Changes in the way consumers eat and shop for food are roiling the crowded global grocery market. Disruptors include online competitors, the rise of discounters, and changing consumer perceptions of value. Traditional grocery chains now compete for market share with a slew of domestic and foreign competitors, including warehouse clubs and discounters, convenience, drug, and dollar stores, internet retailers, and meal-kit delivery companies. Cross-border forays by grocery retailers looking for growth beyond mature home markets continue to reshape the grocery sector.
Consumer migration online has grocers racing to increase their online presence, while online players -- including Amazon and China's Alibaba -- are trying out brick-and-mortar retail. Fierce competition, particularly at the high and low ends of the market, and cost advantages enjoyed by online retailers have sparked supermarket price wars, which benefit consumers but threaten to erase the grocery industry's razor-thin profit margins.
Products, Operations & Technology
Grocery stores and supermarkets stock a wide variety of food, beverages, and household items. Generally, stores sell a mix of fresh and frozen foods, packaged and canned goods, produce, meats, dairy products, nonfood items, and household goods. Selection may vary depending on format, retail strategy, and location. In the US, more than two-thirds of products sold by grocery stores are food items, including meats (11% of overall sales); produce (10%); dairy products (7%); and frozen foods (5%). Nonfood items include health and beauty products, general merchandise, medication (including prescription drugs), and fuel, at some locations. Fuel may account for a significant percentage of overall sales. At Kroger, for example, 12% of sales came from fuel in 2016.