Economic recovery will encourage people to eat out, reducing supermarket spending
Los Angeles, CA (PRWEB) September 16, 2012
Accounting for more than 72.0% of the country's $680.0 billion food retail market, the Supermarkets and Grocery Stores industry dominates food sales in the United States. The industry is flooded with supermarkets aiming to grab market share by securing locations in neighborhoods that allow residents to shop conveniently. Operating in a highly competitive and saturated product market, the industry is in the mature phase of its life cycle. Over the five years to 2012, industry revenue is expected to decrease an average of 0.6% per year to reach $491.2 billion, with revenue dropping an estimated 2.1% in 2012 alone. During the recession, changing consumer spending patterns aided the industry. According to IBISWorld industry analyst Eben Jose, high unemployment and low disposable income drove families and individuals to take a more conservative approach to food spending and eating out, a trend that benefited the supermarkets and grocery stores. Grocery shopping increased as consumers opted to eat more meals at home to save money. While the industry experienced marginal growth from 2007 to 2009, industry profit steadily declined over the five years to 2012 as a result of the rising costs of inputs, utilities and transportation. As the economy began to recover in 2010, industry sales began to slightly wane. Consumers slowly returned to prerecession habits and returned to eating out more often, which decreased the number of grocery shopping trips.
Because food and beverages are necessities, IBISWorld expects them to remain in constant demand and generate a steady stream of revenue for grocery stores and supermarkets in the coming five years. However, general economic shifts are expected to weigh somewhat on the industry. “As per capita disposable incomes continue to expand in the recovering economy, consumers will start eating out more, particularly as individuals work long hours and seek the convenience of take-out meals,” said Jose. Also, during the past five years, stores such as Walmart have increased their grocery product offerings, which have lured customers away from traditional grocery stores. This competition is only expected to intensify over the next five years. Consequently, IBISWorld forecasts that industry growth will remain relatively stagnant over the five years to 2017.
Industry concentration measures the extent to which the top four players dominate an industry. IBISWorld expects that the top four players in the Supermarkets and Grocery Stores industry will account for 38.3% of market share in 2012, which signifies a low level of concentration. In this already mature environment, industry operators are striving to gain every possible growth opportunity. Minor growth in concentration is occurring, as players are winning market share during an economic downturn. The Kroger Co. and Safeway and have been able to raise their market share via acquisition and expansion in the past two recession-filled years. Over the five-year period to 2012, market share increased; furthermore, IBISWorld forecasts that it will continue to rise in the five years to 2017, as players continue their recovery with aggressive consolidation and acquisition initiatives. For more information, visit IBISWorld’s Supermarkets and Grocery Stores in the US 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 the United States. These establishments are primarily engaged in retailing 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.
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 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.com or call 1-800-330-3772.