North America: five trends to watch in 2016

Date : 16 February 2016

We highlight the five trends set to shape the grocery sector in the US and Canada this year.

1. Format reinvention

Our key trend to watch this year is ‘format reinvention’. We expect to see a number of new concepts enter the market, with a particular focus on the supermarket format. Over the last year, retailers in North America have been channelling increased levels of investment into this format after a period of relative under-investment. However, with increased focus being placed on fresh foods, prepared ranges and local and organic categories, one of the key challenges is how to reinvent the centre store with the same level of excitement.

2. Digital delivery

Grocery ecommerce came to life in 2015, and this is the only trend which we’re extending across from last year. While we saw significant progress with a number of new grocery ecommerce tests and partnerships launched last year, in 2016 we expect to see existing retailers grow their shares of the channel while new players will also enter the market. This will include both traditional and non-traditional competitors, especially as technology-driven innovation has reduced barriers to entry.

3. Healthcare at your store

Beyond operating in-store pharmacies and offering limited diagnostic testing, grocery stores are set to play a stronger role in healthcare provision. Retailers are increasing the share of space dedicated to healthcare-based services, while also broadening their product offers, impacting core ranging decisions. Enabled by technology, shoppers are also demonstrating an increased interest in health and wellness, a trend we expect to accelerate as wearables and related monitoring devices move beyond smart watches and wristbands.

4. Stepping up food-to-go development

While a number of retailers in North America have done a great job in developing their prepared food ranges, retailers are now placing a greater emphasis on food-to-go as they focus on consumers’ new eating habits and winning a greater share of stomach. Retailers are moving beyond eat-later missions and catering for food-for-now, reflecting current foodservice trends. We expect to see an increasing level of partnerships in this space as retailers look to bring in external expertise, although for relevant food suppliers it also represents and additional opportunity to drive sales in store.

5. Delivering on efficiency

As retailers step up their investments in new formats, channels and services, we are seeing a renewed focus on delivering efficiency-based cost savings, including portfolio rationalisation. Walmart is closing over 130 stores in the US this year, including 102 smaller format Walmart Express stores, while Target has made significant headcount reductions at its HQ. Consolidation will also remain a significant factor in shaping the sector this year as retailers look to drive economies of scale and improve profitability over the longer term.

Download our latest insight deck, ‘The outlook for North America in 2016’ for further insights on these trends and the latest results and developments from the region.

Stewart Samuel, Program Director, IGD Canada
Based in Canada, Stewart heads up all of IGD's North American coverage. He is also responsible for shaping IGD's programs across the region. Contact Stewart at [email protected] for further information on how we can support your market planning strategies.