The growing popularity of supercentres and warehouses has intensified competition.
New York, NY (PRWEB) March 01, 2014
Despite numerous challenges, including stagnant earnings and frugal spending among consumers, the Supermarkets and Grocery Stores industry achieved modest growth in the five years to 2014. As per capita disposable income dipped in 2010 and remained repressed during the following year, some consumers turned to more affordable food retailers such as supercentres, wholesale clubs and discount stores. Other consumers looked for cost savings at grocery stores, purchasing and stocking up on promotional items or trading down to private-label brands. In response to the growing demand for affordable options, retailers expanded their private-label product lines to appeal to price-conscious consumers. While the shift toward a greater selection of generic goods has helped operators maintain volume sales, industry revenue growth has been curbed due to the lower price point of these items when compared with branded products. As such, IBISWorld anticipates industry revenue to grow slightly at an average annual rate over the five years to 2014, including expected growth in 2014.
Faced with increasing purchase costs and intensifying competition from discount retailers, the leading grocery store chains acquired smaller competitors to expand their market share and lower operating costs through economies of scale. For instance, Loblaw purchased T&T Supermarket in 2009 while Sobeys acquired Canada Safeway Limited at the end of 2013. According to IBISWorld Industry Analyst Hester Jeon, “Although industry consolidation has not improved profitability in the short term, operators have successfully achieved growth in the latter half of this period by enhancing customer loyalty programs and dedicating more retail space to organic and ethnic foods.”
The Supermarkets and Grocery Stores industry has a medium level of concentration with the four largest players expected to account for more than half of industry revenue in 2014, representing a slight decrease from 2009. In the five years to 2019, IBISWorld forecasts industry revenue to increase an annualized rate. “The strengthening economy will help increase per capita disposable income levels, which will allow some consumers to return to grocery stores to make food purchase,” says Jeon. Other consumers will begin trading up to premium goods at industry establishments, opting for organic and imported products, helping lift industry revenue. While higher income will allow some consumers to dine out at restaurants more frequently, industry operators will entice consumers by offering a greater variety of prepared meals and specialty foods to entice and retain customers.
For more information, visit IBISWorld’s Supermarkets & 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.
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