Grocery store openings increased 30 percent in 2018

New grocery store openings were up 30% in 2018 as compared to the prior year, according to a report by JLL. More than one-quarter of the new stores were in Florida, California and Texas as a result of expansion by Publix, Sprouts Farmers Market, Aldi, Kroger and H-E-B.

"Grocery is one of the strongest retail sectors, with nearly twice as many new stores opening than closing last year," according to JLL Director of Research James Cook.

Cook also pointed out that shopper habits have shifted to more frequent, shorter trips, and as a result, food retailers are focusing on developing smaller format stores.

"In 2019 we expect to see even more grocery stores rolling out their smaller-format stores as they battle razor-thin margins in prime locations, while still serving evolving consumer needs," said Cook.

Aldi, which accounted for 16% of total new stores by square footage, continues to expand at a rapid pace. And new formats, like Giant's 9,500 square foot Heirloom Market in Philadelphia, were recently introduced.

Amazon reportedly to launch supermarket business; Philly in the mix

Amazon plans to launch a new retail grocery business, according to a report in The Wall Street Journal. The report stated that Amazon already plans to open a grocery store in Los Angeles - possibly before the end of this year - and has signed leases to open two more in early 2020.

In addition, the company is in discussions to open grocery stores at shopping centers in Philadelphia, San Francisco, Seattle, Chicago and Washington, D.C. The Journal also reports that Amazon is considering potential acquisitions of existing small-to-medium size grocery chains.

"I would speculate this is a traditional grocery play that leverages the best of Amazon technology and shopper insight," said Danny Silverman, CMO at Edge by Ascential. "As Amazon continues to look for ways to capture the last mile through physical retail, they need to test and find propositions that speak to different shopper segments. Whole Foods is a relatively narrow proposition, (Amazon) Go is small footprint and (Amazon) Fresh is delivery-only. A more traditional grocery play would cover critical gaps in their current model."

Walmart adds online delivery service in select Philly markets

According to a company news release, Walmart began online grocery delivery service late last month to Philadelphia and select suburbs, including King of Prussia, Warminster, Kennett Square, West Berlin and Cinnaminson.

Customers in these areas can shop for items on Walmart's website and choose a delivery time, including same-day delivery for an added fee.

Walmart plans to offer its online delivery service in 100 metropolitan areas by the end of the year.

Study shows that consumers still prefer visiting supermarkets for groceries

Despite all the hype around online ordering and delivery services, a recent study conducted by TABS Analytics found that conventional supermarkets and Walmart are overwhelmingly the top destinations for regular grocery shopping.

Of the 1,000 U.S. adults surveyed, 75% said traditional grocery stores were the retail venues they regularly visited to buy food and beverages (more than six times per month), and 57% cited Walmart.

However, compared to last year, 2% fewer people named supermarkets and Walmart as the places they regularly shop for food and beverages, and 2% - 4% more customers named dollar stores, drug stores and discount grocery stores. Target, Trader Joe's and Whole Foods saw gains as well.

Just one in six consumers said they regularly shopped online for groceries.

Walmart poised to surpass Amazon as online grocery leader

A report released last week by Deutsche Bank Securities found that as a result of Walmart's investments in e-commerce, the company may overtake Amazon in online grocery market share by the end of the year.

"The retailer is reaping the returns of many years of investment in e-commerce and customer service," said Deutsche Bank Analyst Paul Trussell. "We believe the company is now in position to accelerate market share gains in grocery while also growing EBIT dollars and expanding ROI."

According to Walmart, the company offers online grocery delivery service in over 50 markets and more than 2,000 pickup locations. Walmart projects that it will have pickup sites in 430 markets, covering 69% of U.S. households, by the end of January 2019.

In 2017 Amazon had online grocery sales of $2 billion for a 12.5% market share. Walmart was close behind with sales of $1.78 billion and an 11.1% share.

Trussell believes Walmart could reach a 17% online grocery market share by 2025.

Walmart adding grocery delivery in 100+ markets

Walmart announced that it plans to expand its online grocery delivery service to more than 100 metro areas around the country. The company says the service will be available to more than 40 percent of U.S. households by year-end.

Currently Walmart's grocery delivery service is available in six markets, where customers can receive their orders the same day in some cases. The fee is $9.95 and the minimum order is $30.

According to reports, Walmart already employs more than 18,000 personal shoppers and will hire thousands more.

Walmart also offers online grocery pickup, where customers order groceries online and pick them up at stores without having to get out of their cars. This service is currently available in 1,200 stores throughout six markets, and the company plans to add the service to 1,000 more stores this year.

Kohl's plans to add groceries to select stores

According to reports, Kohl's is looking for "well capitalized companies" that it can partner with to offer groceries and drive traffic to its stores.

Kohl's has streamlined their offerings in hundreds of stores in recent years, and several of those locations have excess space that can be used to showcase grocery items that draw customers in more frequently. For stores that are part of a larger shopping center, selling groceries may be restricted by other tenants, or waivers may be needed by certain co-tenants.

The company currently operates about 1,100 stores, most of which are in the 80,000 - 90,000 square foot range.

According to the Milwaukee Journal Sentinel, the grocers that partner with Kohl's would have their own entrances and would be separated by an internal wall. It is expected that Kohl's will provide more information during its March 1 quarterly earnings call.

Report finds that grocery shoppers visit multiple stores

A report from Acosta found that 76% of shoppers visit more than one store each week for groceries, and most of these consumers shop around to find cheaper products. In addition, 37% visit other stores to ensure they have fresh food, and 33% do so because they can't find all the brands they like at one location.

The report also notes that 53% of shoppers choose a retailer based on a preference for specific store brands, up from 34% in 2011.

So, grocery chains should take note (and most likely they are) that while price is a motivating factor for grocery shoppers, selection, freshness and private label quality are also very important. And while store traffic may be up overall due to consumers shopping around and making multiple grocery trips each week, it is likely that basket size per visit is down.

The findings help explain the proliferation of non-traditional food retailers, as consumers aren't finding everything they want at a traditional grocery store.

PA wine sales expand to grocery and convenience stores

Although it's been widely publicized in Pennsylvania, those outside the state may not be aware that the laws here regarding wine and beer sales have entered the 20th century - sort of. (Yes, I know it's the 21st century.)

Here's the deal. In PA, beer must be purchased at package stores, and only by the 12-pack or case. However, some supermarkets and convenience stores can sell beer, but only under specific guidelines (i.e. separate registers). And some bars can sell 6-packs for take-out only.

As for wine and liquor, they can only be sold at state-owned stores. Until now, that is. As of earlier this month, consumers may buy up to four bottles of wine at supermarkets and convenience stores that already sell takeout beer. That's only if the supermarket or convenience store has the right kind of license, though.

Here's an excerpt from a Supermarket News article explaining the new law.

"Before the retail establishments can make it more convenient for their customers to purchase wine, the stores must clear some hurdles of their own. Those without existing liquor licenses seeking to sell wine for off-premise consumption must first comply with certain provisions regarding these sales. They must apply and obtain a restaurant liquor license known as an 'R' license. Once acquired, licensed eateries - and even gas stations - may sell up to two six-packs of takeout beer per transaction. However, in order for retail establishments to begin selling wine in addition to beer, they must also apply for a 'wine expanded permit,' which authorizes stores to sell up to four, 750 ML bottles of wine for off-premises consumption."

There is plenty more, including fees depending on how much wine the retailer purchases, and rules regarding how much square footage can be used in the store as well as how many tables and chairs are required.

It seems more confusing than it needs to be, but the law actually represents some progress. It is likely that alcohol sales in PA will eventually be completely privatized, but not for a long time. For now they are still regulated by lawmakers. Hence my 20th century reference above.

Update: Southeastern PA stores that received approval under the new law to sell wine include the following:

Bucks County:
Acme - Doylestown
ShopRite - Bensalem
ShopRite - Fairless Hills
Giant - New Hope

Chester County:
Acme - Wayne
Giant - Exton

Delaware County:
Acme - Glen Mills
Acme - Media
Giant - Havertown

Montgomery County:
Acme - Flourtown
Giant - Flourtown
Giant - North Wales
Giant - Willow Grove

Philadelphia County:
Thriftway - Aramingo Ave.
Acme - Red Lion Road

Supermarket with no staff opens in Sweden

A grocery store with no staff has opened in Sweden. The store, located in a small seaside resort in the southern part of Sweden, is controlled by customers via an app. It responds to shopper requests day and night, all year round.

Once customers are registered, they simply enter the store, scan their items, pay from their phone, bag their groceries and head home. The concept is based totally on the honor system, with only security cameras available to monitor the store.

Target delaying food overhaul until 2017

The Minneapolis Star Tribune reported earlier this month that Target has pushed back the rollout of its food overhaul from 2016 to 2017, saying they need more time to hash out and test ideas. The company's goal is to make its grocery department more of a destination, rather than an afterthought.

The process has already begun, with small tests taking place in several stores around the country. In these select stores, shoppers see a new kiosk on wheels that displays food items and accessories. A store in Minneapolis is one of 450 Target stores with a bigger assortment of gluten-free, organic and healthier items.

The same Minneapolis store is also testing a larger selection of bulk nuts, trail mixes and grains in self-service bins, with produce laid out in wood-paneled receptacles and wicker barrels promoting a fresh-from-the-farm look.

According to the Star Tribune story, analysts have tracked a 49 percent increase in organic items offered at Target in the last year, including private label and brand-name items. Sean Naughton, a retail analyst for Piper Jaffray & Co. noted that Target's brand-name organic items are often sold for less than at Whole Foods. He explained that Target can afford to sell the items for less since the margins it gets on its home goods and apparel "allows them to be competitive on traffic-driving categories like food."

"It's a nice advantage they have compared to others," said Naughton.

Grocery dominates Top 100 Retailers list

The National Retail Federation released its Top 100 U.S. Retailers list, with Walmart on top with $334 billion in sales, about three-and-a-half times the sales of runner-up Kroger.

As a merchandise segment, grocery continues to prove that it's a driving force. According to the study, eight of the nation's 10 largest retailers drive a significant portion of store traffic with groceries. In total, 37 of the Top 100 retailers include groceries in their merchandise mix, and more than 20 can be classified as supermarkets.

Here are the top 10:

Walmart - $334 billion
Kroger - $94 billion
Costco - $75 billion
Target - $71 billion
The Home Depot - $70 billion
Walgreens - $68 billion
CVS Caremark - $66 billion
Lowe's - $52 billion
Amazon.com - $44 billion
Safeway - $38 billion

Other food retailers on the list include the following:

13: Publix - $29 billion
17: Ahold USA - $26 billion
21: Albertsons - $19 billion
23: Delhaize America - $19 billion
25: Dollar General - $17.5 billion
28: Wakefern/ShopRite - $14 billion
29: BJ's Wholesale - $13 billion
32: Whole Foods Market - $12.5 billion
37: Supervalu - $11 billion
38: Aldi - $11 billion
40: Family Dollar - $10 billion
50: Trader Joe's - $8 billion
62: Wegmans - $7 billion

Walmart grocery comps rise as overall comps fall

Walmart announced yesterday that overall U.S. comparable-store sales, excluding fuel, for its fiscal first quarter were down by 1.2%. The company blames the decrease on smaller and slower-arriving tax returns, and unseasonable weather.

Grocery sales were better than overall sales, as grocery comps were in the "low single-digits." Similar comps were reported for the Neighborhood Market grocery stores, and Sam's Club, which is gearing up for a membership fee increase, saw comps improve by 0.1% in the quarter.

Overall Walmart sales in the U.S. increased by 0.3% to $66.6 billion, and companywide sales increased 1% to $113.4 billion.

Exact figures on the number of times customers heard the phrase "Welcome to Walmart" when entering the store were not released.

Grocers take top 3 spots in "experience" ratings

The third annual Temkin Experience Ratings, which evaluate a company's overall customer experience, came out last week, and grocery chains fared well. Based on a study of 10,000 consumers, Publix, Trader Joe's and Aldi earned the highest scores. Here are the top 12 performers:

1 - Publix
2 - Trader Joe's
3 - Aldi
4 - Chick-fil-A
5 - Amazon.com
6 - Sam's Club
7 - H.E.B.
8 - Dunkin Donuts
9 - Save-A-Lot
10 - Sonic Drive-in
11 - Little Caesar's
12 - Ace Hardware

The five lowest scores went to US Airways, Time Warner Cable, Days Inn, Empire BCBS and 21st Century.

Weis opens large, green supermarket in Fogelsville

Weis Markets opened its newest store earlier this month in Fogelsville, and at 65,800 square feet it's the company's largest in the Lehigh Valley. It is also expected to be the Valley's first grocery store to be LEED-certified by the U.S. Green Building Council.

According to Weis, the store will use approximately 22 percent less electricity than a typical grocery store, and 60 percent fewer refrigerant emissions.

The store's 35-seat cafe offers beer that customers can drink with their meal or take home.

The largest supermarket in the Lehigh Valley is the 74,000 square foot Giant that opened last December.

Tesco to shut down Fresh & Easy chain

Tesco, the British supermarket giant and the world's fourth largest retailer, announced it will sell or shut down its 200 Fresh & Easy grocery stores. All of the stores are located in California, Arizona and Nevada, and the banner is Tesco's only U.S. asset.

Fresh & Easy began with its first store in Phoenix in 2007, and the grocery chain's stores are typically in the 10,000 to 15,000 square foot range. They offer fresh food and ready-to-eat meals at low prices, and the stores are touted as more convenient alternatives to traditional U.S. supermarkets.

Since 2007, Tesco has invested about $1.6 billion in the chain, but it has never been profitable.

"It is now clear that Fresh & Easy will not deliver acceptable shareholder returns on an appropriate timeframe in its current form," said Tesco CEO Philip Clarke.

Analysts say that Aldi could be among those interested in acquiring the chain, and that Walmart could bid for parts of it.

Analysts predict better year-end for supermarkets

Industry analysts said earlier this month that they expect the financial performance of supermarkets during the second half of the year to be slightly better than in the first half. Reasons cited include the following:

• A slowdown in inflation, which may result in better value propositions;
• Slow but ongoing acceleration in the general economy;
• More meals at home expected this winter, as compared to 2011 when mild weather resulted in more meals away from home.

Overall, the financial performance for the top 10 publicly traded grocery chains in the first half of 2012 was mixed as compared to the previous year. Sales were up 3.5% and operating income increased 1.2%, but comparable-store sales increased less this year than last.

According to Andrew Wolf, managing director for BB&T Capital Markets, inflation ran at about 3.3% for the first half of the year, so the 3.5% sales gain came almost entirely from inflation.

"As a result, the stronger conventional players generally saw a little bit of improvement in volume trends as inflation dropped from 3.8% in the first quarter to 2.7% in the second - and while comparable-store sales were still down in real terms, they were down less as volume improved."

Top 10 publicly traded grocery chains (ranked by sales volume):
1 - Kroger
2 - Safeway
3 - Supervalu
4 - Ahold USA
5 - Delhaize America
6 - Whole Foods
7 - Harris Teeter
8 - Stater Bros.
9 - Roundy's
10 - Ingles Markets

Independent grocers saw net profit gains in 2011

Independent grocery stores, which make up about 5% of the grocery market as compared to 20% 10 years ago, saw average net profits before taxes rise to 1.12% in 2011, a 3.7% gain from the previous year, according to a survey by the National Grocers Association and FMS Solutions.

According to the survey, same-store sales for independents rose 2.6%, but when adjusting for food-at-home inflation (changes in retail prices for food), it was actually a 2.2% decrease. Gross margins increased from 25.68% to 26.33%.

The survey also found that independents whose net profits were in the top 25% of the sector significantly outperformed their peers, as their net profit before taxes was 4.67%, an increase of 14% from the previous year.

S&P raises Whole Foods rating to investment grade

Last week S&P raised their corporate credit rating on Whole Foods to "BBB-," or investment grade. Based on S&P's expectation that strong sales and profit growth will continue at Whole Foods, they issued a "stable" outlook.

According to S&P, "Whole Foods has enhanced credit protection measures with considerable profit growth reflecting higher comparable-store sales and new smaller and more productive stores, trends we expect to continue."

S&P also stated that "the rating on Whole Foods reflects our assessment of its business risk as 'satisfactory,' which incorporates the company's strong position as the leader in the organic and natural food retailing sector, and our expectation that it will continue to outperform traditional grocery stores in the near and intermediate term. We also revised our assessment of Whole Foods' financial risk to 'intermediate' from 'significant.' This is based on the company's strong cash flow generation and forecasted credit ratios."

Aldi ad campaign to focus on "truths" of no-frills grocery shopping

"Loyalty shouldn't require a card."

"You can't eat frills, so why pay for them?"

"The same is always better when it costs less."

According to Aldi, these advertising slogans are "Aldi Truths," and part of the company's campaign that explains some of the advantages of shopping at a no-frills grocery store.