• by Sarah Mahoney , July 6, 2009

A new report suggests that the sweeping changes consumers have made in food buying over the last year are likely to stick, spelling big trouble for traditional grocers.

 

While traditional supermarkets experienced a moderate sales gain of 3.6% in 2008, reaching $403.7 billion, its share of food retailing dollars slipped to 42.1%, according to the annual report on food retailing from consulting company Willard Bishop. And by 2013, it expects the grocers' share to dwindle to just 35.2%.

Non-traditional grocery stores -- including supercenters, warehouse clubs and limited-assortment stores -- are expected to grow 5 points, reaching 41% by 2013. "The search for low prices and great values was a consumer divining rod that introduced shoppers to new stores and formats, and continues to impact store choice and spending," the report says.

Supercenters will continue their rapid ascent, with sales growing at a rate of about 10% a year into 2013, increasing market share from 15.9% in 2008 to 21.6%. In 2008, category sales jumped 11.9% to $152.2 billion, with the number of stores climbing 9.6%.

Both limited-assortment stores such as Aldi and Trader Joe's and super warehouse stores are expected to grow nearly as fast, gaining between 8% and 10% in sales annually. Last year, sales at limited-assortment stores zoomed 14.3% to $22.3 billion across, while super-warehouse sales shot up 12.4% to $18.2 billion in 2008.

Dollar stores, the current darlings of the recession, had a 9.1% increase to $16.9 billion in 2008, and are expected to grow at an annual rate of 5.4% through 2013, while drug stores are forecast to gain 4.5%. Fresh-format stores are also predicted to continue their growth, albeit with more subdued annual gains of about 3.9% annually, while wholesale clubs, which grew 11% to $79.5 billion in sales in 2008, are likely to grow by 3.6% a year.

And since the report forecasts annual food price inflation at 2.9% over the next five years, that means the stragglers will be losing ground. Those categories include convenience stores, expected to gain just 1.9%, excluding gasoline; small grocers, which will see a relatively low growth rate of 0.8%, and traditional supermarkets, whose growth rate is expected to slow to 0.3%. The biggest losers will be mass stores, expected to see an annual sales decline of 6.2%, as more of those are converted to supercenters.

The company has been tracking share changes in the retail food industry since 1983.