A recent report from dunnhumby found that Amazon, H-E-B, Costco, Sam’s Club and Walmart are best positioned for 2053, when the U.S. grocery retail industry will be worth $1.9 trillion, more than double its size today.
In “Grocery 2053: A Data-Driven Gaze into The Future,” dunnhumby included the largest 35 U.S. retailers across conventional, mass, club, specialty, discounter, drug and dollar channels.
The company identified 15 sub-trends affecting the grocery industry and grouped these into mega or macro trends that will have the biggest potential impact on grocery retailers over the next three decades.
The dunnhumby Retailer Preference Index database – that contains more than 70,000 consumer survey responses conducted from 2017-22 – was analyzed to understand which trends matter most to consumers.
Grocery retailers were then evaluated for 2053 based on their future expected customer base, the trends relevant to them and the value proposition alignment required.
Key findings from the study:
- Fiscal conservatism (concern about the economy as well as personal day-to-day and long-term finances) is the biggest source of stress for consumers and the most important overarching trend that will affect them over the next 30 years. Only when income exceeds $150,000 per year do finances even out with health and the environment as sources of stress. And the younger the consumers, the more they tend to be stressed with finances, both long-term and day-to-day.
- The 10 retailers best positioned to benefit from fiscal conservatism over the next 30 years are, in order: Lidl, Food 4 Less, Aldi, Costco, Fry’s, Amazon, BJ’s Wholesale, H-E-B, Shoprite and WinCo. Conversely, the shares of Harris Teeter, Wegman’s, Publix and Sprouts Farmers Market are vulnerable to the fiscal conservatism trend.
- Health and wellness, Data 3.0, values-based consumption and channel proliferation follow fiscal conservatism as the most important trends of the future. CVS topped all retailers for health and wellness, followed by Amazon, H-E-B, Rite Aid, Walgreens, Costco, Walmart, Fry’s, Kroger and Meijer. Amazon was the top store for Data 3.0, values-based consumption and channel proliferation.
- Health and wellness and finances are opposing forces for many consumers. While 80 percent hope to choose healthier foods when shopping, price is a barrier for 60 percent. Consumers with higher incomes are more likely to regularly choose healthy foods when shopping. Younger customers care more about their mental health, whereas older customers care about their physical health.
- Data 3.0 (defined in the report as the adoption of new technology) is still nominal, but it appeals to younger generations. That means that winning the hearts and wallets of future post Millennial generations will happen not only through offering self-checkout lanes (used by four out of every five customers) but integrating new and holistic virtual tech into purchases and communications.
- Values-based consumption – qualities such as sustainability or the welfare of store employees – remains aspirational and ranks last when customers are asked to trade off with other needs such as finances and personal health. Like health and wellness, consumer needs that are less personal and less immediate take a back seat until the priorities are fulfilled.
“While the shifts the retail grocery industry have gone through over the last three and a half years have been quite dramatic, the reality is that consequential shifts unfold over decades,” said Matt O’Grady, president of the Americas for dunnhumby.
“It isn’t one five-year period in grocery history that will change the fortunes of retailers. Rather, grocers will rise or fall based on their ability to align themselves to the dominant demographic, cultural, economic and technological trends that will slowly reshape the market context over decades to come.
“The aim of our report is to help retailers understand what shopper values that will shape the decades to come, and offer a framework of how to transform their organizations over time.”
