Are Grocery Store Sales Making a Comeback?
|Executive Summary
The birth of the warehouse club and superstores distribution channel within the retail sector, several decades ago, continues to redraw the boundaries of an industry in permanent flux. There are clear winners and losers as well as some sectors that are making a timid, but nonetheless, important comeback. Clear winners are the warehouse clubs and superstores as well as non-store retailers (i.e., e-commerce), while the clear losers include department stores and discount department stores. Meanwhile, a sector that has started to make an important comeback, especially compared to what has happened during the decades before the Great Recession, has been the grocery store industry. Growth in this industry has resumed after several decades of almost stagnation, whereas growth in the warehouse clubs and supercenters industry has downshifted considerably compared to the rates we saw before the Great Recession. This could be pointing to upper limits on the penetration potential by the warehouse clubs and superstores over the past several decades against the grocery store space. This resumption of growth in terms of real sales and employment by the grocery store industry is, perhaps, the consequence of the changes that have occurred since the end of the Great Recession, as new consumers stay closer to downtown city areas of the country, which favor grocery store sales versus large warehouse clubs and supercenters stores.
Warehouse Clubs and Supercenters Versus Grocery Stores
The expansion of the warehouse club and supercenter distribution channel has changed the landscape of the U.S. retail sector over the past several decades. The growth in this distribution channel has been impressive and has dislocated other traditional sectors of retail along the road. Figure 1 shows the impressive growth of this industry over nearly two and a half decades compared to other distribution channels, like department stores, which have suffered the brunt of the warehouse club and supercenter success.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.