Top 10 Grocery Facts of 2017
December 11, 2017There were a lot of interesting developments in the grocery industry in 2017. We created our Top 10 Grocery Facts of 2017 list from the news stories and research findings that we think have the most impact on the grocery industry. This list is ranked from most significant to least.
1: Amazon acquires Whole Foods
Amazon bought Whole Foods Market for $13.7 billion. Amazon closed the deal in late August and became the owner of 473 Whole Foods stores.
Impact: 2017 was full of buzz about the “retail apocalypse.” However, it’s pretty significant that an online retailer invested in brick-and-mortar stores. If nothing else, this acquisition shows how important physical grocery stores are in today’s digital era.
2: Digital drives most grocery spending
51% of brick-and-mortar grocery sales are influenced by digital media somewhere on the path to purchase, according to a study by Deloitte released in September. This study was full of insights, such as 1 in 3 shoppers say digital inspires them to spend more. (Read our summary of the study here.)
Impact: Effective use of digital channels is critical. Email, apps, grocer websites and Social Media channels were among the channels influencing grocery purchases. Most significantly, purchases were driven by recipes, reviews and recommendations, so grocers need a digital strategy that does more than product selling.
3: E-commerce is growing, but slowly
Online grocery purchases averaged 3.4% of total grocery sales, according to the Ecommerce Supermarket Scorecard report released earlier this year. The average consumer spends $148 per online grocery transaction, which is over a 5% increase from 2016, the report says. Millennials are driving the online-only grocery model, with 11% of them using it in 2017 and 5% in 2016. Overall, 43% of consumers shop for groceries online “at least occasionally.”
Impact: The top 3 reasons U.S. consumers don’t buy groceries online are a desire to physically interact with the product (51%), wanting the groceries in hand at the moment of purchase (42%) and quality concerns 31%). None of these numbers show a majority preference for migrating all grocery shopping online but rather cautious interest.
4: More spending in fewer trips
The average shopper spends $110 on groceries per week, which is 41% higher than the $78 weekly average in 2016. The average U.S. shopper takes 1.5 grocery trips per week, which is down slightly from the 1.6 weekly average in 2016.
Impact: Customers are more willing to spend their money than their time at the grocery store. Although the average number of shopping trips didn’t decrease much compared to 2016, the average is down 40% compared to 5 years ago (an average of 2.2 weekly trips in 2012).
5: Meal kit demand is up
Meal kit sales in the U.S. generated $80.6 million for the year ending in March 2017, which is a 6.7% increase from 2016. The top reasons customers buy meal kits are that they save planning time, reduction in cooking time, to try a new recipe and to make a healthy choice, according to Nielsen’s “Understanding the Meal Kit Landscape and Consumer Preferences” study.
Impact: Meal kit delivery services may not be much competition for grocers offering meal kits. About 75% of customers who subscribe to a meal kit delivery service cancel the service in less than a year.
6: Overall grocery sales are fresh
Total grocery sales increased from $2.14 trillion in 2015 to $2.15 trillion in 2016. Sales in the service deli department increased 3.3% with growth on fresh-prepared, take-home food. Fresh produce and floral sales grew just over 3% and in-store bakery saw 2.7% growth, according to Progressive Grocer’s 2017 Consumer Expenditure Study.
Impact: Customers are showing a clear preference for fresh food over perishables. (Perishable sales remained flat from 2015 to 2016.)
7: People are dining in, not out
77% of consumers prefer home-cooked meals over going out to restaurants. That preference is driven by both cost and a desire for fresh food are driving more people to eat at home, according to the 2017 Food Attitudes and Behaviors Beneson Strategy Group’s study.
Impact: Grocers should take this preference as an invitation to provide recipes and bundle ingredients together in easy-to-prepare meal kits to make it easier for customers to prepare home-cooked meals.
8: Health matters
63% of Americans are trying to eat healthier. Healthy food choices include organic, GMO free and no natural ingredients, according to Nielsen’s Capitalizing on Health and Wellness Trends report released in February.
Impact: Provide point of sale signage that points out health benefits to foods throughout the store to bolster sales. Be sure to post signage in more than just the produce section.
9: Packaging makes or breaks sales
64% of consumers would switch to another food product if they better understood the ingredients in the food. Over 1 in 3 consumers don’t buy food when they find ingredients on the label confusing, the 2017 Label Insight Ingredient Confusion study found.
Impact: What can grocers do about food packaging? First, be sure that any store-prepared foods clearly label the ingredients. Secondly, grocers should carefully review the items they keep in stock. Grocers can put pressure on manufacturers to clear up their labels if it’s driven by consumer demand.
10: Customers’ favorite grocery store is…
That depends on who you ask. Publix Super Markets and Wegmans tied for first in Market Force Information’s survey in May. Scoring was based on how customers rated their “satisfaction with their most recent grocery shopping experience and their likelihood to refer that grocer to others,” the press release said. Another survey ranked Kroger as the most-loved grocery store, The Morning Consult reported in August. This second survey asked customers to rank their “favorability” or “unfavourability” towards the nation’s largest 500 companies.
Impact: 6 in 10 grocery shoppers consider themselves loyal to a particular store. But at the end of the day, it’s all about finding ways to make your customers make your store their favorite place to shop.