Thinking outside the big box – Grocery Retailing Trends
Thinking outside the big box

The other day I attended a webinar hosted by Robert Gregory, Global Research Director at Planet Retail on the subject of the Internationalisation of Retail focusing on the grocery and health and beauty sectors. The information shared and the conclusions drawn were very interesting especially with the current landscape in Western Europe. 

I, like many, live in an area that is littered with superstore battlegrounds – within a radius of a few miles I can access 5 big box stores. I have long felt that this situation must be unsustainable and that we must be close to saturation point but more stores continue to appear. However, based upon the findings from Planet Retail it would appear that we are perhaps close to realising this prophecy with sales growth from Big Box Retail stores expected to be only 3.6% (CAGR) over the next 5 years.

Now I don’t I don’t expect a spate of big box store closures (although we are already know about many that were planned being mothballed) but the landscape is definitely changing so what does this mean for large-scale Grocery Retailers?

  1. Firstly neighbourhood stores and convenience stores will become more important strategies to pursue with sales growth through these channels forecast at 5% and 5.6% (CAGR) respectively over the next 5 years.
  2. Online and Home delivery will continue to gain in popularity and these large grocery retailers must continue to invest in these two areas otherwise other large scale eRetailers will start to eat into their market share especially with the plans afoot within Amazon to bring grocery retailing to its customers in the UK and the rest of Europe.
  3. Discount chains will continue to eat into market share with an expected sales growth rate of 6.2% (CAGR) over the next 5 years, by far the biggest growth area for grocery retailing.
  4. Grocery retailers will need to decide if they protect their domestic market or whether the best form of defence is attack through International expansion with markets in Middle East and Africa offering good potential

In my opinion it doesn’t look like these large grocery retailers are in for an easy ride in the coming years with their dominance across their domestic markets already under attack from many different directions. I believe we will see some significant changes in the landscape with a couple of high profile casualties between now and the end of the decade. I am already interested to see in 2016 whether the much publicised decisions being made today by some of these large scale grocery retailers (such as Morrison’s getting out of convenience stores, Tesco scaling back their international operations and Carrefour expanding through franchise agreements in the Middle East) will enable them to deliver the results the markets are expecting.

What do you think? Leave a comment here or get in touch via my LinkedIn. 

Photo by Dean Hochman licensed under Creative Commons.

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