In 1997, supermarkets and small-format grocers held 37 percent share of American’s total food spending; as of 2022, that share had fallen to one quarter, according to data from the USDA, reports The Wall Street Journal. On the other hand, warehouse clubs and supercenters, like Walmart and Costco, increased their share of food spending from 4 to 10 percent over the same period.
Competition for food dollars continues to grow from big box retailers, convenience formats like Amazon, restaurants and fast food chains, as well as from discount grocers like Aldi and Lidl. Between 1997 and 2022 restaurants and fast food, for example, increased their food dollar share from 33.6 percent to 37.4 percent.
The downward trend only extends to grocers and supermarkets: data from Nielsen’s NIQ shows that grocers and drugstores are the only two retail formats that lost food market share in the year ended May 2023 compared with the year-earlier period.
According to The Wall Street Journal, center store is in jeopardy, as many competitors can sell these items at a lower price. Supermarkets have resisted renovating the center store, as they rely on trade spend from national brands, which can account for more than half of a business’s profits. Full Story
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