US supermarkets losing market share

Published on
January 30, 2014

Traditional supermarkets continue to lose market share to alternative outlets in the U.S., which is impacting how and where perishables are sold, Jim Hertel, managing partner of food retail consulting company Willard Bishop, said during a recent webinar.

During the Grocery Industry Outlook Webinar hosted by BMO Financial Group on 28 January, Hertel explained how the change in the types of retailers selling food, along with generational shifts, is influencing fresh seafood sales.

While the number of traditional supermarkets has remained fairly steady for the past 35 years, the format’s share of the U.S. consumer’s grocery dollar has steadily declined. In 1988, traditional supermarkets boasted around a 90 percent share of food and consumables dollars in the U.S. In 2013, that number dropped to below 50 percent, according to Hertel.

“In the last five to six years, it is no surprise that economic forces have had a tremendous impact on where food is being sold. Extreme value retailers like Aldi, Trader Joe’s, Save a Lot, and dollar stores have taken off because they address a real need,” Hertel said.

At the same time, more U.S. shoppers are seeking out fresh meats, seafood, and produce, an area where traditional supermarkets excel. “Fresh has become the differentiating factor for [traditional supermarket] retailers. It has been front and center in terms of the leverage they are trying to pull, relative to extreme value formats,” Hertel said.

Still, those shoppers — many of them Generation Y — are seeking out fresh format stores such as Fresh Markets and Whole Foods Market, along with natural, organic, and specialty stores.”We will see more of these stores and a lot of investment — maybe over-investment — in this end of the market, as the price points and margins are very attractive,” Hertel said.

Fresh food retailers are the most formidable competitors for traditional retailers in the fresh, wild-caught seafood category, while dollar and mass stores “compete strongly for canned and frozen seafood sales,” Hertel told SeafoodSource. “While that’s still true, when chain drug retailers like Walgreen’s have developed a very credible sushi program, we can say that the competitive level has never been higher. Grocers can’t take their eyes off anyone,” Hertel said.

To better compete with all the various formats, traditional supermarkets must focus on knowledgeable service personnel in their fresh seafood departments, freshness (“don’t forget that dimension include smells,” Hertel said) and a willingness to go the extra mile for loyal customers, “whether it’s setting aside a favorite selection from today’s catch or cutting salmon steaks extra thick for grilling…make customers feel special,” Hertel said.

Hertel has a fairly positive outlook for traditional supermarkets’ fresh seafood departments in the near future. “All the taste and health benefits that seafood offers mean that the general consumption trendline should be headed up longer term; 2014’s specific outlook will be dependent on prices, both for seafood as well as competitive proteins,” Hertel said.

Contributing Editor

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