Supermarkets and Walmart top grocers shopped, but for

how long?
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Grocery shoppers are now journeying across at least a dozen different

retail channels in search of better prices and product selections, with
supermarkets and Walmart maintaining the majority (63%). However,
figures have declined for both of these channels since Mintels last
issuance of this report while other channels have increased. There is
now a grocery solution for every type of grocery shopper as other
channels like drug stores and warehouse clubs have significantly upped
their food, drink, and HBC offerings to compete head-to-head with
traditional supermarkets. Supermarkets in turn are not getting their
fair share of younger consumers who are heading to mass
merchandisers for one-stop shopping convenience.

Location, location, location

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Many consumers are creatures of habit who crave convenience.

Convenience can come in many shapes and forms but above all, close
proximity to ones work or home is the main reason that drives 65% of
shoppers decisions regarding where to go for groceries. To better
penetrate crowded urban areas, and other geographic areas void of
grocery stores, many retailers (both traditional supermarkets and
other channels like Walmart and Target) are rolling out small-format
stores. Grocers that are challenged by a limited number of stores must
continue to innovate in other important areas (such as home delivery)
in order to survive in the current landscape.

Online grocery shopping still low, but growing

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Nearly half of survey participants who shop at online retailers for

groceries claim to be spending more in this channel than they did a
year ago. Online grocery shopping is still in its infancy, but is
significantly on the rise. It will take a while to gain mass adoption
given significant barriers such as consumers unwilling to pay delivery
fees, and wanting to maintain control of their food choices, particularly
with perishables like fruit, vegetables, meat, and poultry. Furthermore,
40% of grocery shoppers simply enjoy going grocery shopping and
perhaps dont see a need to order online. The ability to order online
and pick up groceries at the store, though, is being welcomed and

increasingly tested by shoppers looking for convenient solutions.

Innovating around experience

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Key themes that emerged regarding shoppers desired innovations and

improvements includemore personalized offers based on purchase
behavior, a simplified checkout process, technology that will allow
them to compare prices, pay faster, etc, and various other experiential
aspects. Price, product selection, and convenience are all expected
givens, but grocers can stand out by offering a fun and enjoyable
environment that could include samples, cooking demonstrations, and
nutritional advice from dieticians. Opportunity exists for the store
employee to play an elevated role in providing such an experience:
21% choose where to shop based on if the employees are helpful and
knowledgeable indicating demand for specialized expertise.

Retailers are wading their way through current waters

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A review of the grocery industrys leading retailers highlights the

extreme fragmentation that exists. Among the top 20 retailers
according to Supermarket News top 75 list, seven are other MULO
channels outside the supermarket. To keep up with the changing tide,
grocers are revamping stores, reevaluating strategies, and cautiously
testing their way into multiple initiatives. Key themes from the most
successful retailers and wholesalers include a focus on creating
customer value through pricing; fresh foods and organic product
lines; small format store rollouts; private label brand launches; and
continued transitioning toward omnichannel marketing and branding.

Beyond the sole grocery store

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This industry fragmentation is leading to a plethora of mergers and

acquisitions, and store closings in some cases reflective of consumers
changed grocery shopping behavior. They now visit multiple stores
across a variety of channels like mass merchandisers, drug stores, and
warehouse clubs which is causing traditional supermarkets in total to
lose market share.

Its a digital world after all

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As with the rest of the world, digital technology has found its way into
the grocery aisles. Consumers, especially younger generations, are
increasingly turning to their mobile devices to compare prices,
download coupons, obtain product information, and even pay. Retailers
are testing in-store smart technology on shelves and carts, among
other initiatives. While it will take some time for grocery e-commerce
to reach its full potential due to a myriad of challenges, shoppers are
gradually experimenting with online delivery services including
subscription-based versions that supply meal kits/ingredients as well
as click-and-collect services.

Forecast positive for grocery market

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Total US MULO sales of groceries reached $619.7 billion in 2014, and

are expected to surpass that level by 2.6% this year. Looking ahead,
sales should continue to grow annually at that same average rate to
reach $721.8 billion, or 14% higher than the 2015 sales estimate. The
market should be bolstered by an improved economy and the currently
high consumer confidence although shoppers will remain priceconscious when it comes to necessities like groceries.

Supermarkets versus all other

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Traditional supermarkets have been dethroned from the market share

leader position by other retail channels like mass merchandisers,
warehouse clubs, farmers markets, and drug stores that have held on
to this slight lead since 2012. Both supermarkets and all other MULO
channels are expected to experience sales growth at current prices,
but all other MULO will grow at a rate that is on average 1.6 times
faster than supermarkets over the next five years. All of this
fragmentation is also resulting in some notable mergers and
acquisitions in the industry.
Share loss among supermarkets is coming mainly from food and drink
which comprise the majority of total MULO sales; 39% of food and
drink sales now occur outside the supermarket. HBC is an opportunity

category as it continues to pace up steadily, but supermarkets have a

way to go to capture a decent share given that 81% of HBC sales
happen at other MULO channels.

Changing consumer preferences and needs require grocers

to be nimble
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Overall population growth trends will bode well for the market. The
Hispanic and Asian populations are growing the fastest which is
important for grocery retailers given that they maintain larger
households, and thus, are likely to have amplified grocery needs. As
the American population becomes more mixed our collective palette
grows accustomed to a variety of foods, resulting in grocers catering to
these diverse taste and flavor preferences. Other market factors such
as special diets, a growing preference for clean labels, and an influx of
news about the benefits of healthful eating and maintaining a wellbalanced lifestyle will keep the industry on its toes as retailers hustle
to keep up with changing consumer demands and preferences.

iven that grocery shopping is basically a necessity, its not surprising to

see that the demographic profile of the primary shopper closely
mirrors that of the US population (see Databook). Of note is that men
play a key role in grocery decisions and serve as a unique target.
Surprisingly, men are more likely to stick to a list, and are less likely to
overspend compared to women. They are also much more likely than
women to have purchased groceries online (37% vs 25%). One third
of grocery shoppers are Boomers which is important to note given that
they are more set in their ways, over indexing versus all respondents
when it comes to choosing where to shop based on a convenient
location and their familiarity with a stores layout.
Figure 18: Primary grocery shopper profile, by key demographics,
August 2015
Base: 1,919 internet users aged 18+ who are primary grocery shoppers
in household

Click here to zoom

Source: Lightspeed GMI/Mintel

Many consumers find grocery shopping enjoyable

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Regardless of who is doing the shopping, its interesting to examine

who really enjoys the process. Data indicates that younger consumers
18-34, both men and women, are much more enthusiastic about
grocery shopping than their older counterparts, as are Hispanics and
other multiculturals. According to Mintels Hispanics and Shopping for
Groceries US, November 2015 report, 37% of Hispanics say they

love going grocery shopping while two thirds buy in bulk to save
money (top three box). Furthermore, in Mintels Black Consumers and
Shopping for Groceries US, November 2015 report, 58% love going
grocery shopping and two thirds will tell friends and family about the
brands they like.
Key analysis: These consumer segments may represent an
opportunity for grocers to tap into as brand advocates
especially given that loyalty in the category is becoming less of
a given with the multitude of grocery shopping options
available in todays landscape.
Figure 19: Profile of grocery enthusiasts, by key demographics,
August 2015
Base: 1,919 internet users aged 18+ who are primary grocery shoppers
in household
Thinking about when you shop for groceries, which of the following
statements, if any, describe you?

Click here to zoom

Source: Lightspeed GMI/Mintel

In their words
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Mintel conducted a discussion panel among participants to delve

further into consumers opinions and attitudes toward grocery
shopping. Many consumers were eager to express their positive
thoughts about something that would be easy to label as a mundane
chore.
What are your general thoughts about grocery shopping? Do you
enjoy it? Why or why not? What do you like most about shopping for
groceries? What do you like least? How could grocers make the
experience better or more enjoyable?
I enjoy grocery shopping
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Yeah, I love grocery shopping. I really enjoy it. Because I am

primarily responsible for grocery shopping for my household. I like to
try new and variety of prodcuts. At the same time I look for good
deals too. If the grocers have some personal information about the
customers, then they can make the shopping experience better and
more enjoyable...
21-24 single man

I tend to enjoy grocery shopping because i look for inspiration in

meals. I like putting together recipes in my head and looking to see
what sounds good to eat. The least I hate is the crowds and the lines
because I feel inefficient and slowed down. I think having employees
ready to open a new checkout when lines get past 3 deep would be
great.
25-34 married man

I actually really like grocery shopping. As soon as I could drive, my

mom was making me go to the store for her. I enjoy looking at all of
the fresh produce and chosing new items. Although I like grocery
shopping, I hate shopping when stores are crowded. I will even drive
farther away or pay more money to go to a store that isnt overrun
with people. I found a newly rennovated Kroger that makes my
experience enjoyable. They have free samples everywhere, offer
cooking demonstrations daily, and have specialty departments. Even
the people working in the produce aisle are food experts.
25-34 single woman

I love going to new stores to see if they carry different and unique
brands or products I havent tried previously. Even when I travel I
often will dash into the local grocery store as I enjoy seeing any local
or regional foods they might stock. Grocery stores definitly need to
improve signage or have more staff on the floor to help locate
items..different chains put certain items in various locations and its
frustrating to keep searching for something
55+ married woman

I do like grocery shopping. I like going to my local veggie markets

and picking out exactly what I want for that night. It could be more
enjoyable if they make the shopper more aware of fun facts about
where the food comes from, or little recipes that you wouldnt
traditionally think of in their perspective aisles.
25-34 single man
Grocery shopping is not my favorite activity
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I dont particularly like grocery shopping. It usually takes a long time

and the store is packed. What I like least is how ineffecient it seems.
You have to walk around the store hoping to find what youre looking
for. There is no way to search the store (like you would online) to find
the location of the specific things you need. Something that would
make it more enjoyable would be if more stores started to embrace
technology. For instance, in Sweden you can scan your items as you
put them into your cart. Then when you check out, they just read your
data from your scanner. This saves a lot of time at the checkout
waiting.
25-34 married man

I dont enjoy it. Lots of people pushing, spending money, no fun. I

like finding things, hate spending money. Offer a delivery service in
my area.

Loyal to a location, not a brand

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As shown in Retailers Shopped, data highlights consumers tendency to

shop around at multiple stores for specific grocery needs. Thus, for
grocers, its important to stay relevant and top of mind to remain a
part of consumers shopping journeys; being a number one or two
priority stop is a sensible goal. To achieve this goal, location becomes
paramount.
Nearly two thirds of grocery shoppers visit their primary store of
choice out of convenience which explains why its common to see
grocery stores (or other channels selling groceries) clustered together,
especially in urban areas. A geographic area can qualify as a food
desert if at least one third of the census tracts population lives only
one mile from a supermarket (10 miles in more rural areas) and if the
poverty rate is 20% or greater.
Key analysis: Besides building additional physical locations in
food deserts, grocers have a huge opportunity to try and better
address the needs of those who live in these areas. Initiatives
may include: home delivery, local pop-up store formats,
partnering with farmers markets, etc.
In areas where there are multiple stores close together, it then
becomes a price game (similar to gas stations) in order to attract
shoppers. Familiarity with a store can drive retention as consumers
slide into a habitual mode, making it difficult for other grocers to
become a part of the shopping journey, let alone become a primary
destination of choice. If a nearby grocery store closed, many people
said theyd just shop at another place that was close instead of going
out of their way to shop at another location of a specific brand. This
should be concerning to grocery stores, and clearly demonstrates
the necessity for branding intermixed with promotional
messaging.
Figure 22: Reasons for choosing primary grocery retailer, August
2015
Base: 1,919 internet users aged 18+ who are primary grocery shoppers
in household*
You indicated that you shop for groceries most often at [primary
grocery retailer]. Please indicate which of the following reasons
describe why you shop there.

Note: The larger the font is in the word cloud, the higher the percentage of
consumers who ranked that factor as a reason that influences where they shop (see
Databook for details)
* base for conveniently located and I know my way around the store is 1,880
internet users aged 18+ who are primary grocery shoppers in household and use
noninternet retailer most often

Source: Lightspeed GMI/Mintel

Do you feel a sense of loyalty to a certain grocery retailer? If the

store where you typically buy groceries closed down, would you go to
a different retailer that was nearby or would you actively seek out and
visit the same retailer, even if it meant traveling farther away? Please
explain these decisions.

I dont really feel a sense of loyalty to any retailer at allIf the place I
normally go closed, I would just go to a different retailer its more
about convenience for me. It would need to be a retailer that offered
similarly good prices.
25-34 married man

I really feel no loyalty to any particular grocery store. I go where the

prices are best, and I prefer to go somewhere that I dont need a
discount card to get the deals. For this reason, I enjoy shopping at
Target and Trader Joes.
25-34 single man

I'm sort of loyal to the stores around me since I shopt there most of
the time. If they closed down, I would just try to find another store in
my area that would fulfill my needs. I wouldnt go out of my way for
stores.
21-24 single man

nope. i would go to a different store....my loyalty is to my pocket

book.
55+ married man

Im not loyal to any one store. I shop based on my needs and sales. If
one store should go out of business, I wouldnt hesitate in going to
another in my area.
55+ married woman

Small store formats help address the proximity issue

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An advantage that most supermarkets have is their number of stores

located in convenient areas. Eight out of 10 respondents who agree
that a convenient location drives their decision as to where to shop
also shop primarily at supermarkets. Comparatively though,
percentages for other channels are much lower. In response to this
reality, many retailers are experimenting with small store formats to
better penetrate urban areas that are already crowded with other
stores, and/or to reach shoppers at various points along their
traditional commuting routes. For perspective, the Mintel Trend
Transumers discusses how consumers are spending more time in
transit, and how these in between places offer new
marketing/branding opportunities, as further illustrated below.

Walmart is continuing its plans to further pervade the grocery

business with rapid expansion of its Neighborhood Markets. These are
much smaller stores that can be described as compacted
Supercenters, but are located in urban centers instead of traditional
Supercenters that are primarily located on city outskirts. Neighborhood
Markets offer the same low prices as Walmart stores, with
merchandise focused on groceries, pharmacies, and fuel. Walmart has
645 Neighborhood Market locations compared to 3,400 Supercenters,
but analysts from Moodys predict that the smaller format locations will
eventually outnumber Supercenters. Neighborhood Markets will appeal
to consumers with sentiments like these:

I dont feel any loyalty to any specific store, but since Walmart is
close by....that is our go to place and they also have the lowest prices
and the also have the ad-match program so if there is a sale
elsewhere, they will match their price. I would probably try to find
another Walmart closer by but it they are way too far and not withing
reason, then i would probably have to choose someplace closer to my
home. If the store is too far....it is not worth the money and time to
drive that far away.
35-44 married man, online panel participant
Target created CityTarget in 2012 to make the brand more
accessible to urban customers, and currently has nine locations in Los
Angeles, San Francisco, Seattle, Portland, Wash., Chicago, and its
newest location in Boston. CityTarget formats differ from traditional
stores in that they offer smaller pack sizes and curated assortments to
cater to the needs of urban customers. Target plans to bring its
CityTarget format to Brooklyn, New York in 2016.
Ahold opened a new fresh format called bfresh aimed at
foodies in Bostons Allston neighborhood in August 2015. The store is
a smaller supermarket that offers natural food, specialty items, and
cooked-to-order food. Bfresh helps the retailer get into neighborhoods
where it cant fit its traditional 40,000-100,000 sq ft stores.
Hannaford, a Delhaize company operating nearly 186 stores in
the Northeast, opened a 20,000 sq ft store in North Berwick, Maine in
August 2015. This is half the size of its conventional formats and the
company is using this store as a pilot for possible expansion.
Note: For perspective, according to the FMI, the 2014 median total
store size in square feet was 46,000, down 6% since 2006 at 48,750.

Employees can take on more of an expert/consultant role

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Besides the obvious drivers of convenience, price and familiarity,

grocers have many other selling points to promote in marketing
communications, including highlighting fresh produce (especially
towards Boomers/Swing Generation) and unique/exclusive items
including organic and natural food selections (particularly when
targeting Millennials). One asset to prioritize and invest in is human
capital. Older consumers and Hispanics in particular mention
knowledgeable employees as a factor that is important to them when
choosing where to shop. Helpful employees can also assist in making
the overall store atmosphere and experience more positive. The Mintel
Trend Return to the Experts explains how such expert human advice is
back in fashion. The role of the employee can be elevated beyond just
telling customers which aisle items are in, and/or ringing up items
efficiently. Consumers are seeking information regarding the origin of
foods, meal planning, and nutritional and dietary advice. Aldi, for
example, took a cue from consumers and added Dietitians Picks in
May 2015 to help shoppers easily identify healthy choices
recommended from nutrition experts.
Figure 23: Reasons for choosing primary grocery retailer, by
generations, August 2015
Base: 1,919 internet users aged 18+ who are primary grocery shoppers
in household
"You indicated that you shop for groceries most often at [primary
grocery retailer]. Please indicate which of the following reasons
describe why you shop there."

^ base: 1,880 internet users aged 18+ who are primary grocery shoppers in
household and use noninternet retailer most often
Click here to zoom

Source: Lightspeed GMI/Mintel

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Figure 24: Reasons for choosing primary grocery retailer, by Hispanic

origin, August 2015
Base: 1,919 internet users aged 18+ who are primary grocery shoppers
in household

"You indicated that you shop for groceries most often at [primary
grocery retailer]. Please indicate which of the following reasons
describe why you shop there."

^ base: 1,880 internet users aged 18+ who are primary grocery shoppers in
household and use noninternet retailer most often

Source: Lightspeed GMI/Mintel

I think I would find the same retailer because of the products that
they carry. I would find it and go there because I go there for the
service and the products. If a store has shown loyalty to their
customers, I will show loyalty back.
25-34 married man

I sometimes drive out of my way (20 minutes) to go to a newly

rennovated Kroger. It is in a part of town where many of the foreign

college kids live, so they have a wider variety of foods stocked. They
have an olive bar, a cheese department, various restaurants, cooking
demonstrations, a large mushroom island, an alcohol department
staffed by experts, and a glorious meat/seafood department. This
Kroger also has household items, so if I need something like a storage
bin, hangers, towels, or sheets, I can get them at the grocery store
while avoiding another stop! Any other grocery store wouldn't have
that.
25-34 single woman

I do feel sense of loyalty to wegmans because of its friendly customer

service, quality products, competitive prices, cheerful atmosphere &
helpful staff. This store regularly sends me store circulars,
information about promotions, new recipe ideas & information about
special events in store. If this store closes down in our area I would
definitely seek out and visit the same retailer, even if it meant
traveling farther away instead of going to a different retailer.
35-44 married woman

Do loyalty cards drive loyalty?

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Some 28% of respondents say their loyalty card keeps them going to
their primary store, with percentages higher among older generations.
Loyalty cards are not as enticing to Millennials indicating again that
product and experience are important to this group. In February of
this year, both Whole Foods and Target announced tests of new pointsbased loyalty programs that appear to have had Millennials in mind.
Whole Foods Market Rewards affinity program is being rolled out in 12
stores in the New Jersey and Philadelphia areas. Earned points can be
exchanged for discounts or experiential rewards like cooking classes
for no cost. Targets REDperks mobile program rewards shoppers when
their purchases reach certain levels. Its beta site encourages users to
Load Up, Rack Up, Save Up, and Live it Up. This beta is initially
available on iOS by invitation only in select markets. Still other grocers
such as Safeway offer discounts for gasoline tied to purchase levels
something that appears to be motivating based on Mintels qualitative
analysis. However, points-based programs are not prevalent at
supermarkets, indicating an opportunity for additional testing. Here is
what consumers had to say about loyalty programs.
Are you involved in any loyalty programs at the stores where you buy
groceries? How big of a role do the loyalty programs play in your

decision to shop at those stores? How satisfied are you with the
rewards program? What changes would you suggest? If you are not a
loyalty member, why not? Do you still get discounts at check out?
How?
Important role
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Yes, I am invloved in loyalty programs at the stores where I buy

groceries. The loyalty programs play important role in my decision to
shop at those stores. I am satisfied with the rewards program. They
give me fuel points.
21-24 single man

Well, at Costco I have the executive membership which offers cash

back rewards. it is not just with groceries though, it is with all
merchandise so it does impact how i shop. I usually buy what I can
there and then if I need something else, I would go elsewhere.
25-34 married man

Not much influence

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I prefer to avoid the discount programs because I would find myself

jumping from store to store just to save a few dollars on my
strawberries here and a dollar on my meat over there and driving all
over is not worth the hassle to me. I mainly shop at Trader Joes and
Target, no cards required, the prices are pretty good for everyone.
25-34 single man

I am involved in the loyalty program at Wegmans where I buy

groceries & am satisfied with the reward program. Really speaking
loyalty program does not play much importance for me in shopping
for grocery . The thing matters to me is quality product, competitive
prices , fun-filled store atmosphere , helpful staff & clean store. We do
enjoy special events at store being a loyal member of the store. They
provide chances of wine tasting , trying new recipes etc. They do
provide discounts to loyal members.