Report: Traditional grocers continue to lose market share

While the traditional grocery channel still commands the largest share of sales generated from grocery and consumable products at 44%, that share is shrinking as traditional grocery continues to lose share to non-traditional grocery channels, according to a new report.

New research in “2019 Future of Food Retailing Report” from Inmar, a data-driven technology-enabled services company, provides a detailed look into the food retailing industry in order to identify and quantify market dynamics, trends and behaviors.

The report found that sales for the traditional grocery channel fell 1.1% to $547.6 billion in 2018 when compared to the previous year. Since 1988, according to the report, traditional grocery has lost over half of its market share — down to 44% from 90%. Additionally, the volume of e-commerce sales at traditional retailers continues to rise, as well among formats in the non-traditional channel. E-commerce sales for food and consumables totaled $58 billion in 2018, an increase of 21.7% over 2017.

The food retail industry is changing from both internal and external factors, and retailers and food manufacturers must innovate to compete for market share, the report stated. As omnichannel grocery shopping proliferates and shoppers seek convenient access to more nutritious foods, those channels and formats most favored by consumers will continue to change.

“Understanding, anticipating and proactively accommodating shifting shopper demand must take priority among retailers if they’re to protect sales and share and remain competitive in the midst of accelerating marketplace transformation,” the report noted.

Jim Hertel, senior vice president at Inmar Analytics, said established consumer packaged goods brands and grocery retailers need to embrace new strategies for driving growth in a marketplace where sales volume and profit are suffering continuous contraction with an increased focus on innovation.

“There are no shortages when it comes to innovative products — from plant-based protein to non-milk to clean meat to CBD oil-infused, the ongoing proliferation of alternative offerings would appear to promise real opportunity for successfully activating a shopper base that is seriously committed to dietary improvement involving sustainability and responsible sourcing,” Hertel added. “The first step toward successful innovation is determining which trends are here to stay through accessing existing data; mining and modeling that data for actionable insights is the second.”

Other findings from the report include:

• Convenience stores experienced a sales gain of 2.2% to $201.7 billion in 2018 from 2017 despite a slight decrease in number of stores. Market share for the segment remained flat at 16.1%, and food accounted for roughly two-thirds of convenience store sales

• Sales in the non-traditional grocery channel increased 1.9% to $500.6 billion in 2018 when compared to 2017. The top-performing formats in this channel for 2018 were dollar stores and wholesale clubs, with sales gains of 5.7% and 3.3%, respectively. However, drug stores experienced a significant sales decline of 6.0% in food and consumables in 2018 when compared to 2017

• E-commerce sales for food and consumables totaled $58 billion in 2018, an increase of 21.7% over 2017. The volume of e-commerce sales at traditional retailers continued to rise as well; however, Amazon continues to dominate the space for year-over-year food and consumables sales, increasing 23.5% in 2018, totaling $21.1 billion for the year