Inmar Intelligence is out with its 2021 Future of Food Retailing Report, suggesting that over the next five years there will be "an overall return to pre-pandemic channel trends.
"The growth of Traditional and Non-Traditional Grocery will come at the expense of the Convenience format -- small stores that sell staple groceries, non-foods, and ready-to-eat foods designed for easy and quick access, and can include gasoline. This format is projected to continue to decline from 15.2 percent of dollar share in 2020 to 12.9 percent in 2025."
Other insights from the Inmar study:
• "E-commerce sales of grocery and consumable items grew 48.9 percent year over-year to $119.0 billion in 2020, driven by a 74 percent increase in digital sales of food and beverage. This increase is partially attributed to partnerships between retailers and third-party shopping and delivery services, like Instacart (100 percent year-over-year increase in partners) and Target (partnership with Shipt saw 300 percent increase in same-day deliveries)."
• "Traditional Grocery experienced an overall 10.9 percent increase in sales in 2020, growing to $623.3 billion from $562.3 billion in 2019. This channel saw the highest year-over-year percent boost in sales, resulting in a 1.9 percent year-over-year increase in dollar share to 44.4 percent, a reversal of the share losses in 2018 and 2019 to Non-Traditional Grocery. In addition to the sales increase, Traditional Grocery store count increased 0.6 percent to 40,616 locations at the end of 2020. The largest store count increase was within Limited Assortment, while Super Warehouse had a 16.2 percent store count year-over-year decline."
Jim Hertel, Senior Vice President at Inmar Intelligence, said in a prepared statement that "digital acceleration is affecting the long term growth plans of food retailers and manufacturers. Consumers have convenience at their fingertips with the option to order groceries online, yet in-store sales are climbing back up to pre-pandemic levels. So for retailers across the board, now is the time to build loyalty through digital hybrid experiences. These personalized engagements on digital and tailored and thoughtful in-store experiences will help meet expectations now, which will solidify loyalty in the long run.”
- KC's View:
A lot can happen in the next 4-5 years to make these prognostications inaccurate. As we've certainly seen in the past 18+ months, disruptions can come from a wide variety of directions, forcing businesses to take new paths and explore new models. As I've suggested here before, it sometimes seems that we're just one variant or one natural disaster away from a complete breakdown of the social order.
I also think that there are lots of reasons that a return to pre-pandemic norms may not happen, not least of which is the fact that there is some percentage of retailers who don't understand that they cannot be complacent about all this - they have to compete for every customer and every sale.