale," "Natural" Lead New Product Claims
  • Table 3-2: Top Ten Food and Beverage Product Claims: By Number of New Product Reports, 2003, 2006 and 2007
  • Upscale/Gourmet Positioning
  • Retailers and Marketers on Board

Chapter 4: Grocery Channel Trends

• Grocery Channel Leads in Food Sales
• Kroger, Safeway and Supervalu the Leading Supermarket Operators
• Table 4-1a: Top 10 U.S. Supermarket Chains by Retail Dollar Sales, 2006 (in millions)
• Table 4-1b: Top 10 U.S. Supermarket Chains by Number or Supermarket Units, 2005 vs.2006
• Kroger: Solid Strategy Means Solid Gains
• Safeway - Lifestyle 2.0
• On the Block?
• Supervalu Becomes a Major Retailer Through Albertsons Merger
• Publix Wins Customer Praise
• Ahold USA Goes Leaner and Meaner
• Delhaize America Innovates for Growth
• H. E. Butt Grocery Testing New Concepts
• A&P on the Ups
• Winn-Dixie Fighting an Uphill Battle
• Giant Eagle Tests New Formats
• Focus on Smaller Independent Supermarkets
• Supermarkets Lead in All Food & Beverage Categories
• Many Supermarkets Shift to "Fresh Formats"
• Table 4-2: Percentage of Traditional Supermarkets Offering Meal Solutions: By Type, 2007 (percent)
• Playing Both Ends Against the Middle
• Limited Assortment Chains Making Waves
• Ethnic Food Markets Evolving
• Focus on Natural Food Stores
• Whole Foods: A Natural Leader
• The Whole Foods Shopping Experience
• Bigger and Bigger-and Smaller
• Focus on Gourmet/Specialty Food Stores
• The Trader Joe' s Experience

Chapter 5: Value Channel Trends

• Supercenters
  • The Supercenter Format Matures
  • Focus on Wal-Mart: The Nation' s Largest Food Retailer
  • The Supercenter Push
  • Wal-Mart Slipping?
  • Economies of Scale
  • Private-Label Pursuits
  • Fresh and Organic
  • Market Segmentation
  • Tapping Hispanics
  • Looking Ahead
  • Moving on Target
  • Meijer: The Regional Supercenter Pioneer
  • Kmart Still Struggling to Find a Path
• Warehouse Clubs
  • Ongoing Expansion Based on Unique Appeals
  • In-Store Cachet
  • Room to Grow
  • Costco Wholesale Corp.
  • The Merchandise Mix
  • Private Label and Organic
  • Sam' s Club
  • A New Attitude
  • BJ' s Wholesale Club
• Dollar Stores
  • Adding More Food to Their Product Mix
  • Dollar General
  • Family Dollar
  • Dollar Tree

Chapter 6: Convenience Channel Trends

• Convenience Stores
• Changing with the Times
• Emphasizing Foodservice
• 7-Eleven Switching to Franchise Culture
• The British Invasion: A Fresh Approach from Tesco' s Fresh & Easy
• Focus on Fresh, Healthy
• Big Brands + Private Label
• Keeping Costs Down
• Investors Nervous
• An Impressive Business Model…
• But a Slow Start
• Looking Ahead
• Other Fresh Ideas in C-Store Retailing
• Alimentation Couche-Tard, Inc.
• Famima!!
• Marvelous Market
• MoCo Market
• NexStore Marketplace
• Sheetz, Inc.
• Wawa, Inc.
• Is Wal-Mart in the Running?
• Home Depot Convenience Stores Stall
• Drugstores
  • Competing on the Convenience Front
• Vending Machines
  • Offering Convenience, 24/7
  • New Vending Developments
  • Healthier Vended Items for Schools and Workplaces
  • Fully Automated, Self-Checkout "Mini-Marts"
  • Different Payment Methods
  • Ethnic Foods Vending Machines

Chapter 7: Emerging Channel Trends

• Making Online Grocery Shopping Click
• The FreshDirect Model
• Websites Increasingly Vital for Consumer Packaged Goods Marketers
• Farmers' Markets Are Flourishing
• Figure 7-1: Growth in Number of Farmers' Markets, 1994-2006
• Two Types of Farmers' Markets
• The Markets in Off-Season
• Farmers' Markets Face a Crop of Challenges
• Community Supported Agriculture Programs (CSAs)
• European Food Halls
• Meal Assembly Kitchens: Cooking Out-Eating In
• Figure 7-2: Growth in Number of Meal Assembly Kitchens, 2002-2007
• Other Alternative Channels Target Impulse Sales
• Grocery Retailing in the Year 2022
• Made In Transit Factories?

Appendix: Addresses of Selected Industry Associations and Retailers