Rising Consumption Boosts Grocery Sector; Segment in Transformation to Emerging Models
August 2018 | Marcus & Millichap
Grocery stores gather momentum as retail sales record big gain. For the third consecutive month, core retail sales posted strong year-over-year growth, matching the three-month average of 5.6 percent. A range of economic factors have helped bolster consumer confidence over the past few months, leading to this elevated level of spending. Numerous retail categories reported robust sales in July, including grocery stores, which logged 3.8 percent annual growth. This measure well exceeds the category’s 10-year average of 2.6 percent.
Grocers refine strategies as consumer preferences change. Grocery stores continue to transform with the evolving retail climate by improving customers’ overall experience. Some grocers, such as Kroger, have put the brakes on expansion as they reinvest more capital back into existing brick-and-mortar locations, integrating dine-in options, wine bars and more quality products to bolster foot traffic. The features now included in grocery stores have made them a one-stop shop for many consumers. Conversely, smaller formats have also gained popularity as grocers attempt to maximize sales per square foot. Chains like Hy-Vee and Meijer have adopted this concept, seeking to penetrate urban markets.
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