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Report: Food Retail Formats of the Future

Report: Food Retail Formats of the Future

The Gerson Lehrman Group just published a report titled, “Food Retail Formats of the Future.” It analyzes the “customers of tomorrow,” who are currently – and will continue to be – influenced by social media, the economy and a more diverse population. In addition, other trends like the aging of the baby boom population, the increasing number of women compared to men graduating from college, a greater focus on sustainability and the growing focus on healthy eating will force food retailers to do a better job of adapting to consumer trends if they want to be successful.

The report states that the conventional superstore format is falling behind the many specialty formats. Supercenters, wholesale clubs, limited assortment stores and specialty stores are rapidly gaining market share.

According to the report, in many cases these conventional stores have strong and proud histories, but their stores no longer stand for anything. National vendors make advertising and placement decisions, not local operators.

“The chains that will win in the future will build strong brand identities with the names on the front of the store, rather than being collections of national brands within the store; and they will actively manage their vendors, rather than let the vendors manage them.”

The specialty formats succeed because they focus on a defined customer group and therefore can excel in meeting the needs of those customers, contends the report. Management focuses on serving customers over the long term, rather than satisfying Wall Street’s short term expectations.

The Gerson Lehrman Group report concludes by predicting the winning food retail formats for the future will include strong price operators like ShopRite (Wakefern), who differentiate themselves by price, generate high sales volumes and solid operating margins, and beat their conventional competitors with good product quality and customer service.

Other predicted winners will be the targeted specialty stores like Trader Joe’s and Whole Foods, many of which feature private label offerings focused on high quality healthy foods and unique gourmet products at competitive prices. “Foodie” emporiums like Wegman’s are also expected to succeed, as they offer a large selection of top quality perishables and unique products that allow them to pull customers from a much greater radius than other food stores.

Limited assortment stores like Aldi, Save-A-Lot and Price Rite will be winners as well, says the report.

Check it out; it’s an interesting read: