Coresight report examines state of grocery industry

Coresight Research has published a report on the state of the grocery industry.

In the "Market Navigator" report, Coresight provided the size and trajectory of the U.S. grocery retail sector for 2024 and beyond and critical factors impacting the sector’s growth. The report also discusses e-commerce penetration in the sector, distribution channels, the competitive landscape, key themes and innovators and blue-sky thinking for the sector, among other topics.

Informing the data in the report, the company said, are online surveys of U.S. consumers aged 18 or older conducted by Coresight Research. Other sources include company reports, U.S. Census Bureau and Coresight's research.

Some of the key findings include:

• By 2050, Coresight Research thinks the current top five major grocery players in the U.S. — Walmart, Kroger, Costco, Albertsons and Ahold Delhaize, in that order — will predominately control the market due to continued structural transformation via mergers and acquisitions. As of 2023, the top five players hold around 44% of the total market, which Coresight Research said could grow to 60% to 65% by 2050 via consolidation.
• In 2024, Coresight expects online food and beverage retail sales growth to soften further, decelerating from 14.7% growth in 2023 to 10.2% growth, taking the online market to $90 billion. Coresight said it expects that grocery e-commerce sales will remain under pressure through the rest of 2024 as the uncertain macroeconomic environment continues to push shoppers to prioritize costs over convenience. In 2025 and beyond, as the sector matures, it expects online growth to taper off further.
• Coresight expects that the U.S. grocery retail market will grow 1.1% in 2024, easing from the 3.9% growth recorded in 2023 and resulting in a $1.5 trillion market. This growth will be supported by modest grocery inflation, with the USDA currently projecting a 1.2% consumer price inflation for food categories overall in 2024. However, the report says it expects a moderate real-term [volume] retail sales decline of 0.1% in 2024 as consumers remain judicious with their spending amid heightened economic concern. Looking forward, Coresight estimates that the market will likely continue to see positive growth in 2025 and beyond, recording low single-digit percentage annual growth rates similar to those seen prior to the pandemic.

In the report, Coresight Research said it expects that grocery retailers will be less impacted by GLP-1 medications than consumer packaged goods companies, given that grocers sell fresh foods, the sales of which will likely offset potential declines in the sales of packaged and processed items.

“We believe that organic and specialty-focused grocers could especially benefit from the shift toward healthier eating seen among many GLP-1 users,” the report said.

“As noted in the GLP-1 section, GLP-1 drug users are consuming less sugary drinks and unhealthy products and are consuming more fresh products, mostly fruit and vegetables, dairy, meat and seafood," said Coresight analyst Sujeet Naik. "I believe this is beneficial to grocery retailers because they will sell more produce items, and it would also benefit their gross margins as these perimeter items, such as produce and meats have higher gross margins as compared to center store items like packaged foods.”