Over the next five years, the Grocery Stores industry is expected to reach $675 billion, benefiting mostly from a strengthening US economy. As per capita disposable income rises, shoppers will likely be more inclined to purchase premium level, value-added products at retail stores. In addition to growing demand for premium goods, operators will likely benefit from slowly growing input costs.
Per capita disposable income has risen an annualized 2.8% over the past five years. Improving discretionary income has enabled consumers to purchase a wider variety of premium grocery items, specifically organic products. Growing health and environmental concerns have also driven consumers to purchase more all-natural and organic food. Consequently, industry participants have benefited from the sale of organic goods, which are sourced at similar prices as nonorganic foods and then priced at a premium.
Shifting demographics are anticipated to significantly influence the industry over the next five years. Millennials have emerged as the most populous generation in the United States. As this age group’s level of disposable income rises, industry operators are expected to increasingly cater their services to attract these individuals. Millennials are typically characterized as being health-conscious and value-driven. Due to these preferences, premium private label brands have become increasingly popular.