The grocery industry is facing some uncomfortable realities, as we all know, and I’ve found some stories this week to give us plenty to think about.
I take a look at two consumer trends that I think deserve more attention. First, new McKinsey research shows that Americans are demanding actual results (not just marketing) from wellness products. Then there’s the rising cost of ground beef, which has turned an old American favorite, meatloaf night, into a surprisingly expensive family dinner. (We’ll get into solutions, too.)
Meanwhile, Duke Winston examines Costco’s vaulting past Kroger into second place in grocery market share. It’s another indication that conventional supermarkets are losing ground to competing formats.
In case you missed it, Alexander Wissel makes the case that Albertsons might be better off making the counterintuitive move – shrinking its footprint – and concentrating on what it does best, rather than chasing scale.
And Jessica Smith reports on Doug Baker’s appointment to lead FMI’s industry relations practice, succeeding longtime executive Mark Baum.
Five stories, each with implications for how the trade competes, operates and serves its customers.
You can read them all below…
Wellness Consumers Want Results, Not Just Health Claims
The grocery industry has never been short on health claims, and manufacturers have been happy to oblige with products promising everything from better digestion to longer lives. But consumers are getting tougher to impress. New McKinsey research finds that effectiveness now matters just as much as price when Americans buy wellness products.
In a U.S. market worth more than $700 billion, that’s a pretty clear message to manufacturers and retailers:
Promises aren’t enough anymore. Here’s what I think we should do about it…
Costco Passes Kroger as Warehouse Clubs Gain Grocery Market Share
Costco has officially overtaken Kroger as America’s second-largest grocery retailer by share of food and beverage spending, according to new Numerator data. That’s a significant development, and another indication that traditional supermarkets are losing ground to warehouse clubs and mass merchants. Costco now commands 8.4% of the market, compared with Kroger’s 8.2%. Walmart remains comfortably ahead at 20.3%.
Consumers are spreading their grocery dollars across more formats, and conventional supermarkets are feeling the squeeze.
Duke Winston has more on the trend…
Meatloaf Night Isn’t the Bargain It Used to Be
Remember when meatloaf was the ultimate budget-friendly family dinner? A pound of ground beef, some breadcrumbs, an egg and (in my house) a little ketchup could feed the whole family, with leftovers for sandwiches to boot. Those days are getting harder to remember. With extra-lean ground beef now topping $8 a pound, even this old standby is becoming expensive.
For supermarkets and shoppers alike, the rising cost of an ordinary weeknight dinner is hard to ignore.
I think the industry should adapt, like so…
ICYMI: A Smaller Albertsons Might Be a Stronger Albertsons
Albertsons has plenty riding on its legal battle with Kroger, but a courtroom victory alone won’t solve its problems. The company needs capital, better stores and a clearer reason for shoppers to choose it over Walmart, Costco or Kroger. I’ve been thinking about what comes next for this storied grocer, and I suspect the answer might involve getting smaller rather than bigger.
Sometimes retreat isn’t surrender. It’s how you position yourself to compete again.
Executive Editor Alexander Wissel looks at the potential road ahead…
Doug Baker Takes the Reins of FMI’s Industry Relations Practice
Collaboration is one of those words the grocery industry uses constantly, but making it work across retailers, manufacturers and suppliers is another matter. FMI is turning to Doug Baker to lead that effort, naming him senior vice president of industry relations and chief collaboration officer effective Dec. 1. He succeeds Mark Baum, who spent 12 years building FMI’s industry partnerships.
Baker inherits a substantial operation at a time when cooperation across the food supply chain matters more than ever.
Jessica Smith has all the details of the changeover…