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U.S. Food Retail

U.S. Food Retail

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U.S. Food Retail

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  1. Be able to differentiate between different types of Food Retail outlets: Supermarket, Convenience Store, Superette, Supercenter, Warehouse Club. • Understand U.S. Food Retail sales trend and where growth has occurred. • Be able to explain what has happened to the number of Supermarkets in the U.S. relative to the amount of Supermarket floor space and the number of unique items per store. • Explain where concentration in this industry is occurring and whether consumers should be worried. • What have been the challenges to “On-Line Shopping” • Where has the U.S. Food Retail industry focused improving productivity while lowering operational costs? U.S. Food Retail EconS 451: Lecture #4 Source: U.S. Food Marketing System, 2002, ERS-USDA

  2. Retail Definitions Source: U.S. Food Marketing System, 2002, ERS-USDA

  3. Distribution of U.S. Foodstore sales Source: U.S. Food Marketing System, 2002, ERS-USDA

  4. Source: U.S. Food Marketing System, 2002, ERS-USDA

  5. Source: U.S. Food Marketing System, 2002, ERS-USDA

  6. Number of Supermarkets and Sales Source: U.S. Food Marketing System, 2002, ERS-USDA

  7. Supermarket Definitions: Source: U.S. Food Marketing System, 2002, ERS-USDA

  8. Loss of Market Share • Conventional supermarkets have lost significant market share to Supercenters and Warehouse clubs. Their strategy to compete is to: • Focus on natural foods • More pre-prepared foods • Promote store/private labels • Promote frequent shopper discounts • On-line home shopping • Self-Checkout • More personalized Source: U.S. Food Marketing System, 2002, ERS-USDA

  9. Challenges to On-Line Shopping • Meeting customers expectation on timely delivery • Access to delivery locale in all weather conditions • Spoilage for perishables like milk, ice cream, damaged fruit, etc. • Inflated delivery costs in low/density areas. Primary reasons why success has been in high-density cities. Source: U.S. Food Marketing System, 2002, ERS-USDA

  10. Retail Mergers / Divestures Source: U.S. Food Marketing System, 2002, ERS-USDA

  11. Concentration in Food Retail • National Concentration has increased substantially, local market concentration has only increased slightly due to anti-trust oversight and monitoring. • Between 1992-1998 C4 ratio of national grocery retailers increased 68.6% while the C4 ratio among the largest 100 cities increased 5.4%. Source: U.S. Food Marketing System, 2002, ERS-USDA

  12. Sales of Top Grocery Wholesalers Source: U.S. Food Marketing System, 2002, ERS-USDA Food Retail World - Leading Retailers

  13. Productivity and AverageHourly Earnings Source: U.S. Food Marketing System, 2002, ERS-USDA

  14. Foreign Owned Food Retailers Source: U.S. Food Marketing System, 2002, ERS-USDA

  15. Summary! • Retail food sales growth has been slow due to slow population growth and growth of fast-food sales. • The number of supermarkets has declined while average floor space has increased, understand the benefits associated with this market shift. • Nontraditional supermarkets have focused on all natural specialty products (Wild Oats, Whole Foods, Trader Joes). • Implications for industry concentration related to upstream purchasing power relative to ability to increase price to consumers. • Understand food retail employment productivity changes relative to average earnings per employee. • Foreign investment in U.S. Food Retail still relatively small, but investment of U.S. Food Retail from abroad is growing. Source: U.S. Food Marketing System, 2002, ERS-USDA