The rise of supercenters and warehouses has increased competition for the industry
Los Angeles, CA (PRWEB) February 10, 2013
Despite numerous challenges, including stagnant profit margins, the Supermarkets and Grocery Stores industry has found a way to achieve growth in the five years to 2012. Contrary to recessionary spending patterns experienced by many other retail industries, supermarkets and grocery stores benefited from lower per capita disposable income levels because many consumers chose to purchase food from this industry rather than eat at restaurants, says IBISWorld industry analyst Eben Jose. As a result, IBISWorld expects industry revenue to increase at an annualized rate of 2.2% to $76.6 billion in the five years to 2012. Industry participants have been plagued by the rising cost of food and external competition from supercentres and warehouse clubs, though. Additionally, revenue growth has slowed from 2010 to 2012 as consumers return to their prerecession spending habits.
The rise of supercentres and warehouse clubs, such as Walmart and Costco, has forced the industry to transform in the five years to 2012. These competitors operate on a massive scale, which allows them to source food at much lower prices. As a result, they are able to offer lower prices to consumers, which have drawn shoppers away from the Supermarkets and Grocery Stores industry. The industry has responded by entering into a consolidation phase; the number of industry enterprises is expected to decrease at an annualized rate of 2.6% in the five years to 2012. “Major players like Loblaw Companies and Sobeys Inc. have been acquiring independent grocery chains to expand their reach and gain leverage with food wholesalers and suppliers,” says Jose. “Furthermore, these players have been upgrading their establishments, improving their customer loyalty programs and giving significantly more retail space to organic and ethnic foods.” According to Statistics Canada, most industry enterprises are large, employing more than 500 people. From 2007 to 2012, the number of firms employing one to 20 people has decreased substantially because many of those types of firms could not compete with the larger chains. Other major companies include Metro Inc. and Safeway Inc.
In the five years to 2017, Improvements in the economy will increase per capita disposable income levels, which will give consumers more discretionary income. A large percentage will choose to return to eating at restaurants, while some continue to shop at industry establishments, keeping growth steady. Supermarkets and grocery stores will continue to improve their customer loyalty programs and add private-label and specialty food selections (e.g. organic and ethnic foods) to retain and entice customers. For more information, visit IBISWorld’s Supermarkets and Grocery Stores in Canada industry report page.
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IBISWorld industry Report Key Topics
The Supermarket and Grocery Stores industry makes up the largest food retail channel in Canada. These establishments retail general lines of food products, including fresh and prepared meats, poultry and seafood, canned and frozen foods, fresh fruits and vegetables and various dairy products. This industry excludes convenience stores, warehouse clubs and supercentres.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US and Canadian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.ca or call 1-800-330-3772.