Why is grocery so critical?

Grocery Market
Today’s consumers want healthy options, which many consumers equate with buying local.

The first and most obvious answer is that everyone needs food. 

While the Great Recession changed many shopping and saving habits for the long term, especially for younger shoppers, groceries are largely the exception. According to a recent survey from Retale, only 8% of shoppers age 18–34 are likely to cut spending on groceries during tough times. 

So while other retail categories have suffered from the economy and a plunge into digital spending, grocery stores are still the most frequently visited retail format in the United States. 

But why else is grocery thriving in 2016? 

Social changes, including less time and busier schedules, are driving the shift in how consumers cook and eat. Big weekly shopping trips are no longer the norm.

“Consumers are more time-constrained than ever before, and they are prioritizing ready-to-eat foods and quicker, more focused, shopping trips,” says William Hogben, CEO of FutureProof Retail. This change affects the stores that consumers choose as they search for formats that make shopping easier while adding value to the trip. These expectations include convenience, personalized service, efficiency and simplification.

Other changes driving the industry include the evolving relationship consumers have with food, according to Charisse Jacques, a principal in the retail practice of A.T. Kearney, a global strategy and management consulting firm. Today’s consumers want healthy options and fresh foods, which many consumers equate with buying local.

In addition, Jacques says that consumers are looking for food inspiration, which is helping to drive testing of new store formats.  

Finally, growth is inevitable as nontraditional retailers focus on their grocery shelves. 

“For many retailers, grocery is enticing because it combines three shopping categories: necessities and basics, discretionary spending (upscale brands), and impulse buys,” says Perry Kramer, VP and practice lead at Boston Retail Partners.

Di Di Chan, president of Future Proof Retail, agrees that grocery is a draw for retailers as shopping centers and property owners also see its value.



“Many grocery stores receive reduced rents in shopping centers because they draw in consumers for the other shops, and this same anchor approach is now being applied inside the big box retailers,” says Chan. “Grocery is so critical because in our modern economic circumstances it will be the last expense people cut—in a period of near-zero interest rates we see businesses accepting grocery's low margins in exchange for its high security.”

Why is grocery so critical?