Sales growth for Grocery Retailers not expected to keep pace with Inflation.

During “The Future of Food Retailing” Webinar sponsored by The Food Institute, Willard Bishop revealed that growth rates for six retail formats are not expected to keep pace with inflation. The six types of formats include four grocery retail formats, convenience stores that sell gas, and military outlets. While it’s not anticipated that mass retailers will experience any real growth, Fresh Format stores, Limited-Assortment stores, Supercenters, and Dollar stores will post the greatest gains vs. inflation by 2010.

“This is a conservative estimate given that rising energy prices could push the inflation rate even higher,” said Jim Hertel, SVP of Willard Bishop.

Also presented during the Webinar, Willard Bishop’s annual “Future of Food Retailing Report” reveals even further market share erosion for traditional grocery formats. Total traditional grocery market share for 2005 was 50.4%, while the market share for non-traditional grocery outlets reached 33.4%. Convenience store market share for 2005 was 16.2%. By 2010, traditional grocery share is projected to decline to 44.1%, while non-traditional grocery share is projected to increase to 40.5%. And, while convenience store sales will continue to rise, this format is not expected to keep pace with the growth of other retail formats and therefore is projected to have a 15.4% market share by 2010.

Both Jim Hertel and Bill Bishop, Founder of Willard Bishop, underscored the need for immediate action by manufacturers and retailers. “Manufacturers need to embrace the changes that are taking place in food retailing today in order to succeed over the long term,” observed Mr. Hertel. “Even if new and emerging formats aren’t ‘right’ for your products, these are the types of stores where Americans are increasingly purchasing their food and consumables.”

Mr. Bishop cautioned, “The key takeaway for retailers is that there’s real risk in falling behind in efforts to satisfy shopper needs. Sales are shifting more rapidly than ever before among stores, and the growth is going to the most innovative retailers.”

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