An article in the February issue of Shopping Centers Today reported on the affect grocery discounters are having on the supermarket industry, stating that traditional supermarkets are losing market share "thanks to a rapidly advancing horde of competitors seeking to outdo them on price, convenience and quality."
The article quoted an analyst from JLL who said that "consumers are now splitting their grocery shopping across multiple channels - as many as five," and that "by 2018, traditional supermarkets' share of grocery dollars in the U.S. will have shrunk 300 basis points to 37.2 percent."
As we all know by now, the list of traditional supermarket competitors includes large wholesale clubs, supercenters, fresh grocers, and small-format, dollar, drug, convenience and online stores.
And, of course, the Germans are coming. Aldi plans to expand from 1,300 to 2,000 American stores in the next three years, and Lidl is planning to open stores here in 2018.
According to an analyst from PerishablePundit.com, "A box of laundry detergent or Kellog's Corn Flakes is the same no matter where it is sold. That makes it easy for price-conscious shoppers to hunt for bargains on commoditized goods by website, in dollar stores, at Walmart, or in a multiplicity of other food selling outlets. Even if traditional supermarkets can continue to sell center-store items, they have to do so at such deep discounts that they're just not able to generate profitability."
To combat this issue, major chains are focusing more on fresh and prepared foods, and creating "foodie-friendly cheese caves, wine bars, mini-restaurants and more." They are also trying to alter their product mix to include the types of products found at warehouse clubs. Ultimately, traditional supermarkets are trying to make their stores appeal to everyone (like they used to) - discount-oriented consumers, aspirational consumers and affluent consumers.
Meanwhile, online grocery sales continue to grow. The online grocery spend in 2014 was $23 billion, and it is expected to be nearly $100 billion by 2019, or 12 percent of total grocery spending.