End of the Smaller Conventional Supermarket Format Projected

Feb 15, 2002

Food manufacturers and retailers face substantial consolidation and internationalization over the next five years as they innovate with brands and retail formats to satisfy changing consumer habits and demands, according to a report released today by Cap Gemini Ernst & Young. “State of the Art in Food: The Changing
Face of the Food Industry” draws its conclusions from a survey of 220 leading
food executives from 19 countries in Europe, US and Asia Pacific, and detailed
interviews with 65 senior-level executives, reports just-food.com.

Economic conditions and market efficiencies are meanwhile leading to the end
of the smaller conventional supermarket format, as factors such as high overhead,
low volume and limited assortments take their toll, according to the report.
At the same time, hypermarkets and larger supermarkets are expanding services
and product mixes; discounters are moving in the direction of “quality discounting,”
offering higher-quality products at the lowest prices; and convenience stores
are catering to “eating moments.” The report concludes that most food retailers
have had little success utilizing the Internet as a viable option to reach the
consumer. The research indicates that the e-commerce channel will remain a challenge
and will represent no more than five percent of the global food business in ten years.

Moderator Comment: Is there still a significant consumer
demand for self-service only retail models?

Traditional supermarkets are not becoming extinct. They
evolved into the other formats we see today. In 10 years, there will be another
new format du jour. It is basic competition. Adapt, adopt or atrophy. [George
Anderson – Moderator

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