• by Karlene Lukovitz , March 7, 2008

In the short term, the recessionary economy is compelling more consumers to take gas/money-saving actions such as consolidating grocery trips and shopping at supercenters where they can buy both food and non-food items.

But the longer-term trend is expected to go in the opposite direction: People will be shopping at an increasingly large number of more segmented food outlets, according to a new study from Packaged Facts, "The Future of Food Retailing in the U.S."

PF cites January 2008 Nielsen Co. research showing that due to the economy, 70% of consumers are currently combining shopping trips and errands, 41% are eating out less, 39% are staying home more often, 27% are shopping more at supercenters, megastores and big-box stores, and 23% are buying less expensive grocery brands.

But according to Information Resources, Inc. (IRI), while today's consumer typically shops in three grocery locations, that number will expand to eight by 2010.

Economic, demographic, lifestyle and technological changes "are creating a fertile environment for new concepts to entice food shoppers, capture market share and re-invent the grocery industry," sums up PF's analyst.

More than a dozen types of retailers are now vying for share of the retail food market, which is estimated to be worth anywhere from $450 billion to $605 billion, according to the researchers.

In addition to supercenters, these include club stores, big-box retailers, specialty stores, convenience stores, drug stores, gas stations with convenience offerings and others. New formats like Whole Foods's upscale, fresh-food emphasis and "lifestyle" formats emphasizing amenities/sensory experience, are also contributing to segmentation.

And of course, fast-food and other restaurants are grabbing more food dollars. The National Restaurant Association reports that U.S. consumers now spend almost half (48%) of their food budget in restaurants.

To compete with fast-food restaurants and other retail formats on the cross-channel battlefield, grocery retailers are both expanding prepared-food offerings and creating in-store restaurants or snacking areas, PF points out.

Moreover, large food retailers, increasingly aware that huge stores can be difficult and time-consuming for harried, working consumers, are instituting convenience features like separate entrances and dedicated check-out lines for prepared-food shoppers--and experimenting with smaller store formats.

Susan Reda, executive editor of the National Retail Federation's Stores magazine, summed it up this way in CSP Daily News: "Grocery retailers answered the call to build bigger, more efficient one-stop shops where their customers could buy merchandise and groceries in the same place. Now, the pendulum seems to be swinging back, as consumers are saying they prefer more intimate, smaller, customized grocery stores."

Other key retail food trends explored by PF include greater focus on store brand building, fresh/natural/organic and "green" food choices, health and wellness, serving the preferences of ethnic markets, and increasing in-store media for merchandising, advertising and promotion.

For more information on the report, go to http://www.packagedfacts.com/Future-Food-Retailing-1562608/