Food retail is a relatively new sector of the food industry that is progressing dynamically. It contributes to several peripheral industries such as food packaging, retail, transportation and others. The growing global population, changing consumer choices, and developing economies are paving way for the food retail sector to thrive. Additionally, increasing consumer spending on food, growing preference for private labeled food brands, and rising supermarket culture are driving the food retail market.
High Demand for Private Label Brand to Boost the Food Retail Market
The private label food brands are anticipated to have high impact on the food retail market in the short term and have medium impact in the long run. Private label food products are produced by small-scale food enterprises, which incur relatively low cost of production compared to large-scale organized food companies. High demand for private label food in retail stores is in turn boosting the food retail market.
However, private label food brands are anticipated to lose share in the food retail market in coming years owing to recovery of the global market for food retail. This will lead to retention of customers for organized large scale food companies in the food retail market.
The rising consumer spending on food is anticipated to have a medium impact on the food retail market in the short term and have high impact in the near short and long terms. Inflation and unemployment are some of the factors to keep growing consumer spending to be medium in the short run.
Supermarket and Other Large Retail Stores to Sideline Specialist Grocers in the Food Retail Market
The growing trend for supermarket shopping is driving the food retail market substantially. However, in the short term the impact of rising supermarket shopping is anticipated to be medium and high in the medium and long run. Among the urban population, the changing food habits and food preferences are some of the factors, which are likely to drive supermarkets in developed nations.
On account of the fast growth of supermarkets and hypermarkets, the share of private retailers, convenience stores, and independent specialist grocers is anticipated to reduce significantly in the food retail market. Supermarkets, hypermarket, and other large retail stores account for a large share of the food retail market. The growing middle class and rising online shopping are opening further opportunities for the food retail market.
Supply Chain Inefficiency to Restrain the Global Food Retail Market
The inefficient supply chain and threat from unorganized small players will challenge food retail market. The inefficiency in the supply chain in less developed nations is anticipated to have medium influence in the short and medium terms in the food retail market. The investment in infrastructure from the government and entry of global food processing enterprises in developing nations is anticipated to counteract the supply-chain related challenges in the food retail market.
On the competitive scenario, the food retail market has high competition. This is owing to large number of companies offering same products. The food retail market experiences medium intensity of rivalry due to presence of 90 companies having global presence and some regional presence companies. High brand choices, healthy rate of growth and low differentiation for product has increased intensified competition in the market.
On the geographical scenario, North America and Europe exhibit high concentration of organized retail that stiffens the competition in food retail market in these regions. Moreover, low investments for assets that are non-transferable makes for easy exit barriers in the global food retail market.
The major players in the global food retail market are Carrefour S.A.,Metro AG, Wal-Mart Stores Inc.,Tesco Plc, Seven & I Holdings Co. Ltd, Costco Wholesale Corporation, REWE Group, The Kroger Co, and Group Auchan SA.
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