Fresh format lead retail gains - The Packer

Fresh format lead retail gains

06/20/2013 12:20:00 PM
Tom Karst

The growth of fresh food retail formats and the coming attraction of online shopping were two trends highlighted in a web seminar hosted by The Food Institute and Willard Bishop Consulting.

In the June 19 presentation called  “The Future of Food Retailing,” Jim Hertel, managing partner with Barrington, Ill.-based Willard Bishop, said retailers can’t rely on high inflation to provide sales growth for their operations. Recent consumer price trends show only 1% inflation compared with a year ago, he said.

Food retailing in general is a stable category, with growth only coming from food inflation and population growth. Within the category, however, Hertel said there is much turmoil caused by consumer shifts. Baby boomers, with incomes falling, are fading in importance and convenience-oriented millennial consumers are on the rise, he aid.

These shifts are providing winners and losers among retailers and their suppliers, he said. “The optimistic note for today is that real growth and not just inflation is available today for food retailers and manufacturers who know that to look for and embrace the future,” he said. Hertel said retailers should develop a range of possible responses to trends and pursue responses that make sense for them. The future will reward retailers with a bias toward action, he said.

One overlooked growth opportunity for retailers is e-commerce, he said. “Amazon is not the only e-commerce format that is likely to succeed going forward,” he said. E-commerce food sales are expected to grow `12.1% yearly.

Traditional supermarket dollars increased 3.4% in 2012, but the market share of those stores remained steady at 46.5%. Hertel said “fresh” format sales increases significantly led all formats, he said. Fresh format sales rose 22.5% to $12.7 billion in 2012. Whole Foods enjoyed a same-store sales increase of 8.7%, followed by The Fresh Market with a 5.7% gain in 2012. The market share of fresh format stores was still quite low, at 1.1% in 2012, according to Willard Bishop statistics.

Limited assortment stores, led by Aldi, showed a 4.4% increase in sales to $29.9 billion, according to Willard Bishop statistics. Limited assortment stores had a market share of 2.7% in 2012, according to Willard Bishop.

Persistent unemployment, slow growth and a squeezed middle classes make it a tough environment for retailers, he said. In that context, he said retail formats that are expanding include extreme value formats, fresh, natural and organic operators and drug stores.

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