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FREQUENT SHOPPER & RETAILER ARTICLES

      SUPERMARKET FACTS - INDUSTRY OVERVIEW 2004

       MARKETERS TARGET CONSUMERS THRU RETAILERS' FREQUENT-SHOPPER PROGRAM

        DETERMINING HOW TO PROMOTE YOUR BRAND USING LOYALTY PROGRAM DATA

     ONLY 15 PERCENT OF CUSTOMERS ARE LOYAL BUT REPRESENT 55 PERCENT OF SALES

     SLOTTING ALLOWANCES IN THE SUPERMARKET INDUSTRY

    FMI REPORTS ON CONSUMER ATTITUDES AND THE SUPERMARKET

    FMI DISCUSSES BUILDING SHOPPER LOYALTY WITH STORE BRANDS

    COMPETITION AMONG TRADITIONAL AND NEW CHANNELS IS INCREASING

     CROSS-CHANNEL SHOPPING IS WIDESPREAD IN TODAY’S MARKETPLACE

    WAL-MART ALTERS WAY GROCERY BUSINESS IS RUN

      FREQUENT SHOPPER DATA IS UNDERUTILIZED ASSET IN THE CPG INDUSTRY 

      LOYALTY CARDS COMBINED WITH CHANNEL AND CONSUMER INSIGHTS BUILD LOYALTY & PROFITABLE GROWTH

      SUPERMARKET NEWS TOP 75 US GROCERY STORES (SALES)

      SUPERMARKET NEWS GLOBAL TOP 25

      SUPERMARKET FACTS - INDUSTRY OVERVIEW 2002

     DATA MINING LOYALTY PROGRAMS IS ESSENTIAL FOR ROI

    TRADE DIMENSIONS REPORTS 2002 CHANNEL CHANGE STATISTICS

    LATEST U.S. CONVENIENCE STORE COUNT AT 132,424 STORES

    2001 SUPERMARKET SALES INCREASE 3.5 PERCENT TO $398.2 BILLION

    WHOLESALE GROCERY COMPANIES MARKET SHARE

      SHELF PRESENCE SHOWS INCREASE IN PRIVATE LABEL

    SUPERMARKET INDUSTRY WILL GROW THROUGH ACQUISITION

    COUPONS KEEP BRAND LOYAL CUSTOMERS

    PRIVATE-LABEL GROWTH EXCEEDS NATIONAL BRANDS

    DATA MINING FREQUENT SHOPPER DATA

     A.C. NIELSEN RELEASES FOURTH ANNUAL FREQUENT SHOPPER STUDY

 EVALUATING TRADE SPENDING AND ITS EFFECT ON BRAND EQUITY USING FREQUENCY CARDS

Source: Food Marketing Institute, Trends in the United States: Consumer Attitudes and the Supermarket, 2005

Grocery Store — Any retail store selling a line of dry grocery, canned goods or nonfood items plus some perishable items.
Supermarket—Any full-line self-service grocery store generating a sales volume of $2 million or more annually
Convenience Store— Any full-line, self-service grocery store offering limited line of high-convenience items. Open long hours and provides easy access. The majority sell gasoline with an annual sales of $2 million or more.
Independent — An operator of fewer than 11 retail stores.
Chain — An operator of 11 or more retail stores.

Conventional Supermarket - The original supermarket format offering a full line of groceries, meat, and produce with at least $2 million in annual sales. Conventional stores will realize 9% of their sales in GM/HBC. These stores typically carry approximately 15,000 items, offer a service deli and frequently a service bakery.
Superstore - A larger version of the conventional supermarket with at least 40,000 square feet in total selling area and 25,000 items. Superstores offer an expanded selection of non-foods (at least 10% GM/HBC).
Food/Drug Combo - A combination of superstore and drug store under a single roof, with common checkouts. GM/HBC represents at least one-third of the selling area and approximately 15% of store sales. These stores also have a pharmacy.
Warehouse Store - A low-margin grocery store offering reduced variety, lower service levels, minimal decor, and a streamlined merchandising presentation, along with aggressive pricing. Generally, warehouse stores don't offer specialty departments, e.g., Xtra.
Super Warehouse - A high-volume, hybrid format of a superstore and a warehouse store. Super warehouse stores typically offer a full range of service departments, quality perishables, and reduced prices, e.g., Cub Foods.
Limited-Assortment Store - A "bare-bones," low-priced grocery store that provides very limited services and carries fewer than 2,000 items with limited-if any-perishables, e.g., Aldi and Sav-A-Lot.
Other - The small corner grocery store that carries a limited selection of staples and other convenience goods. These stores generate approximately $1 million in business annually.
Convenience Store (Traditional) - A small, higher-margin store that offers an edited selection of staple groceries, non-foods, and other convenience food items, i.e., ready-to-heat and ready-to-eat foods. The traditional format includes those stores that started out as strictly convenience stores but might also sell gasoline.
Convenience Store (Petroleum-Based) - The petroleum-based stores are primarily gas stations with a convenience store.

Non-Traditional Grocery

Hypermarket - A very large food and general merchandise store with approximately 180,000 square feet of selling space. While these stores typically devote as much as 75% of the selling area to general merchandise, the food-to-general merchandise sales ratio is typically 60/40, e.g., Bigg's.
Wholesale Club - A membership retail/wholesale hybrid with a varied selection and limited variety of products presented in a warehouse-type environment. These 120,000 square-foot stores have 60% to 70% GM/HBC and a grocery line dedicated to large sizes and bulk sales. Memberships include both business accounts and consumer groups, e.g., Sam's Club, Costco, and BJ's.
Mini-Club - A scaled-down version of the wholesale club. The mini-club is approximately one-fourth the size of a typical wholesale club and carries about 60% of the SKUs, including all of the major food and sundry departments and a limited line of merchandise (soft goods, office supplies, and opportunistic, one-time buys), e.g., Smart & Final. Some of these stores do not have membership fees and often operate as a "cash & carry."
Supercenters - A large food/drug combination store and mass merchandiser under a single roof. The supercenters offer a wide variety of food, as well as non-food merchandise. These stores average more than 170,000 square feet and typically devote as much as 40% of the space to grocery items, e.g., Wal-Mart, Kmart, Super Target, Meijer, and Fred Meyer.
Deep-Discount Drug Store - A low-margin, GM/HBC store with approximately 28,000 square feet of selling space and 25,000 SKUs. These stores typically carry fewer sizes but more GM/HBC brands than a supermarket. Food accounts for 20% of store sales, e.g., Phar-Mor and Drug Emporium.
Internet - An Internet-based grocery distribution operator. Included in this format are all Internet operators who use the Internet as the primary means of accepting grocery orders for home delivery or pickup. Also included are major food retailers that generate a portion of their sales through Internet-based sales. Internet suppliers typically offer 12,000 SKUs or more for home delivery, e.g. Peapod.

        MARKETERS TARGET CONSUMERS THRU RETAILERS' FREQUENT-SHOPPER PROGRAM

Consumer Product Goods marketers are targeting consumer through retailers’ frequent-shopper programs to efficiently reach consumers at account-specific levels that can be effectively calculated.

Grocery chain retailers are under pressure from new formats and alternative retail channels (Wal-Mart) to maintain their market share. Their frequent-shopper programs provide consumer loyalty and valuable targeted marketing data that is their primary weapon against their competitors.

Marketers look for programs and retailers that will allow them to communicate to their target consumers directly rather than using more traditional 'mass' vehicles by providing a targeted offer based on the consumer's purchasing habits. Manufacturers have been proactive in card-based frequent-shopper programs including Coca-Cola, Kraft, Procter & Gamble, Pillsbury and Unilever. Retailers have data about individual consumers that manufacturers cannot gather on their own, including buying patterns, total basket purchases, predisposition to switch brands, and sensitivity to promotions.

Manufacturers typically fund basic co-branded promotions, including coupons, the cost of advertising, and in-store signage and may get involved with designing the program and assisting in the analysis of the data. Retailers are very protective of their customer data and many are very cautious in sharing that information with manufacturers for analysis and third-party analytic firms play an important role for theses trading partners. Retailers do not provide the identities of their consumers and the manufacturers analyze general purchase data, without identifying the individual consumers identity. Retailers and manufacturers should look for common goals and synergies from a customer perspective and focus on improving data analysis to evaluate the effectiveness of their marketing promotions.

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        DETERMINING HOW TO PROMOTE YOUR BRAND USING LOYALTY PROGRAM DATA

That’s important to understand so you can really begin to understand the effect promotion has on consumers and what it has to do with loyalty. As a manufacturer, if you rewarded people who would have bought the product anyway and didn’t bring any new users to your brand, then you’ve really just sacrificed margin. The retailer needs to keep two years of data to really understand the effects of promotions on consumers in the future. You need a pre-period that is detailed enough to understand what consumers were doing before, and you need a post-period of some substance. Unfortunately, many retailers don’t keep data online for that long. So even if they wanted to do this analysis themselves, they do not have enough data online to be able to do it.

A good way to use promotion is to encourage people to come into that category even if the first purchase is on a discount. That’s what you want to do with targeted discounts because you leverage promotions to bring new consumers to your category, however, you want to bring new consumers into your category who will stay with it and also purchase your product at full revenue. Return-On-Investment (ROI) is a lot more than just gross margin. It’s understanding and building a loyal base of consumers who will shop your brand and your category and will shop it when it’s at full revenue as well as when it’s on discount. That’s where "margin blending" comes in because if you margin-blend a category, you look at all the brands and all the packages within the category to try and identify the brands that are not price sensitive, the brands that people will purchase anyway at full price. If they’re going to purchase it anyway, then there’s no point in discounting, because then all you’re doing is reducing profit out of the category.

   ONLY 15 PERCENT OF CUSTOMERS ARE LOYAL BUT REPRESENT 55 PERCENT OF SALES

Retailers use their Frequent-Shopper Loyalty program sales data to tailor their product assortment to their most loyal shoppers.  Only 12 percent to 15 percent of customers are loyal to a single retailer, according to the Center for Retail Management at Northwestern University, but they represent between 55 percent and 70 percent of sales.  Nearly two-thirds of shopper (65 %) believe Frequent-Shopper Pogroms are important. More than 50 percent of retailers now offer Frequent-Shopper Programs and nearly two-thirds of program customers use their loyalty cards at least weekly and 84 percent at least once a month, according to the FMI, Trends in the United States: Consumer Attitudes & the Supermarket 2003.  Supercenters, warehouse-clubs, dollar stores and limited-assortment stores choose to offer everyday low prices.

A Frequent-Shopper or Loyalty-Marketing program is an electronic method of identifying customer purchases and translating that information on their shopping habits and preferences.  They identify the retailers’ most loyal customers, their buying habits and can offer the products and services that their best customers demand.  The retailer can analyze their shopping habits, refine marketing programs and fine-tune the product mix at the chain or individual store level. They can identify the promotions that appeal most to various customer groups and tell you when products were sold and whether they were sold on or off promotion, and the profit margin on each sale. Overall, shopper give food retailers high marks for their frequent-shopper programs as 41 percent rate them excellent and another 45 percent rate them as good.

A study by McKinsey & Company estimated that a Frequent-Shopper program’s first year can cost as much as $30 million, with annual maintenance and marketing costs reaching $5 million to $10 million.  Smaller retailers may be able to purchase of-the-shelf CRM (customer relationship management) software.

Retailers typically analyze data at the aggregate level, i.e. data from groups, not individuals. The key to the success of these programs is to interpret data from your loyalty program more quickly, cheaply and frequently.  Faced with intense price competition from Wal-Mart, food retailers must ensure that their programs offer both value and other customer benefits.

Retail loyalty cards have advanced as an aggressive marketing tool, with 82% of consumers participating in some form of loyalty program, according to a survey conducted by WSL Strategic Retail, New York City.  Supermarkets are the leader by a wide margin with 58% of consumers carrying a supermarket card and 82% trying to use the card every time they shop. About 17% will go out of their way to use the card. 

According to a Card-Based Marketing Report from Retail Systems Consulting and TDLinx, there are 12,849 supermarkets in the U.S. with card-based frequent shopper programs, representing 38% of supermarkets and 42% of the total ACV (estimated all commodity volume). CPG manufacturers are interested in frequent shopper programs due to targeting and measurability. Retailers have the ability to reach specific consumers based on past purchases, where manufacturers are limited mainly to customer self-reporting surveys that are often less than accurate. Retailers can also accurately measure consumer activity after a promotion. Retailers will not provide the names and addresses of their customers to manufacturers. Manufacturers need this information so they can evaluate whether or not they can move brand dollars from traditional vehicles, such as FSIs, into retailer frequent shopper programs.

Coverage is particularly strong in certain regions, for example, New England (48% of store count, 57% of ACV covered), Mid-Atlantic (42% of store count, 60% of ACV), and the Southwest (42% of store count and 48% of ACV). The other regions are Southeast (42% of stores, 38% of ACV), East Central (34% of stores, 38% of ACV), East Central (34% of stores, 43% of ACV), West Central (29% of stores, 39% of ACV), and Pacific (35% of stores, 37% of ACV.)  I estimate that an average of twenty percent of independents have frequent shopper programs.  Clearly the numbers prove 1) FS programs are growing, and 2) they have gained critical mass across the US. 

The growth is significant, especially when viewed over the last eight years.  In 1996 there were just over 4,000 U.S. stores with programs.  By 1999 there were 9,000 stores, or 29.6% of U.S. supermarkets, accounting for approximately 25% of the ACV.  In 2002, 30% of the stores (just over 10,000) had programs, with 44% of ACV covered.  The increase in the last few years came mainly from big chains rolling out their programs to all their stores, including Kroger, Albertson’s, and Winn-Dixie.  There need to be more cooperation between the manufacturers and retailers, and greater internal communication at retailers’ headquarters between marketing and category management. 

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    SLOTTING ALLOWANCES IN THE SUPERMARKET INDUSTRY

1.       What are slotting allowances?

Suppliers pay distributors slotting allowances for product placement on store shelves. Sometimes distributors request them, and sometimes suppliers offer them. Although common, these allowances are neither uniformly requested nor offered.

The most common allowances are for new products or new product introduction allowances. These may also cover premium product placements, such as on eye-level shelves or special displays; the cost to have products remain on shelves or pay-to-stay allowances; or the cost to retailers if a product fails.

2. How much are slotting allowances?

The amount varies depending on numerous factors, such as whether the supplier has a proven track record, whether consumer testing has been performed, whether the product is carried by competitors in the same market, and whether the supplier has a well-conceived advertising program. The amount can be as small as several hundred dollars to have a new product introduced in a single store to many thousands of dollars for a chain-wide promotion. In some instances, manufacturers provide free cases of new products to help retailers gauge consumer demand. Since each new product introduction is unique, these allowances are typically negotiated individually and no industry-wide numbers are available.

3. Why are slotting allowances used?

The principal reason is to cover the considerable costs to introduce a product, to remove the item that previously occupied the shelf space and to recover some of the investment in the likely event that the new product fails. Depending on how a new product is defined, the failure rate ranges up to 80 percent per year.

Each year, food retailers spend an average of $956,800 per store on new products that fail, according to a study of 1995 introductions by the market research firm Linton, Matysiak & Wilkes. The major reason cited for failures is a lack of market research. In many cases, manufacturers are using retailers to test-market new products. Through slotting allowances, manufacturers are, in effect, having the retailer conduct a live market trial instead of paying for test market research.

4. Why are new product introductions so costly?

About 100,000 grocery products are available on the market.  The typical supermarket has space for only 30,000 to 40,000 products, and the failure rate for new products is as high as 80 percent. With so many items competing for so little shelf space, new product introductions have become a high-cost, high-risk proposition. As many as 24 steps are needed to introduce a new item and another 10 to remove the one that occupied the space, according to a Deloitte & Touche study (Managing the Process of Introducing and Deleting Products in the Grocery and Drug Industry, 1990). Based on this study and current retail practices, these steps include:  

5. Are slotting allowances offered for all products?

No. They are not offered for most established products or for new offerings that have a high likelihood of success.

Arguments for Slotting Allowances include:

Argument against Slotting Allowances include:

The true impact may depend on how the practice is applied. The Federal Trade Commission (FTC) takes the view that these issues need to be considered on a case-by-case basis as it reviews complaints.

8. Are slotting allowances legal?

According to Oct. 20, 1999, testimony by Willard K. Tom, deputy director of the FTC’s Bureau of Competition, before the House Judiciary Committee, the legality of slotting practices “can be determined only in light of all the surrounding facts and circumstances.” Even in cases where a small supplier cannot afford a high slotting fee, the practice can be deemed legal, he said, as long as the market remains competitive and consumers “receive the benefits of low prices and wide product selection.”

    FMI REPORTS ON CONSUMER ATTITUDES AND THE SUPERMARKET

A study was presented at the 2003 FMI Conference called “Trends in the United States: Consumer Attitudes & the Supermarket, 2003” which revealed that alternative shopping channels continue to take value-driven consumers away from traditional grocery stores.

Resulting from the increased competition from supercenters and discount stores, only 79 percent of shoppers said a traditional supermarket was the primary grocery store, down from 81 percent in 2002, while 18 percent chose a discount store or a supercenter, up from 15 percent in 2002. There is a growing shopper base for supercenters, dollar stores and warehouse clubs.

Low prices gained in importance as 83 percent saying it was very important compared to 77 percent in 2001.  Shoppers who choose discount stores and supercenters instead of traditional supermarkets as their primary store generally have lower household incomes ($41,800 versus $49,500 for traditional grocery stores), are younger (median age 41.2 versus 44.8) and have larger households (3.3 percent versus 2.8 percent).  Discount and supercenter store shoppers are more price driven (92%) than traditional supermarket shoppers (82%).

Traditional shoppers rate higher than discount stores and 67 percent of primary traditional supermarket shoppers would recommend their stores compared to 60 percent of primary discount shoppers. Consumers believe the economy will not recover soon and were concerned with unemployment, problems with business ethics, terrorism, war with Iraq and rising fuel costs.  This resulted in consumer confidence dropping in February 2003 to the lowest level in more than nine years.  The five most frequently practiced cost-savings measures have remained constant:

·        Look for grocery specials in the newspaper (36%).

·        Participate in frequent-Shopper Programs (30%).

·        Stock up on sale items (27%).

·        Use cents-off coupons (21%).

·        Price comparisons (21%).

While the percentage of shoppers reporting their primary store offers Internet grocery shopping increased from 9 percent in 2000 to 16 percent in 2002, it dropped to 14 percent in 2003 with only 3 percent of the shoppers purchasing groceries online in the last 12 months. Sixty-nine percent said that they have Internet access versus 62 percent in 2000.

In 2003, the average household weekly grocery bill ranges from $52 for one person to $138 for large households of five or more people. On average, grocery shoppers eat their evening meal away from home 1.4 time per week with younger consumers and smaller households eating away from home more frequently than older shoppers and larger households.

Gasoline and self-checkouts have been quickly adopted by shoppers as 60 percent purchase gasoline and 53 percent use self-checkouts where available. Warehouse clubs, supercenters, dollar stores and convenience stores continue to expand in offering gasoline.

The number of consumers interested in purchasing irradiated products has increased from only 38 percent in 2000 to 57 percent in 2003 due primarily to the high level of concern regarding bacteria as a health risk.  Almost all shoppers (92 percent) of shoppers are aware of sell by dates on packaging with 89 percent saying that they frequently look at this information.  Food items most frequently checked are most perishables, uncooked meats and dairy products.

    FMI DISCUSSES BUILDING SHOPPER LOYALTY WITH STORE BRANDS

As competition continues to grow to gain market share for the consumers grocery dollar, from new channel options such as Warehouse Clubs, Supercenters and Dollar Stores, store brands or private label products have become more important as they provide a unique difference from their competitors.  They also have the ability to provide store loyalty, increase profitability and improve customer satisfaction.

An FMI study called “Building Shopper Loyalty with Store Brands” indicated that store brand shoppers are as demanding about high quality products, good selection, convenient location, product availability and customer service and not simply lower prices.  There appears to be a shift in demographics from lower-income households to more affluent households, especially among premium store brands.  Ethnic shoppers (African Americans, Hispanics and Asians) are less inclined to purchase private label products, however this may change with target marketing strategies.

There is a direct correlation between store brand loyalty and store loyalty as shoppers who believe that their stores private label is important are likely to be loyal to that retailer.  Premium private label can attract new users to private label, especially from more affluent shoppers who are less price-sensitive but require high quality and value.

Category management is the key to success as factors that influence product selection varies widely across categories.  When price is not the most important factor, retailers must manage store brand pricing to ensure that the pricing supports the overall categories as well as the store brand strategies.  Marketing and merchandising strategies must be developed to increase market share including improved packaging, in-store sampling and communicating the high quality of the brand.

Store brands represent an estimated 17 percent of the $729 billion dollar grocery industry and the growth of store brands have averaged almost double that of national brands.  Store brand market share can increase as evidenced in England where private label has reached 45 percent at Tesco Plc and 60 percent at J Sainsbury Plc.

With increased competition across several channels for the consumer’s grocery dollar, store brands represent value and approximately 70 percent of shoppers place high importance on store brands when selecting a grocery store. The increased number of channels has eroded market share for several grocery categories in traditional supermarkets, especially with nonfood items. 

Heavy private label shoppers purchase more than 30 percent store brand items when shopping.  They study reported that 36 percent of shoppers buy 10 percent or fewer private label items while 36 percent buy between 11 percent and 30 percent of store brand items and 28 percent buy more than 30 percent store brand items.  Heavy private label users are not as motivated by low prices as the price-oriented shopper, however pricing plays a role in communicating quality driving brand and retail image and enhancing margins.  One-third of heavy private label shoppers trust the store brand to of high quality and as good as national brands.  Price and value drive them while light private label purchasers focus on brand loyalty and family preferences.  Seventy-three percent think that store brands are produced by the same manufacturer as national brands with a different label.

Shoppers that are loyal to a retailer are more likely to purchase store brands and the reverse is true. While private label has traditionally been marketed as a lower-cost alternative to a national brand, retailers are now promoting quality and freshness. Simply carrying more store brands does not guarantee success as the study showed that stores that managed their categories better to maximize store brand performance were more successful.  Store brands play a critical role in driving overall retail and category strategy and should not be based solely on margins.  Price and quality were the leading factors for food items and while packaging was not as important, it reinforces the consumers’ attitudes about quality. Package design must clearly project a brand image and identity, attract attention at the shelf, promote value and quality and reinforce the brand message with the consumer at the point-of-purchase.

Traditionally, heavy private label users in terms of dollars tend to be larger, less affluent families, however premium private label items have attracted higher income professionals with smaller families. Price conscious private label consumers are generally women, age 35 to 54, with larger families and a median household income of $39,200.

Managing the store brands through tiered strategies, especially premium brand development, positively impacts the growth of store brand sales.  Premium private label shoppers have more positive attitudes toward store brand quality and trying new products.  The packaging should signify an upscale, high-quality product. Understanding the consumer is key to developing strategies to increase private label sales.  Brand segmentation and targeted marketing can bring new consumers to purchase private label products.

While ethnic shoppers tend to be more brand loyal, a targeted store brand program can succeed and an opportunity exists to market directly to ethnic groups.  There are opportunities for private label growth with ethnic shoppers as their combined buying power in the U.S. has reached $1trillion.  By 2030, 19 percent of the U.S. population will be Hispanic, 13 percent African American and 7 percent Asian American/Indian.  Language translation, in-store sampling, packaging and in-store marketing should be part of the retailers marketing strategy for ethnic shoppers.

Developing store brands with high quality and unique product attributes can build store loyalty and shopper satisfaction.  Retailers should be clear and consistent with the brand message, product quality and value. Effectively marketing store brands requires a combination of preferential merchandising, displays, advertising and promotions.  It is important for retailers to optimize store brand awareness at the point-of-purchase.  Utilize existing loyalty card data to develop a relationship between the retailers’ customers and store brands and target the customers with a combination of trial-generating promotions and brand messages.

Retail loyalty cards and programs have moved to the forefront as an aggressive marketing tool, with 82% of consumers participating in some form of loyalty program, according to a survey conducted by WSL Strategic Retail, New York City. Supermarkets lead the pack by a wide margin with 58% of consumers carrying a supermarket card and 82% trying to use the card every time they shop. About 17% will go out of their way to use the card.

Customer participation in loyalty reward programs for other market including: Credit cards (29%), drug stores (27%), entertainment stores (24%), travel programs (23%), bookstores (20%), restaurants (19%) and greeting card stores (16%).

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     COMPETITION AMONG TRADITIONAL AND NEW CHANNELS IS INCREASING

Competition among food retailers has never been more dynamic with more than a dozen types of retailers competing for market share. Food retailers today include conventional supermarkets, superstores, supercenters, membership clubs, combination (food and drug) stores, natural and organic outlets, limited assortment stores, convenience stores, dot-coms and gasoline stations. Consumers have never had more choice in variety, value and quality. The competition includes restaurants, especially fast food, which are near the milestone of controlling half the $850 billion market for food sales. Dual-income couples and generations X and the echo boomers are fueling steady sales growth in “food away from home.”

Families still eat most of their main meals at home, but a dramatically increasing number of those meals are fully or partially prepared by outside sources. Driving this trend is the increase individual-income families (and their overworked couples) and young adults who don’t like to cook or don’t know how. As a result, they buy an increasing portion of their food ready-to-eat or -heat. Many food retailers are expanding and upgrading the frozen meal selection. Their bakeries are selling breakfasts. Their delis are selling lunches and side dishes for dinner. Salad, pizza and coffee bars are spreading. For one-stop convenience, shoppers can go to superstores, supercenters, combos and super warehouse outlets. For value, they have limited assortment, warehouse and wholesale club stores.

The industry is consolidating while competition among traditional and new channels is increasing dramatically. The various food retailer formats include: