There is a bad news for supermarkets. According to Inmar Analytics’ 2019 Future of Food Retailing Report, the share of U.S. food and consumable products consumption last year dropped 2.5 percentage points. It dropped to an all time low of 35% of the $1.25 trillion market.
The analysts predict that by 2023, the decline will drag down the share to below 33%. And in some parts the change isn’t even subtle. The American households have stopped using small, natural, limited- assortment from the entire traditional grocery space. And the share dropped to 44% this year from 90% thirty years ago. These changes effect the traditional supermarkets and may lead to their shutdown in the near future. But Krogers is fighting tooth and nail to keep the journey going.
All the shoppers from the traditional supermarkets go to Walmart and wholesale clubs like Costco now. Thus these clubs picked up share to represent 20% and over 9% of U.S. food and consumables purchases last year. They give a cutthroat competition to the traditional supermarkets.
But even after the slump there are Limited assortment grocers like Trader Joe’s, Aldi and Lidl work their magic on consumers. They win consumers on prices with their narrower store brand assortment and “fresh format”. And supermarkets like Wegmans and Amazon’s Whole Foods also come up with innovative ideas and offers to hook customers in.
With the changing consumer demands and changes in the industry Krogers made a 3 year plan to get back in the game. Rolling out Kroger feedback helped the company fight back. Kroger’s plan was “Restock Kroger,” a key part of which involves making itself an “omnichannel” retailer and meeting consumer demands.
It also partnered up with Ocado to provide online service to consumers. It expanded grocery pickup to 1,780 locations and delivery to 2,225 to cover about 95% of its target households. The business is now booming which makes Krogers a success, even after the slump on traditional supermarkets shares.