Meet Carol. Carol, besides sending you this email each week, goes to the…
Meet Carol. Besides sending you this email each week, Carol goes to the grocery store about 3 times a week. She is typical of shoppers who mostly start in produce, go to the meat section, then onto dairy, and finally to checkout. Sales in the center of the store of packaged foods and beverages are down 0.4% year over year – but the center store for large chains like Kroger and Wal-Mart are being attacked by Amazon, Club stores, and the smaller format Aldi and soon Lidl. Staples at Aldi are ~20% cheaper, according to their CEO and my wife (unimpeachable source). There is some good news for chain stores: fresh-produce sales are up 1.9%, and Deli prepared foods are up 4%.
What does this mean?
- Grocery stores can survive with a smaller footprint but will require more labor
- Refrigerated transportation will increase
- More DSD and cross docks with smaller warehouses while suppliers like Kraft will see a tough time growing
- Greater reliance on speed // freshness
- Food Safety Modernization Act (FSMA) becomes even more important
