Modern Grocery Retailing Market in the US

Modern Grocery Retailing Market in the US

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Retailing is a transaction between a buyer and a seller where goods are exchanged for a certain sum of money. Sellers or the retailers form an essential part of the value chain, by delivering the goods directly to the individual or household for personal use. Retailing can be done in many ways: door-to-door sales, through stores or markets, and through delivery.

Traditional grocery retailing is the sale of grocery products primarily through small stores such as mom and pop stores owned by individuals running their own retail businesses; and represents the unorganized Retail sector. Modern grocery retailing is the sale of products through a chain of retail stores, usually owned by retail giants, and represents the organized Retail sector.

The US is the world’s third largest country in terms of population. Its population was 313.9 million, as of 2012. The Americans spend more than 20 percent of their income on food, housing, and non-alcoholic drinks. The US is the second largest Grocery market in the world, after China. In 2012, modern grocery retailers in the country accounted for 84 percent of the revenue in the total Grocery Retailing market in the US. Further, modern grocery retailing represented 61-63 percent of the all the retail outlets in the US and 80-82 percent of the grocery selling space.

The marketplace in the US accommodates different kinds of retail formats such as supermarkets and hypermarkets, depending upon the brand value and the positioning strategy of the retail giants. Some of the major retail giants in the US include Wal-Mart, Kroger, and Safeway.

The Modern Grocery Retailing market in the US is expected to witness steady growth during the period 2012-2016. Among the different retail formats, supermarkets are leading the Modern Grocery Retailing market in the US, in terms of market share, followed by hypermarkets. Wal-Mart is the leading vendor in the Modern Grocery Retailing market in the US, accounting for 25.2 percent of the market share in 2012. Kroger followed Wal-Mart, accounting for 8.1 percent share of the market in 2012. The overall market is expected to grow at a CAGR of 0.76 percent during the forecast period.

There are many drivers that are contributing to the growth of the Modern Grocery Retailing market in the US. One such driver is the increasing demand for convenience foods. Convenience foods are foods that are easy to prepare, easy to eat, and can be used for more than a single serving. With the growing need to have ample leisure time, consumers are increasingly opting for convenience foods. Further, with the reducing size of households, increasing number of working women, and changing demographics of consumers; the demand for convenience foods has increased significantly. Another driver which is contributing to the growth of the Modern Grocery Retailing market in the US is the increasing implementation of in-store innovations.

Despite the presence of several drivers, the growth of the Modern Grocery Retailing market in the US is curtailed by many challenges. One such challenge is intense competition in the market. Due to the huge market size of the Modern Grocery Retailing market in the US, in terms of revenue, many new vendors are entering the market making it more and more fragmented. Further, existing vendors in the market are coming up with innovative ideas and concepts for their products, to differentiate themselves from others and to meet the changing consumer needs. Another challenge which is hindering the growth of this market is the negative impact of food inflation.

Market Overview

This report covers the present scenario and the growth prospects of Modern Grocery Retailing market in the US for the period 2012-2016. To calculate the market size, the report takes into consideration revenue generated by the following segments of the market:

 Supermarkets

 Hypermarkets

 Forecourt Retailers

 Discounters

 Convenience Stores

The report also presents the vendor landscape and a detailed analysis of the top five vendors in the Modern Grocery Retailing market in the US. It also discusses the major drivers that influence the growth of the market. It also outlines the challenges faced by the vendors and the market at a macro level, and the key trends that are emerging in the market.

Market Size and Forecast

The Modern Grocery Retailing market in the US was valued at US$814.3 billion in 2012 and is expected to reach US$839.5 billion by 2016, growing at a CAGR of 0.76 percent. However, the YOY growth rate is expected to fall during the forecast period. This is because of the growth of private label brands that have positioned their products as low-cost products. The growth of the Modern Grocery Retailing market in the US is expected to be driven by private label brands during the forecast period. Since the products under private label brands are priced low, the YOY growth rate of the revenue generated by modern grocery retailers is expected to fall. Nevertheless, retailers would be able to generate higher profit margins from the private label brands due to low cost involved in developing and marketing the products under these brands.

Modern Grocery Retailing Market in the US 2012-2016 (US$ billion)

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Market Size and Forecast

 

The Total Grocery Retailing market in the US was valued at US$969.5 billion in 2012 and is expected to reach US$985.2 billion by 2016, growing at a CAGR of 0.4 percent. The Modern Grocery Retailing market in the US was valued at US$814.3 billion in 2012 and is expected to reach US$839.5 billion by 2016, growing at a CAGR of 0.76 percent. The Traditional Grocery Retailing market in the US was valued at US$155.2 billion in 2012 and is expected to reach US$145.7 billion by 2016, growing at a CAGR of 1.57 percent. Overall, grocery retailing in the US is expected to witness a very slow growth rate during the forecast period. This is because grocery is seen as a necessity and customers will purchase the same quantity that they have been purchasing, which is enough to fulfill their daily needs. The Modern Grocery Retailing market is expected to grow at a higher rate than the Traditional Grocery Retailing market. The reason for the growth of modern grocery retailing is that consumers currently want to spend their money and time engaging in leisure activities in their free time. Hence, they opt for modern grocery retailing as it combines shopping with leisure. Further, consumers have adopted private label brands since the economic slowdown and the adoption rate of private label brands conti

Publish Date: November 2016

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