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Grocery Sales Won't Pace With Inflation

Grocery Sales Won't Pace With Inflation

Growth rates for six retail formats are not expected to keep pace with inflation, according to The Food Institute. The formats include four grocery retail formats, convenience stores that sell gas and military outlets.

“This is a conservative estimate given that rising energy prices could push the inflation rate even higher,” said Jim Hertel, Senior Vice President of Willard Bishop, who prepared the report.

As well, Willard Bishop’s annual “Future of Food Retailing Report” reveals even further market share erosion for traditional grocery formats.

Total traditional grocery market share for 2005 was 50.4 percent, while the market share for non-traditional grocery outlets reached 33.4 percent. Convenience store market share for 2005 was 16.2 percent.

By 2010, traditional grocery share is projected to decline to 44.1 percent, while non-traditional grocery share is projected to increase to 40.5 percent. And, while convenience store sales will continue to rise, this format is not expected to keep pace with the growth of other retail formats and therefore is projected to have a 15.4 percent market share by 2010.

“Manufacturers need to embrace the changes that are taking place in food retailing today in order to succeed over the long term,” Hertel said. “Even if new and emerging formats aren’t ‘right’ for your products, these are the types of stores where Americans are increasingly purchasing their food and consumables.”

“The key takeaway for retailers is that there’s real risk in falling behind in efforts to satisfy shopper needs. Sales are shifting more rapidly than ever before among stores, and the growth is going to the most innovative retailers,” added Bill Bishop, Willard Bishop founder.

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