REPORT DESCRIPTION

Market Size and Overview:

The Food retail market is expected to be valued at USD12.48 trillion in 2023 and is estimated to register a revenue of USD 16.42 trillion by 2030. The market is anticipated to witness a compound annual growth rate (CAGR)of 4% over the forecast period of 2024-2030. 

Food consumption has witnessed an increase due to the rise in disposable income and a fast-paced lifestyle prevalent among a significant portion of the global population.

Industry Overview

A diverse array of food and grocery products constitutes the regular consumption of people, encompassing fresh food, frozen items, personal care and home care products, beverages, and other commodities. To enhance revenue, food and grocery retailers focus on establishing an optimal price-product combination. Presently, organizations in the food and grocery retailing sector emphasize inventory management as a key strategy to generate revenue from these items. Additionally, they employ various analytical tools to monitor customer behavior in the purchase of such items from their establishments.

Retailers are presently conducting workshops, discount pop-ups, and events centered around grocery products in their stores. This approach aids businesses in fostering customer confidence in acquiring grocery items from their retail outlets, contributing to market expansion. For instance, in October 2020, Walmart Inc. introduced three 'Black Friday' events at its U.S. stores to offer discounted grocery products to American shoppers. Anticipated growth in the consumption of nutritional and frozen food items on a global scale is expected to drive sales for these products.

Moreover, the increasing prevalence of e-commerce worldwide is foreseen to create new avenues for expansion within the retail industry. Customers, during the COVID-19 lockdown period, initiated the replenishment of their households with various food and grocery products to mitigate supply shortages, resulting in a substantial increase in revenue. However, stiff competition from unorganized and local industry players is projected to impede demand. Furthermore, disruptions in the food and grocery supply chain due to unforeseen factors such as military conflicts, tornadoes, and natural disasters are expected to hinder sector growth.

MARKET DRIVERS:

The upswing in home cooking is a driving force behind market growth.

A rising trend among individuals who seek to recreate the experience of travel and vacation by preparing ethnic foods at home has led to an increased demand for food pantry essentials. Ingredients like curry pastes and spice blends offer a convenient way for novice home cooks to create flavorful dishes. Consequently, food pantry items have evolved into a pivotal and lucrative market for specialty stores to explore, aligning with the growing trend of home cooking and the demand for ingredients that elevate standard dishes.

The industry's expansion is propelled by innovative delivery methods introduced by the HORECA industry.

Consumers are shaping the development and acceptance of novel grocery delivery models aligned with their retail and service consumption habits. Emerging delivery options, including Buy Online Pickup In-Store (BOPIS), curbside pickup, and direct-to-door, are gaining popularity, indicating a shift in consumer behavior. The prevalence of one- to two-day shipping is on the rise, impacting delivery expectations. Inaccurate delivery estimates negatively influence customer loyalty and retention. As subscription services and direct-to-consumer models gain traction, grocers are restructuring their physical locations to optimize real estate investments in accordance with these evolving consumption models.

Market restraints

Various unforeseen circumstances may act as constraints on the growth of the food retail market.

Disruptions in the food and grocery supply chain caused by factors such as military conflicts, tornadoes, and natural disasters are anticipated to impede industry expansion.

Intense competition from local industry players is poised to limit growth.

Challenges such as insufficient supply chains and the threat posed by unorganized companies are affecting the market. In the short and medium term, the impact of the growing private label brands market is expected to be significant, transitioning to a moderate influence in the long term. Private label brands, produced by small-scale food processing enterprises and offered to food retailers at lower prices than those from larger corporations, are expected to experience a decline in market share by the decade's end due to the projected economic rebound in Europe. Consequently, organized food processing enterprises are likely to retain customers in the long run.

FOOD RETAIL MARKET – BY PRODUCT:

• Fresh Food
• Frozen Food
• Food Cupboard
• Beverages
• Cleaning & Household
• Others

In the year 2021, the food cupboard segment comprised over 37.5 percent of the market share. According to the COVID-19 Consumer Tracker commissioned by the UK Food Standards Agency, approximately 39% of UK consumers opted to prepare meals from scratch due to pandemic-induced lockdowns, leading to the temporary closure of pubs, restaurants, and cafes. The surge in cooking and baking activities, especially among Generation Z customers, has propelled the demand for the food cupboard category in recent times. Although the fine food sector has increasingly focused on nutrition and authenticity, the future is expected to witness a growing demand for high-quality, long-lasting food cupboard items as consumers shift towards local and less frequent shopping. Conversely, the beverages category is anticipated to experience the fastest growth throughout the projection period. The closure of hospitality establishments during the pandemic resulted in a substantial increase in off-trade purchases of beer, wine, and non-alcoholic beverages. Changes in consumer behavior regarding beverage consumption at home are likely to contribute to the category's growth during the projection period. The beverage industry, like many others, has undergone significant transformations due to emerging trends, with a rise in popularity of health and wellness products, such as natural and organic drinks, overshadowing traditional beverage sales.

FOOD RETAIL MARKET – BY CATEGORY:

• Packed
• Unpacked

Retailers typically stock pre-packaged grocery items to prolong the shelf life of these products, making the packed category a substantial segment of the market. Additionally, consumers benefit from time and effort savings by consuming pre-packaged foods, driving the revenue generated from packaged food items.

FOOD RETAIL MARKET – BY DISTRIBUTION CHANNEL:

• Supermarkets & Hypermarkets
• Convenience Stores, Departmental Stores & Clubs
• Online

In the year 2021, the supermarkets & hypermarkets category dominated the market, accounting for over 64.00 percent of total sales. The significant market share is attributed to the widespread presence of supermarkets and hypermarkets globally. The convenience of finding a diverse range of food and beverage products in one location motivates people to frequent their local supermarkets and hypermarkets. Furthermore, creative marketing and promotional activities by store owners aim to maintain consumers' in-store purchasing habits.

The online delivery channel is projected to experience the fastest growth from 2023 to 2030, fueled by changing purchasing patterns influenced by the pandemic. Increased safety restrictions led to a surge in both online and local shopping, particularly in regions with stricter lockdowns. The closure of cafes and restaurants, coupled with a rise in remote working, shifted consumers' food consumption from restaurants to grocery stores. Customers are increasingly recognizing the benefits of digitization in grocery shopping and expect its integration into the shopping experience. Merchants utilizing technology to enhance the shopping experience and meet evolving customer needs are witnessing prosperity. The growth of online food and grocery purchases is notably driven by digital natives, especially millennials and Generation Z, who are accustomed to and comfortable with technology, making online shopping a longstanding habit for them.

FOOD RETAIL MARKET - BY REGION:

• North America
• Europe
• Asia Pacific
• South America
• Middle East and Africa

In the year 2021, the Asia Pacific region accounted for the highest proportion of global sales, comprising 36.3 percent. The region's dominance is primarily attributed to the proliferation of supermarkets in emerging countries. Factors such as urbanization, increased disposable incomes, foreign direct investment (FDI), format diversification, local investments, and modernization of procurement procedures to reduce costs have collectively contributed to the growth of supermarkets in the Asia Pacific.

The Middle East and Africa region are expected to witness significant growth in the global market, driven by the increasing establishment of prominent supermarket store companies such as LuLu Group International, AL Safeer International, Panda Retail Company, and others in nations like the United Arab Emirates, Saudi Arabia, and South Africa. The proliferation of technology, particularly increased smartphone usage and broadband penetration in developing nations, has supported the expansion of online food sales in the Asia Pacific region, consistently surpassing the world average in terms of internet commerce adoption. The Middle East and Africa region leverage technology for improved customer service and efficient supply chain management, contributing to the anticipated growth in the market.

FOOD RETAIL MARKET - BY COMPANIES

The market exhibits fragmentation with a multitude of global and regional companies operating within it. To expand their clientele and foster brand loyalty, these enterprises are making substantial investments in acquisition and promotional initiatives. Additionally, they are leveraging emerging technologies such as blockchain and artificial intelligence (AI) to enhance consumer experiences and optimize supply chain operations. Several noteworthy players in the food retail market include:

• Walmart
• Costco Wholesale Corp.
• 7-ELEVEN, Inc.
• Amazon.com Inc
• The Kroger Co.
• Target Brands, Inc.
• ALDI
• AEON Co Ltd
• Carrefour CA
• Schwarz Gruppe

Impact of Covid-19 on the food retail market: The emergence of the COVID-19 pandemic had a profound impact on the growth of the food retail market. In the aftermath of the epidemic, the food and beverage sector underwent significant transformations. With the closure of some restaurants and others offering only takeaway or delivery services, a considerable portion of meals was consumed at home, especially in regions with stringent lockdown measures. This led to unforeseen fluctuations in grocery sales, with empty store shelves reflecting real-time changes in consumer preferences. During the pantry-stocking phase of the recession, there was an uptick in sales for confectionery, sweets, and salty snacks.

The onset of Covid resulted in heightened grocery expenditures, increased volumes of online grocery sales, and consumer polarization. The pandemic gave rise to consumer polarization, where some individuals increased their spending on more expensive items. Furthermore, the surge in home cooking, driven by the pandemic, emerged as a pivotal factor in industry development.

NOTABLE EVENTS IN THE FOOD RETAIL MARKET

ACQUISITION - In January 2021, Alimentation Couche-Tard Inc., a Canadian convenience store company, acquired Carrefour S.A., a French international retail corporation, with the aim of expanding its 26,000 food and grocery shops in the United States and Canada.

PRODUCT LAUNCH - Walmart introduced Alphabot, a novel technology for their supermarket business, in January 2020. Geared towards enhancing its position as America's largest supermarket, the technology enables the company to pick, pack, and expedite the delivery of consumers' online grocery orders more efficiently.

PARTNERSHIP - In June 2020, Instacart, an American retail business, announced a collaboration with C&S Wholesale Grocers to provide an e-commerce solution to the 3,000 independent C&S wholesale shops across the United States. This partnership enabled the collaborating firm to strengthen its online presence in the United States.