Executive Summary

Each of our Sector Overview reports provides an essential briefing on a sector or market. This report focuses on U.S. grocery retailers:

• Despite ultralow food-price inflation, sales at grocery retailers and spending on food and beverages grew solidly across 2018, with each measure tracking at 3% or more year over year.
• Kroger’s partnership with Ocado is notable not only because it demonstrates the scale of Kroger’s commitment to grocery e-commerce, but also because it looks set to take Kroger into home delivery in a major way. In recent years, the U.S. online grocery market has been inching toward an in-store collection model.
• We think Amazon’s grocery banners, Amazon Go and Whole Foods Market, would need to shift their positioning on price and proposition in order to capture meaningful shares of full-basket grocery shops from mass-market grocery rivals.
• Our proprietary shopper profiles show that mass merchandisers’ shoppers skew younger and that Target attracts notably younger grocery shoppers. Amazon online grocery shoppers have a strikingly similar age and affluence profile to Whole Foods shoppers.