The report, entitled The Future of Food Retailing in the US, forecasts growth for the retail food and beverage sector of 4.5 percent per year over the next five years to reach $697.5bn by 2015. This includes real sales growth of 1 to 2 percent a year, plus annual inflation of 3 to 4 percent. Food retail sales were worth $560bn in 2010, the market research organization said.
Publisher of Packaged Facts Don Montuori said: “The value focus remains tied to the nation’s economic fortunes. As long as unemployment remains high, the likeliest scenario for the retail industry — and indeed the US economy as a whole — will be slow growth, and value will continue to be a prime motivator behind consumers’ food and beverage purchases.”
However, although consumers are forecast to continue looking for low prices, the concept of value encompasses more than price alone, the report said. It said that value is defined by consumers as ‘worth the money’, taking in factors such as quality, convenience, nutrition, health and service, as well as price.
“Whether eating more meals at home, shopping more at notoriously value-centric
retailers such as dollar stores or Walmart, deferring discretionary purchases, or trading down on essentials, these new consumer tendencies will persist throughout 2011,” Montuori said.
As for where consumers were shopping last year, the traditional grocery channel generated 57 percent of sales in 2010, value channels brought in 26 percent of sales, convenience channels 14 percent, and 3 percent of sales were through alternative channels such as drugstores and vending machines. Walmart was the leading retailer, accounting for about $62bn of food and beverage sales last year, the report said.
“Food retailers are scrambling to adjust their marketing strategies to survive the growing competition that has erupted in the industry,” Packaged Facts said.
Marketing strategies that have emerged in this environment include experimenting with internet marketing and digital technologies, SKU reduction, price wars, tweaking private label offerings, and retailers positioning themselves as authorities on wellness and nutrition management.