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Overview of the Retail Grocery Market in the
New England Region of the United States
April 2009
The Government of Canada has prepared this report based on primary and secondary sources
of information. Readers should take note that the Government of Canada does not guarantee
the accuracy of any of the information contained in this report, nor does it necessarily endorse
the organizations listed herein. Readers should independently verify the accuracy and
reliability of the information. This report is intended as a concise overview of the market for
those interested in its potential and is not intended to provide in-depth analysis which may be
required by the individual exporter. Although every effort has been made to ensure that the
information is correct, Agriculture and Agri-Food Canada assumes no responsibility for its
accuracy, reliability, or for any decisions arising from the information contained herein.
Please address any comments or suggestions you have on this report to:
Ben Berry – ben.berry@agr.gc.ca
Overview of the Retail Grocery Market in the New
England Region of the United States
Table of Contents
Overview ...................................................................................................... 4
New England Region....................................................................................... 5
Opportunities and Challenges........................................................................ 6
New England - Canadian Trade...................................................................... 8
Regional Grocery Retail Sector and State Economies ........................................ 9
Retail Grocery Market Overview ......................................................................15
Supermarkets ............................................................................................15
Convenience Stores ....................................................................................16
Mass Merchandisers....................................................................................17
Warehouse Clubs .......................................................................................18
Dollar Stores .............................................................................................18
Store Redesigns .........................................................................................19
Smaller-Format Convenience Segment ..........................................................20
Current Economic Conditions ..........................................................................22
National Consumption Trends and Opportunities ................................................23
Healthier Options .......................................................................................23
Larger-Sized Formats..................................................................................24
Ready-Made Meals .....................................................................................24
Ethnic Food ...............................................................................................24
Specialty Food ...........................................................................................25
Organics ...................................................................................................25
Local Food.................................................................................................26
Key Target Markets .......................................................................................26
Ethnic Consumers ......................................................................................26
Halal and Kosher Food Markets ....................................................................30
Mediterranean Food Market .........................................................................31
Market Access ..............................................................................................31
Key Resources ..............................................................................................31
Overview of the New England Retail Grocery Market 2
Overview of the Retail Grocery Market in the New
England Region of the United States
UPDATE APRIL 2009: The New England economy, like that of the United States,
continues to struggle through a recession. A housing crash, credit crunch, the
evaporation of consumer confidence, energy costs and financial market uncertainty
buffeted the national economy in 2008. In January of 2009, it was believed that
unemployment would continue to increase in coming years and that the weak
housing market was not likely to end in the near future, gauging from past
recessions. It was expected that the recession was still in its early stages and likely
to worsen before improving. However, it was also suggested that the United States
economy could begin to experience improvements in a year’s time, with the correct
policies (The Economist, Drastic Times). Recently, there have been some indicators
that imply that the United States economy may be beginning to recover. However an
immediate recovery is still unexpected, with growth expected to remain very weak
for the remainder of the year (The Economist Intelligence Unit, 2009). Similarly, the
recovery of the retail industry is expected to still be months away, with weak retail
numbers in March predicted to remain into the fourth quarter (Van Riper, 2009).
Research conducted near the end of 2008, found that almost 70% of consumers
believed that the next 12 months are either a “bad” or “not so good” time to
purchase items that they want or need, which can significantly impact supermarkets.
However, while other areas of retail and some types of foodservice have faced a
difficult market with the weakened United States economy, grocery retail seems to
be weathering the recession fairly well. Before the economic downturn in the United
States, grocery retailing was forecast to grow 5% from 2008 to 2010; however that
has now been revised to slightly more modest growth of 4%. While retail sales of
numerous other products decreased significantly from January 2008 to February
2009, food and beverage store sales increased almost US$600 million. This
dichotomy has resulted in retailers that are less grocery-oriented and have a larger
product mix, such as Wal-Mart and Target facing more difficulties than “full retail
grocers” such as Kroger (Euromonitor International, April 2009). However,
discounters and dollar stores have also been weathering the current economic
environment better than other-focused stores, as they appeal to thrifty consumers
looking for value, deals and price cuts.
While expansion plans in the supermarket sector have been diminished, (Smith
2008), food preparation and consumption at home has been increasing as consumers
have been cutting back on eating out. Other changes in behaviour have seen
decreases in purchases of premium brands and impulse buys, while movement
toward generic private-label brands has increased. However, some of these
behaviours are believed to be a result of not only the economy, but other shifts such
as health and wellness, that are expected to continue in the future (Van Riper,
2009). To-date consumers have not returned to their pre-2007 habits and experts
believe that recent events were in many ways a wake up call, not simply a blip in
long term consumer habits. Progressive Grocer predicts that events to watch in the
retail grocery industry in 2009 will be increasing price wars, growth in private label
programs, and a decline in store openings and expansions (2009).
Overview of the New England Retail Grocery Market 3
The information contained in this report takes into account the economic situation
and the forecasts available during this time period, but information will be further
updated once long term stability returns to this key market.
Overview
The New England region is comprised of six states: Connecticut, Maine,
Massachusetts, New Hampshire, Rhode Island, and Vermont, and is located in the
Northeastern tip of the United States (U.S.). This geographic location means that
New England is also a part of one of the wealthiest regions in the U.S. The proximity
of New England to the eastern Canadian border presents some opportunities for
Canadian exporters, particularly those in central and eastern Canada, and the
possibility for close trade relations. This close geographic proximity to Canada and
New England’s above average spending power combine to make it an important U.S.
export market for Canadian agri-food products. Canadian seafood has typically been
very popular in New England and Canadian products are well known in the region.
Half of Canada’s fish and seafood exports to the U.S are destined for the New
England region, as are a noticeable portion of Canada’s agri-food products.
The region shares many of the trends occurring in the U.S. national grocery retail
industry, and may present some additional unique opportunities for exporters willing
to invest time in this promising market. Five of the six states comprising New
England are ranked within the top ten healthiest states in the nation (the sixth state
ranked 11th), providing an opportunistic market for new health trends as well as
green initiatives and local produce. In addition, this homogenous, yet adventurous
population may provide significant opportunities for ‘Fusion Foods’ as a method of
introducing new ethnic foods and cooking styles. Despite limited diversity, this
market has proven itself open to a variety of ethnic cuisine. An increasingly
competitive environment has also lead retailers to redesign stores and increase
product selections. These factors, combined with the above mentioned trends and
consumer desire for convenience, provides a diverse array of opportunities for
Canadian agri-food exporters.
Quick Facts
National store-based retail grocery sales totalled US$901.6 billion in 2008 and
grew 3.2% from 2007 to 2008. From 2003 to 2008, sales increased
considerably more, experiencing a growth of 30.6%.
Supermarkets accounted for 37% of the American retail grocery market,
followed by hypermarkets (28%), small grocery retailers (25%),
food/drink/tobacco specialists (8%), discounters (2%), and other grocery
retailers (1%) in 2008.
Mass merchandisers and specialty grocers (i.e. retailers specializing in the
sale of one main food or beverage category, such as a bakery, butcher, fish
and seafood store, greengrocer, wine store, etc.) are the fastest-growing
channels in the American retail grocery market, and are expected to see 33%
and 19% growth, respectively, between 2007 and 2012.
Major growth areas in the retail grocery market include ready-made meals,
particularly healthier offerings, and better-for-you, functional and ethnic food.
The New England region’s GDP totalled US$744.7 billion in 2007, which
equalled 5.4% of the U.S. total.
Overview of the New England Retail Grocery Market 4
Food and beverage store sales in New England totalled US$38 billion,
accounting for 6.3% of national food and beverage retail sales in 2007.
The New England region is home to several grocery retail chains such as
Ahold USA’s Stop & Shop, Supervalu’s Shaw’s/Star Market, DeMoulas/Market
Basket, BJ’s Wholesale Club, Big Y Foods, and Hannaford Supermarkets.
Some of the largest food corporations, including prominent wholesalers and
distributors, also operate and have a presence in the region, including Wal-
Mart, Delhaize America Inc, SYSCO and C&S Wholesale Grocers.
Associated Grocers of New England reported record-breaking sales in 2008 of
more than $315 million, which was an increase of more than $35 million from
the previous year. The company experienced both an increase in new
customers as well as an increase in sales from existing customers.
New England Region
The New England region represents a small geographic area of the U.S. However,
with an estimated population of 14 million in 2007 representing 4.7% of the national
population, the region has a very high population density of 227 persons per square
mile. This is the second highest population density (after the Middle Atlantic division)
of all divisions in the U.S., and is significantly greater than the nation’s population
density of 85 persons per square mile. Population growth of 2.5% occurred from
2000 to 2007 in New England, which was below the national estimated growth rate
of 7.2%. Within New England, New Hampshire had by far the highest growth rate of
6.5% from 2000 to 2007. While the New England population accounts for only 4.7%
of the total U.S. population, New England’s GDP represents 5.4% of the country’s
total GDP; producing more GDP than their population’s share of the country and
illustrating the economic strength and diversity of this region.
New England possesses some of the wealthiest states in the U.S. Connecticut was
estimated to have the 2nd highest per capita real GDP of all the U.S. states in 2007
with US$51,911; Massachusetts ranked 4th with US$47,351. However, the state of
Maine, the lowest ranking of the New England states, was estimated to rank 42nd of
all the U.S. states with a per capita real GDP of US$30,282 for 2007. The Northeast
region was estimated to be one of the strongest regions in the U.S., with New York
and New Jersey ranking 3rd and 5th for per capita real GDP for 2007 of all the U.S.
The 2007 estimated median household income for New England was US$60,148,
significantly higher than the national median household income of US$50,740. Only
the two New England states of Maine and Vermont had a household median income
slightly lower than the national. While the New England region felt the national
economic slowdown impact the growth of state personal income in the third quarter
of 2008, growth remained positive for all the region’s states except for Rhode Island
(which ranked 30 of all the U.S.). New England remained one of the wealthier
regions of the U.S., with Massachusetts, Connecticut, and New Hampshire ranking
3rd, 6th, and 9th respectively for state personal income growth.
Due to the small geographic and population size of the New England states, the
region’s largest metropolitan areas remain fairly small in relation to other areas of
the U.S. However, some of New England’s metropolitan areas possess quite a high
per capita real GDP. According to the U.S. Department of Commerce, in 2006, per
capita real GDP in New England’s metropolitan areas varied from $26,176
(Springfield, MA) to $78,944 (Bridgeport-Stamford-Norwalk, CT); this was the
Overview of the New England Retail Grocery Market 5
highest per capita real GDP in the U.S. and 90% above the nation’s metropolitan
area average of $41,510. In 2006, real GDP grew in all but two New England
metropolitan areas. The majority of this growth was experienced where the finance
and industries are concentrated, which is in the southern parts of New England. The
fastest growing metropolitan area in New England was Bridgeport-Stamford-Norwalk
in Connecticut, which increased 4.9%. The Boston-Cambridge-Quincy area in
Massachusetts and New Hampshire is by far the largest metropolitan area in New
England, with a population of 4.5 million, growth of 3.6%, and economically ranking
as the 9th largest metropolitan area in the U.S. The table below lists the largest
metropolitan areas in the New England region, and illustrates the concentration of
the New England population in the region’s southern areas.
New England U.S. - Largest Metropolitan Areas (2007)
U.S. Population Growth
Metropolitan Area Population
Rank 2006 to 2007
13 Boston-Cambridge-Quincy, MA-NH 4.48 million 0.4%
46 Boston-Quincy, MA 1.86 million 0.4%
55 Providence-New Bedford-Fall River, RI-MA 1.60 million -0.2%
59 Cambridge-Newton-Framingham, MA 1.47 million 0.5%
67 Hartford-West Hartford-East Hartford, CT 1.19 million 0.3%
79 Bridgeport-Stamford-Norwalk, CT 0.90 million 0.1%
82 New Haven-Milford, CT 0.85 million 0.2%
89 Worcester, MA 0.78 million 0.2%
94 Peabody, MA 0.73 million 0.2%
102 Springfield, MA 0.68 million -0.1%
Source: US Census Bureau, 2007
The commercial fishing industry is a major economic force and employer in the
region and has a significant impact on diet and retail grocery offerings in New
England, particularly near the coastal areas. Like most industries, Massachusetts
possesses the largest industry within New England, but the economic impact of the
industry and its offshoots in other states is significant. For example, there are
currently 70,000 acres of shellfish farms under cultivation in the coastal waters of
Connecticut. The perception that the region enjoys a wide variety of fresh and local
fish and seafood is not taken lightly. These products and the region’s reputation have
a significant effect on the areas tourism industry. Fish and seafood is a prominent
part of the region’s culture and cuisine, and is abundantly present in food retail,
restaurants and foodservice establishments, particularly in Maine and Massachusetts.
Opportunities and Challenges
While the New England region represents a fairly small populous and economic
portion of the U.S., the region possesses a reasonably strong economy, particularly
when viewed as part of the overall Northeast region. The economic strength of the
Northeast region should help to somewhat lessen the impact of the economic
slowdown that is occurring in the U.S. and globally. However, the food industry is
experiencing increased pressure on food prices and keeping food costs down has
become a key priority. With a slower economy, low costs will play a more significant
role in building new trade relationships and exporting products to the U.S. The
decrease in the value of the Canadian dollar from 2007, in relation to the U.S. dollar,
will aid in decreasing the cost for U.S. companies wishing to import Canadian
products. As in other parts of the U.S., food consumption in the New England region
is also affected by an aging generation, smaller households, time pressures of dual-
income households, and growing demand for healthy meals.
Overview of the New England Retail Grocery Market 6
The geographic proximity of the New England region to the Canadian border presents
an opportunity for Canadian exporters; particularly those located in central and
eastern Canada, and is an enabler for building close trade relationships. Half of the
New England states (Maine, New Hampshire and Vermont) physically border Canada,
touching the provinces New Brunswick and Québec. This proximity to Canada is also
beneficial with regards to consumers being more likely to have similar lifestyles and
eating habits as Canadian consumers near the New England region.
The popularity of ethnic food in the U.S. has been growing due to the growth of
certain population segments and the fact that more consumers are more willing to
try different foods. Continued growth of the ethnic food market is expected as ethnic
food increasingly enters everyday diets and more companies choose to address the
needs of these ever-growing demographic segments. In 2007, New England’s
population was estimated to be comprised of 88.3% Caucasian, 7.8% Hispanic and
Latino, 6.4% Black and African American, and 3.6% Asian. While the New England
population is not as ethnically diverse as other parts of the U.S., the Hispanic and
Latino, Black and African American, and Asian populations are all experiencing
positive growth. The Northeast region also has a diverse population, with key
markets being Hispanic, Indian, and South Asian markets. These growing ethnic
populations combined with the fact that research has indicated that the majority of
ethnic food and beverages are consumed by Caucasian consumers in the U.S.
(Datamonitor, 2005), presents New England as a favourable market for ethnic food
and beverage.
There is a growing trend for locally sourced food items. However, the definition of
what constitutes ‘locally sourced’ food items is still being refined and can vary
significantly. Thus, this trend may actually provide an advantage to Canadian
exporters located within close proximity to the New England region, when competing
with international exporters and even other U.S. suppliers located a significant
distance from New England. The local food movement is gaining in popularity in New
England, with several grocery retail chains increasingly offering local products in
their stores.
The New England region is also a particularly promising market for health-related
trends and agri-food products, as all of the region’s states have fairly low obesity
rates and are ranked as some of the healthiest states in the nation. Not surprisingly,
one of New England’s main grocery retail chains, Stop & Shop based in
Massachusetts, was ranked as one of the greenest grocers in the U.S. in 2008 by
Progressive Grocer’s first Green Grocer Awards, while a new Star Market store in
Massachusetts promises to be a leader in sustainability (Progressive Grocer, 2008).
Growing consumer desire for healthy, natural, and organic food provides an
opportunity for Canadian exporters who can provide these products at a superior
quality. Canada’s geographic proximity and perception as having high quality foods
also provides another marketing advantage over other foreign food products,
particularly with regards to organic products. As the industry increases in
competitiveness, grocers have been using product offerings and variations to
compete, and have been increasing their array of healthy, natural and organic
products.
There is an abundance of seafood restaurants and foodservice establishments and
products available for retail sale, especially within Maine and Massachusetts. A
robust fishing industry, and a culture and cuisine that possess a strong seafood-base
further combine to make the New England region an opportunistic market for
Overview of the New England Retail Grocery Market 7
Canadian fish and seafood products. This potential is particularly evident when
considering that in 2008 just over half of Canada’s fish and seafood exports to the
U.S. were destined for the New England region, which is considered the “seafood
gateway” to the U.S. market. The difficulties of making a living off being a fisherman
in New England combined with shrinking stocks, have led to diminishing fishing fleets
in the region and an industry in search of increasing imports (Murphy, 2007).
New England - Canadian Trade
The New England region is a significant export market for Canadian agri-food
products as the region accounted for 6.8% ($1.2 billion) of Canada’s total agri-food
exports to the U.S. in 2007, and 7.1% ($1.4 billion) in 2008. While the New England
region is a relatively small part of the U.S., it represents an important region for
Canadian agri-food exports. For instance, the Southwest region of the U.S., with a
2007 population nearly three times the size of New England, only accounted for
4.9% ($848 million) of Canada’s agri-food exports to the U.S. The Southwest region
also has a 2007 GDP more than double the size of New England’s, however the New
England region still accounts for a larger portion of 2007 Canadian agri-food exports
to the U.S., and an even larger share in 2008.
Top agri-food exports to the New England region in 2008 were: chocolate
preparations (a value of $193.1 million or 13.6% of total exports to the region),
frozen prepared or preserved potatoes ($111.6 million or 7.9%), maple sugar and
maple syrup ($63.8 million or 4.5%), communion wafers ($53.2 million or 3.7%),
and canola oil ($48.3 million or 3.7%). While Canadian agri-food exports to New
England grew a mere 2.2% from 2005 to 2008, there was a significant decrease in
exports in 2006, which resulted in there being an increase in exports of 20.6% from
2007 to 2008. Some states in the New England region have been experiencing a
fairly significant growth rate, while others have experienced a decrease in Canadian
agri-food exports. Connecticut experienced the largest growth in exports from 2005
to 2008, with an increase of 62.6%. Vermont and Rhode Island followed with growth
of 23.5% and 18.3% respectively from 2005 to 2008, while New Hampshire had
minimal growth, and Maine and Massachusetts experienced a decline in Canadian
agri-food exports. However, all of the New England states experienced an increase in
Canada agri-food exports in 2008.
The three largest Canadian agri-food exporting provinces to New England account for
80.8% of Canada’s total agri-food trade to the region in 2008. Québec is the largest
agri-food exporter, with exports of $590.8 million accounting for 30.7% of total
Canadian agri-food trade to the region. Ontario was the second largest exporter
followed by New Brunswick, with exports of $436.6 million and $121 million
respectively, and representing 41.6% and 8.5% of total Canadian trade to New
England.
The vast majority of Canadian agri-food exports to New England in 2008 were
consumer exports, which totalled $1.1 billion. This represented 74% of total
Canadian agri-food exports to the region, with Canada’s consumer exports to New
England growing 18.1% in 2008. Main consumer export categories to New England in
2008 were: cocoa and cocoa preparations worth $218.1 million or 20.7% of Canada’s
total consumer exports to the region, preparations of vegetables, fruits and nuts
worth $138.5 million or 13.2%, preparations of grains and pasta at $130.2 million or
12.4%, edible vegetables, roots and tubers at $123.4 million or 11.7%, and meat
and edible meat offal worth $101.4 million or 9.6%.
Overview of the New England Retail Grocery Market 8
Despite an abundant commercial fishing industry, the New England region remains a
major destination for Canada fish and seafood exports. In 2008, the region
accounted for approximately half (52.3%) of Canada’s total fish and seafood exports
to the U.S. Four of the six New England states are among Canada’s top ten states for
fish and seafood exports. Massachusetts is the number one destination for Canadian
fish and seafood exports out of all the U.S. states, and represents 40.8% of Canada’s
total exports to the U.S., or $992.5 million. Maine ranks fifth with $126.4 million,
New Hampshire 8th at $86.6 million, and Rhode Island 10th with $33.3 million.
Connecticut ranked 12th with $31.6 million in Canadian fish and seafood exports,
while Vermont was 43rd with exports of $696,379. While Canada’s fish and seafood
exports to five of New England’s states decreased in 2008, exports to Massachusetts
increased by 9%, resulting in an increase of 4.4% for the total New England region.
Top Canadian fish and seafood exports to the U.S. in 2008 were farmed Atlantic
salmon, representing $412.9 million or 17% of fish and seafood exports to the U.S.,
frozen snow crabs at $341.1 million or 14.0%, frozen lobsters at $318.2 million or
13.1%, live lobsters at $277.7 million or 11.4%, and frozen lobster meat at $139.5
million or 5.7%.
The following table outlines the New England region’s respective importance to
Canadian agri-food exporters. Demographic, retail grocery market and trade profiles
are also highlighted.
New England Region - Importance to Canadian Agri-Food Exporters
Population Food and Beverage Agri-food
Canadian Agri-food
Population as Store Retail Sales Exports as
State/Region Exports to State
(2007) Percentage (2007) Percentage
(2008)
of Region of Region
Connecticut 3.5 million 24.5% US$8.2 billion $204.5 million 12.7%
Maine 1.3 million 9.2% US$3.3 billion $176.3 million 14.1%
Massachusetts 6.4 million 45.2% US$17.6 billion $527.1 million 39.5%
New Hampshire 1.3 million 9.2% US$4.9 billion $89.5 million 6.5%
Rhode Island 1.1 million 7.4% US$2.2 billion $36.8 million 2.7%
Vermont 0.6 million 4.4% US$1.8 billion $386.5 million 24.5%
New England 14.3 million 100.0% US$38.0 billion $1,420.7 million 100.0%
Total U.S. 301.6 million US$604.6 billion $19,938.7 million
Sources: Population Division, U.S. Census Bureau; Canadian Agri-food Trade System, The National
Databook, The Statistical Abstract, U.S. Census Bureau.
Regional Grocery Retail Sector and State Economies
In 2007, food and beverage store sales in New England totalled US$38 billion,
representing 6.3% of national food and beverage retail sales. This is a slightly higher
percentage than the national population which resides in New England (4.7%), which
may be a result of higher food prices, but is more likely due to the region’s wealthy
consumers and thus higher expenditure on groceries. While food and beverage store
sales actually decreased in Connecticut (-8%) and Maine (-12.1%) from 2004 to
2007, the remaining four New England states all experienced positive growth in this
sector. New Hampshire experienced the largest increase with growth of 34%,
followed by Vermont with 24.7%, Massachusetts with 17.5%, and Rhode Island with
15.6%. Combined, this led to an overall increase of 14.9% in food and beverage
store sales for the New England region from 2004 to 2008.
Overview of the New England Retail Grocery Market 9
Competition in the retail industry, and among grocery retailers, has become
increasingly intense throughout the U.S., and New England is no exception. As
competition has increased in the New England marketplace, larger chains have tried
to drive profits by introducing “superstores”, differentiating through diversifying
product range and focus, and entering wholesaling. As a result, some stores have
focused largely on natural and organic products, while others have implemented new
food areas to entice customers, such as gourmet food or pet departments. The
increasing presence of warehouse stores and wholesale clubs have also further
tightened market share in the industry (FundingUniverse).
The New England region possesses an abundance and diversity of grocery retailers,
with a competitive marketplace that includes both larger supermarket chains and
smaller local grocers. The New England region is also home to several successful
companies and chains in the retail industry, and regionally close to prominent
companies located in the Northeast. Ahold USA Inc. holds the sixth largest market
share of retail grocery companies in the U.S. and is headquartered in Massachusetts.
The company possesses the Super Stop & Shop and Stop & Shop retail grocery
brands, which ranked 11th and 13th for market share of all retail grocery brands in
2008 in the U.S. Stop & Shop is not only the largest food retailer in New England,
but also one of the leading retailers in the Northeast U.S., with 375 stores. Supervalu
Inc. also has a significant presence in New England and possessed the third largest
market share of all grocery retail companies in the U.S. in 2008. The company
operates two brands in the New England region, Shaw’s/Star Market and Save-a-Lot,
and is the second largest grocery group in the Northeast U.S., after the Stop & Shop
brand.
Of the supermarket chains that only have stores the within New England region,
Shaw’s/Star Market is the largest, with over 200 stores. The Save-a-Lot brand has a
total presence of 1,181 stores and was ranked as having the 9th largest market share
of retail grocery brands in the U.S. in 2008. Supervalu also operates two distribution
centers in New England, located in the states of Maine and Massachusetts.
DeMoulas/Market Basket is another retailer headquartered in New England, and
operating in Massachusetts and New Hampshire with a chain that comprises 59
stores. The company was ranked 45th in Supermarket News’ 2008 “Top 75 North
American Food Retailers”. Other main chains in New England include: Wal-Mart
stores including Sam’s Club and Supercentres with grocery sections, BJ’s Wholesale
Club, Hannaford Supermarkets, Shop Rite, Whole Foods Market, IGA, Price Chopper,
Big Y Foods, and several others. A list of main retailers in the New England region is
provided in the table below.
Several of the largest distributors/wholesalers in the U.S. also have a strong
presence in New England. SYSCO, ranked as the number one wholesaler in the food
and grocery industry in 2008, has food service locations in Rhode Island,
Massachusetts and Connecticut, with a SYSCO Food Services of Northern New
England in Maine. The second largest food wholesaler, C&S Wholesale Grocers, is
also based in the New England region in the state of New Hampshire and has
distribution centres located in Connecticut, Massachusetts, and Vermont. The
company has also been expanding operations with the recent purchase of grocer
Penn Traffic Co.’s wholesale business segment (Progressive Grocer, 2009).
Overview of the New England Retail Grocery Market 10
Main Grocery Retailers in New England
Main Retailers New Rhode
Connecticut Maine Massachusetts Vermont
in New England Hampshire Island
A&P √ (12)
ALDI √ (13) √ (1) √ (4) √ (1)
Big Y Foods √ (25) √ (30) HQ
BJ’s Wholesale
√ (11) √ (2) √ (20) HQ √ (6) √ (3)
Club
COSTCO √ (5) √ (6) √ (1) √ (1)
C-Town √ (12) √ (1) √ (1)
DeMoulas /
√ (34) HQ √ (25)
Market Basket
Grand Union
√ (1) √ (1) √ (6)
(Family Markets)
Hannaford
√ HQ √ √ √
Supermarkets*
IGA retailers √ (5) √ (6) √ (2) √ (3) √ (9) √ (1)
P&C Foods √ (1) √ (2)
Price Chopper √ (7) √ (14) √ (3) √ (14)
Price Rite √ (8) √ (15) √ (5)
Sam’s Club √ (3) √ (3) √ (3) √ (4) √ (1)
Save-a-Lot √ (7) √ (5) √ (7) √ (1) √ (5)
Shaw’s/
√ √ √ HQ √ √ √
Star Market*
Shop Rite √ (15)
Stop & Shop* √ √ √ HQ √ √
The Food
√ (2)
Emporium
Trader Joe’s √ (6) √ (16) √ (1)
Waldbaum's Food
√ (1)
Mart
Walmart
√ (5) √ (12) √ (7) √ (11) √ (11) √ (4)
Supercentres
Whole Foods
√ (7) √ (1) √ (19) √ (3)
Market
LEGEND: √ = presence in the state, HQ = Headquarters, (#) = number of stores present in the state
*Shaw’s / Star Market operates 201 stores in the New England region; Stop & Shop operates approximately
375 in the Northeast; Hannaford Supermarkets runs a total of 167 stores, which also includes the state of
New York.
Connecticut
2007 Population: 3.5 million, representing 1.2% of the total U.S. population
and ranking the state 29th in the nation. This represents 24.5% of New
England’s total population. From 2000 to 2007, the population grew 2.9%.
The state has eight counties, with the capital Hartford, and the largest city
Bridgeport with a population of approximately 139,008.
Overview of the New England Retail Grocery Market 11
Food and beverage retail sales in Connecticut in 2007 were US$8.2 billion,
representing 1.3% of total national food and beverage sales, and ranking the
state 24th in the nation.
2007 GDP: US$216.2 billion
Median household income estimated for 2007 was US$65,967, higher than the
U.S. median household income of US$50,740
In 2007, the state ranked 1st in the nation in personal income per capita in
current dollars (US$47,519)
Nursery and greenhouse products are Connecticut’s top crops, with other
main crop items including corn, forage, and vegetables.
Of all New England states, Connecticut has the highest value of floriculture
corps, and ranks number one in dairy production, nursery and greenhouse
sales, cut Christmas trees, number of horses, pear production, and tobacco
(USDA).
Canada’s agri-food exports to Connecticut noticeably grew 37.1% from 2007
to 2008, totalling $204.5 million in 2008, and accounting for 14.4% of
Canada’s total agri-food exports to New England.
In 2008, top agri-food exports from Canada to Connecticut were: whiskies
($34.3 million or 16.8% of total exports to Connecticut), potatoes prepared or
preserved, frozen ($24.9 million or 12.2%), chocolate and other food
preparations containing cocoa ($16.3 million or 8%), beer made from malt
($15 million or 7.3%), and communion wafers ($8.7 million or 4.2%).
Of the New England states, several grocery chains only have a presence in
Connecticut, these are: A&P, The Food Emporium, and Waldbaum’s Food
Mart. However, these brands also have a presence in the more prominent
states in the Northeast: New York and/or New Jersey.
Connecticut, along with New York, is also the home to the origins of IGA,
where the Independent Grocers Alliance first formed among independent
retailers in 1926. There are still more than 20 stores under the IGA banner
operating in the New England region, with Bob’s Windham IGA in Connecticut
receiving one of three 2009 IGA USA Retailer of the Year awards (IGA, 2009).
Maine
2007 Population: 1.3 million, representing 0.4% of the total U.S. population
and ranking the state 40th in the nation. This represents 9.2% of New
England’s total population. From 2000 to 2007, the population grew 3.3%.
The state has eight counties with the capital Augusta, and the largest city
Portland with a population of 62,249.
Food and beverage retail sales in Maine in 2007 were US$3.3 billion,
representing 0.5% of total national food and beverage sales, and ranking the
state 38th in the nation.
2007 GDP: US$48.1 billion
Median household income estimated for 2007 was US$45,888, slightly lower
than the U.S. median household income of US$50,740.
In 2007, the state ranked 37th in the nation in personal income per capita in
current dollars (US$30,808)
Maine’s economy is moving towards being less manufacturing based and
more service-based. However, natural resources such as farming still play an
important role in the economy.
Maine is the largest producer of brown eggs in the U.S., a leader in dairy, and
ranks 2nd for maple syrup and 8th for fall potato production. There is also a
vibrant and diverse organic farming sector (USDA).
Overview of the New England Retail Grocery Market 12
Canada’s agri-food exports to Maine grew 5.8% from 2007-2008, totalling
$176.3 million in 2008, and accounting for 12.4% of Canada’s total agri-food
exports to New England.
In 2008, top agri-food exports from Canada to Maine were: potatoes prepared
or preserved, frozen ($49.2 million or 27.9% of total exports to Maine),
animal feed preparations ($20.3 million or 11.5%), edible animal or vegetable
fats & oils ($18.4 million or 10.4%), plants, live, nes and mushroom spawn
($17.6 million or 10%), and fresh cranberries, bilberries and other fruits of
the genus Vaccinium ($10.3 million or 5.9%).
Hannaford Supermarkets is a Northeastern region chain with a headquarters
in Scarborough, Maine. Hannaford Bros. Co. of Hannaford Supermarkets also
operates two distribution centres out of the state of Maine.
Supervalu has a strong presence in New England and is the second largest
grocery group in the Northeastern U.S., with its grocery chains Shaw’s/Star
Market and Save-a-Lot. The company also has a distribution centre located in
Maine.
Massachusetts
2007 Population: 6.4 million, representing 2.1% of the total U.S. population
and ranking the state 13th in the nation. This represents 45.2% of New
England’s total population. From 2000 to 2007, the population grew 1.59%.
The state has 14 counties, and the capital and largest city is Boston with a
population of 589,141.
Food and beverage retail sales in Massachusetts in 2007 were US$17.6
billion, representing 2.9% of total national food and beverage sales, and
ranking the state 9th in the nation.
2007 GDP: US$351.5 billion
Median household income estimated for 2007 was US$62,365, higher than
the U.S. median household income of US$50,740.
In 2007, the state ranked 3rd in the nation in personal income per capita in
current dollars (US$43,702)
Massachusetts is not a large agricultural-based state; however main crops are
greenhouse and nursery products, as well as horticultural products,
cranberries, dairy, apples, corn, and potatoes (USDA).
Canada’s agri-food exports to Massachusetts increased 13.4% from 2007-
2008, totalling $527.1 million in 2008, and accounting for 37.1% of Canada’s
total agri-food exports to New England.
In 2008, top agri-food exports from Canada to Massachusetts were: potatoes
prepared or preserved, frozen ($35.2 million or 6.7%), mixes and doughs for
the preparation of bakers’ wares ($34.3 million or 6.5%), communion wafers
($33.2 million or 6.3%), canola, colza oil and its factions ($32.2 million or
6.1%), and roasted coffee not decaffeinated ($31.1 million or 5.9%).
Not surprisingly, of all the New England states, Massachusetts is the location
for by far the most grocery retail chain headquarters. Several of the grocery
retailers present in New England and based in Massachusetts are Big Y Foods,
BJ’s Wholesale Club, DeMoulas/Market Basket, Shaw’s/Star Market and Stop
& Shop.
Shaw’s/Star Market’s owner, Supervalu, also has a distribution centre in
Massachusetts.
Ahold USA Inc. is also headquartered in Massachusetts and operates the Stop
& Shop brand in the Northeast region, with a distribution centre in
Massachusetts. The company also possesses the sixth largest company share
Overview of the New England Retail Grocery Market 13
of grocery retailers in the U.S., and was ranked eighth in Supermarket News’
top 75 North American Food Retailers in 2008.
The Stop & Shop banner is particularly strong in the Boston region, with 73
locations, and has increased their share in the past year to 23.1% of the
grocery market through intensive price cuts (Supermarket News, 2009).
New Hampshire
2007 Population: 1.3 million, representing 0.4% of the total U.S. population
and ranking the state 41st in the nation. This represents 9.2% of New
England’s total population. From 2000 to 2007, the population grew 6.4%,
ranking the state 18th in the nation.
The state has ten counties, with the capital Concord, and the largest city
Manchester with a population of approximately 107,006.
Food and beverage retail sales in New Hampshire in 2007 were US$4.9 billion,
representing 0.8% of total national food and beverage sales, and ranking the
state 31st in the nation.
2007 GDP: US$57.3 billion
Median household income estimated for 2007 was US$62,369, higher than
the U.S. median household income of US$50,740.
In 2007, New Hampshire ranked 6th in the nation in personal income per
capita in current dollars (US$37,835)
Main commercial crops are greenhouse and nursery products, Christmas
trees, and apples, with dairy accounting for roughly 1/3 of the state’s farm
income (USDA).
Canada’s agri-food exports to New Hampshire increased 16.2% from 2007-
2008, totalling $89.5 million in 2008, and accounting for 6.3% of Canada’s
total agri-food exports to New England.
In 2008, top agri-food exports from Canada to New Hampshire were: maple
sugar and maple syrup ($28.2 million or 31.5% of total exports to New
Hampshire), swine cuts, fresh or chilled ($16 million or 17.8%), bovine cuts
boneless, fresh or chilled ($6.5 million or 7.3%), beer made from malt ($2.9
million or 3.2%), and tomatoes, fresh or chilled ($2.7 million or 3.1%).
C&S Wholesale Grocers, the second largest food wholesaler in the U.S. and
providing distribution services to both independent stores and grocery chains,
is based in New Hampshire.
Associated Grocers of New England, which has grown by over $100 million in
sales in the past decade, also operates from a 380,000 square foot
distribution centre located in New Hampshire.
New Hampshire is predicted to face a significant shortfall in the 2009 budget,
with estimates ranging from $200-$400 million.
There have also been some increases that have affected the food industry,
most notably, an increase in tobacco tax and the wholesale price of wines.
Rhode Island
2007 Population: 1.1 million, representing 0.4% of the total U.S. population
and ranking the state 43rd in the nation. This represents 7.4% of New
England’s total population. From 2000 to 2007, the population grew 0.9%.
The state has eight counties, and the capital and largest city is Providence
with a population of approximately 173,618.
Food and beverage retail sales in Rhode Island in 2007 were US$2.2 billion,
representing 0.4% of total national food and beverage sales, and ranking the
state 44th in the nation.
2007 GDP: US$46.9 billion
Overview of the New England Retail Grocery Market 14
Median household income estimated for 2007 was US$53,568, slightly higher
than the U.S. median household income of US$50,740.
In 2007, Rhode Island ranked 17th in the nation in personal income per capita
in current dollars (US$35,219)
Potatoes are Rhode Island’s main agricultural crop, along with milk,
greenhouse and nursery products (USDA).
Canada’s agri-food exports to Rhode Island experienced noticeable growth of
16.2% from 2007-2008, totalling $36.8 million in 2008, and accounting for
2.6% of Canada’s total agri-food exports to New England.
In 2008, top agri-food exports from Canada to Rhode Island were: canola,
colza oil and its fractions ($12.6 million or 34.2% of total exports to Rhode
Island), maize (corn) oil and its factions ($3.4 million or 9.2%), communion
wafers ($2.4 million or 6.6%), potatoes, fresh or chilled ($2 million or 5.5%),
and swine cuts, fresh or chilled ($1.4 million or 3.8%).
Vermont
2007 Population: 0.6 million, representing 0.2% of the total U.S. population
and ranking the state 49th in the nation. This represents 4.4% of New
England’s total population. From 2000 to 2007, the population grew 2%.
The state has fourteen counties, with the capital Montpelier, and the largest
city Burlington with a population of approximately 38,889.
Food and beverage retail sales in Vermont in 2007 were US$1.8 billion,
representing 0.3% of total national food and beverage sales, and ranking the
state 47th in the nation.
2007 GDP: US$24.5 billion
Median household income estimated for 2007 was US$49,907, approximately
the same as the U.S. median household income of US$50,740.
In 2007, Vermont ranked 25th in the nation in personal income per capita in
current dollars (US$32,731).
Geographically, Vermont is one of the smallest states in the U.S.
Vermont is a huge maple syrup producer, while dairy is another main
agricultural focus. Other main products include honey, corn, hay, greenhouse
and nursery products, and Christmas trees (USDA).
Canada’s agri-food exports to Vermont experienced significant growth of
33.9% from 2007-2008, totalling $386.5 million in 2008. While Vermont has
by far the smallest population and GDP of the New England states, it accounts
for the 2nd largest portion (27.2%) of Canada’s total agri-food exports to New
England.
In 2008, top agri-food exports from Canada to Vermont were: chocolate and
other food preparations containing cocoa ($192.5 million or 49.8% of total
exports to Vermont), maize (corn) ($28.6 million or 7.4%), maple sugar and
maple syrup ($27.8 million or 7.2%), rape/colza seed oil-cake and o solid
residue ($19.3 million or 5%), and animal feed preparations ($13.2 million or
3.4%).
Retail Grocery Market Overview
Supermarkets
Supermarkets are the largest segment of the retail grocery market and are
dominated by chains. American consumers prefer these outlets due to their wide
selection, convenient locations and longer hours of operation (Euromonitor, 2008).
Overview of the New England Retail Grocery Market 15
In fact, Americans believe that supermarkets offer the best selection of products
they need to maintain their health (FMI, 2008). Faced with increased competition
from large mass merchandisers (e.g. Walmart Supercenter and SuperTarget which
offer one-stop shopping solutions and everyday low prices for a broad selection of
groceries) and other major segment leaders, supermarkets continue to remodel
stores and enhance product offerings to improve consumers’ shopping experiences.
While supermarkets had heavily focused on expanding their non-food offerings, in
order to compete with mass merchandisers, over the past several years, this trend
now seems to be reversing as food products reclaim lost shelf space in many outlets.
Supermarkets dominate the U.S. retail grocery sector; sales reached
US$411.8 billion in 2007 comprising 43% of the market, a 15% increase over
2004.
Chain supermarkets makeup 94% of total supermarket sales, while
independent grocers account for the remaining 6%.
Supermarkets are staying competitive by offering private label lines. Recent
industry estimates suggest that private label products offer 10% to 15%
higher margins than those of national brands, and that store brands can
account for 15% to 25% of total store sales (Euromonitor, 2008).
Supermarket gas stations have also helped retailers generate more store
traffic. It is estimated that more than half of American consumers purchase
gasoline at supermarket gas bars (Food Marketing Institute, 2008).
Kroger is the largest supermarket chain in the U.S. with an approximate 18%
market share, followed by Safeway (11%), Albertsons (8%), Publix (7%) and
Food Lion (6%) (Euromonitor, 2008).
The U.S. was home to 45,581 supermarkets in 2007.
Convenience Stores
Having traditionally relied on tobacco and gasoline sales as primary traffic-builders,
convenience stores have transformed themselves into “grab-and-go” outlets to meet
consumer demand for prepared convenience goods. With supermarkets, mass
merchandisers and warehouse clubs increasingly selling gasoline, and consumers
turning to lower-priced competitors for tobacco products, the convenience store
segment faces considerable competition. To overcome this obstacle, convenience
stores are remodelling and tailoring their product offering to meet local demand.
Many outlets now offer a variety of healthy and portable prepared food. Refrigerated
coolers that house perishable food are also being added to drive sales.
One large convenience store chain that is remodelling to remain competitive and
better meet consumer needs is Valero Corner Stores. Valero Corner Stores unveiled
its first store under its new Road Runner banner in late 2007 in San Antonio, Texas.
The store offers its Fresh Choices label, which includes fresh foods, snacks, soft
drinks, spring water, vitamin water and teas. These new products aim to meet
demand for convenient, fresh and ready-made products. There are over 1,000
Valero Corner Stores across the U.S., all of which will be remodelled and refurbished
and take on the Road Runner name.
An additional factor affecting convenience store sales is the increased availability of
pay-at-the-pump options for purchasing gasoline. Gas is the main draw for
consumers at many convenience stores, and with the option of paying at the pump
the need to go into a convenience store is lessening, and therefore drastically cutting
into traditional impulse buys. A number of chains continue to drive in-store customer
traffic by offering snack or meal promotions, as well as by incorporating popular
Overview of the New England Retail Grocery Market 16
foodservice chain “express” kiosks (e.g. Jack in the Box, Dunkin Donuts) or
entertainment.
The country’s 146,294 convenience stores generated US$308.8 billion in sales
(not including gas) in 2007.
Ten per cent of Americans purchase a food product from a convenience store
every two weeks.
Approximately 80% of convenience stores offer food prepared on-site.
Sandwiches, pizza, chicken, hamburgers and Mexican food are the most
popular menu options at foodservice kiosks in convenience stores.
7-Eleven is the largest convenience store chain in the U.S. with an
approximate 4% market share, followed by Alimentation Couche-Tard’s Circle
K banner (2%), Shell Oil Co’s Shell Shop banner (1.4%), BP America Inc’s
Amoco FoodMart banner (1.3%) and Marathon Oil Co’s Speedway
SuperAmerica banner (1.3%) (Euromonitor, 2008).
Although gas station convenience stores dominate the market, nearly 84% of
the segment’s market share was accounted for by other convenience store
retailers, the majority of which are non-chain stores (Euromonitor, 2008).
The top 10 selling convenience store products (excluding fuel) include
cigarettes, non-alcoholic bottled beverages, beer, foodservice products, other
tobacco, candy, salty snacks, general merchandise, milk and packaged sweet
snacks.
Within New England, three major convenience store-related companies have recently
formed a new partnership. Manchester Wholesale Distributors (MWD) of New
Hampshire, which services convenience stores and the foodservice industry, has
agreed to sell assets to AG New England, who has recently expanded their division
that specializes in servicing convenience stores. AG New England will also ally with J.
Polep Distribution Services to help provide service to MWD’s convenience stores. The
New England Convenience Store Association (NESCA) also hosts an annual Trade
Show Convention for the industry (The Griffin, 2009).
Mass Merchandisers
While retail grocery market leaders are experimenting with new smaller-format
stores, mass merchandiser-type outlets remain extremely popular with consumers as
many offer one-stop shopping solutions. Mass merchandisers continue to challenge
the supermarket segment for grocery sales by expanding their food selections;
offering competitive, everyday low-prices; and opening new outlets. In fact, many of
such retailers are increasingly converting into supercentres that offer a wide
assortment of grocery items and an in-store pharmacy, along with typical mass
merchandiser products. With their key competitive advantage being aggressive
pricing, and consumers increasingly looking to complete all of their shopping in one
location, mass merchandisers’ market share was valued at 15% or US$141.7 billion
in 2007.
The country’s 3,038 mass merchandiser outlets generated US$141.7 billion in
sales in 2007.
Approximately 31% of a mass merchandiser’s outlet is allocated to grocery
items (Euromonitor, 2008).
Grocery sales remain an important part of mass merchandisers’ business;
major retailers, such as Wal-Mart Supercenter and SuperTarget continue to
improve their private label offerings to increase profit margins (Euromonitor,
2008).
Overview of the New England Retail Grocery Market 17
Wal-Mart Supercenter dominates the segment with an approximate 78%
market share, followed by Meijer (6%), SuperTarget (6%), Ahold USA Inc’s
Super Stop & Shop banner (5%), and Kroger Co’s Fred Meyer Stores banner
(2%) (Euromonitor, 2008).
Warehouse Clubs
Warehouse clubs are an important player in the U.S. retail grocery market as they
offer high quality food products and regular merchandise in large package formats at
low prices. This segment is a strong competitor for mass merchandisers and
supermarkets that offer club-pack sizes. In fact, a number of supermarket retailers
have expanded their offerings to include value or club-pack aisles to attract shoppers
that regularly purchase multipacks. Warehouse clubs are also well known for their
“treasure hunt” appeal; shoppers must search aisles for limited-time bargains that
are not advertised. Although such outlets have a more limited and variable selection
of products, they offer competitive pricing for multipacks which appeal to high-
volume buyers.
In order to remain competitive, many warehouse clubs have expanded their product
offerings in recent years, particularly fresh food selections and store brand product
lines. Costco, the segment leader, has especially benefited from such developments
and positioning itself as an upscale discounter in recent years. The retailer offers a
wide range of high quality merchandise, fresh food and a large private label line,
Kirkland. Costco also marks-up products no more than 14%, in comparison to the
25% mark-up standard in the supermarket category, which gives the retailer a
competitive edge (Euromonitor, 2008).
Sam’s Club, the second-largest wholesaler in sales terms, but first in the number of
outlets, is currently expanding its “affordable luxuries” offerings, with focus on
gourmet food and wine (Euromonitor, 2008). As a Wal-Mart subsidiary, Sam’s Club
benefits from large economies of scale, a strong distribution network and real estate
expertise; however, many outlets tend to be situated in rural areas, whereas, Costco
targets more urban consumers.
The country’s 1,152 warehouse club outlets generated US$101.5 billion in
sales in 2007.
Costco, Sam’s Club and BJ’s Wholesale Club (which only operates in the
eastern U.S.) dominate the segment, having accounted for roughly 94% of
national wholesale club sales in 2007 (Euromonitor, 2008).
More than half of Americans shop at warehouse clubs.
Grocery sales account for approximately one-third of warehouse club sales;
top selling goods include dairy, meat, produce and ready-made meals.
New England’s main warehouse club retailers are Sam’s Club and Costco, with
14 and 13 stores in the region respectively.
Dollar Stores
Dollar store retailers have revitalized themselves over the past decade with better
quality merchandise and increased product variety, resulting in large channel growth.
More recently, there has been a shift toward adding food aisles and convenience
goods to increase sales. Many retailers are adding refrigerated and/or frozen food
sections for fresh produce and frozen, ready-meals, positioning dollar stores as one
of the main threats to traditional grocery retailers. Dollar General, for example,
recently launched its Super Dollar General concept in addition to its Dollar General
Overview of the New England Retail Grocery Market 18
Market banner, both of which sell a greater selection of grocery items and are similar
to Wal-Mart Supercenters, but on a much smaller scale. Large national retailers from
other channels, such as Wal-Mart, Target, Kroger, Albertsons and Walgreens, are
also trying to benefit from dollar store sales by experimenting with dollar store aisles
in their stores.
However, current economic conditions in the U.S. along with rising commodity prices
are making it difficult for the few remaining true “dollar” stores to maintain their
traditional pricing strategies. 99 Cents Only, for example, had experimented with
selling reduced quantities of packaged food, such as six-packs of eggs and smaller
milk cartons, and stopped stocking products like peanut butter and cooking oil on an
regular basis to try and cope with rising food prices. After recently reporting its
second consecutive quarterly loss, the industry giant implemented its first ever
pricing strategy change in September 2008, increasing its top price to 99.99 cents —
nearly a one cent increase per item. 99 Cents Only also announced that it is closing
its 48 stores in Texas to better focus on core markets, California, Arizona and
Nevada.
As retailers such as Target and Costco make bargain hunting trendy, dollar stores
have increasingly become frequented by upper-income households along with their
main consumer segment of low- to middle-income families. In fact, store growth
within the dollar store channel is unparalleled by any other retailer. Top dollar store
chains, including Dollar General, Family Dollar, and Dollar Tree, Fred's and 99 Cents
Only, have added more than 5,900 new outlets since 2001. For more detailed
information on this retail segment, consult the Overview of the Retail Dollar Store
Market in the United States report on the Agri-Food Trade Service Web site at
http://www.ats.agr.gc.ca/us/4356_e.htm.
The dollar store segment was estimated at US$27.5 billion in 2005, a 9%
increase over 2004.
As of 2006, over 19,000 dollar stores were operational, a large increase from
the 5,458 that existed in 1996. In 2006 alone, the dollar store channel
increased its total store count by 1,100. More than 8,000 new outlets are
expected to open by 2010.
While there are over 800 dollar store companies in the U.S., the top five
dollar store chains, Dollar General, Family Dollar, Dollar Tree, Fred's and 99
Cents Only, saw combined sales of US$22.4 billion in 2006 and represented a
little more than two-thirds of total dollar store channel sales.
New England’s major dollar store retailers include Family Dollar and Dollar
Tree. The large chain, Dollar General, is present only in New England’s
Vermont state.
In 2006, 65% of American households shopped at dollar stores, up from 55%
in 2000.
Candy and snacks ranked in the top 10 selling products category at dollar
stores in 2004, i.e. first and seventh place, respectively.
Annual household trips to dollar stores grew to 12 outings in mid-2006 from
an average of 10 in 2000.
The average basket size of a trip to the dollar store grew to US$13 in mid-
2006 from US$11 in 2000.
Store Redesigns
A number of significant trends are currently impacting the U.S. retail grocery market.
Perhaps one of the largest developments is the vast number of retailers across all
Overview of the New England Retail Grocery Market 19
grocery segments that are revamping their outlets and businesses to provide better
product selections and store designs, as well as “greener” operations. Market leaders
are developing energy efficient buildings, and adopting greener business practices
from the production process through to distribution and at the retail store level. For a
detailed look at how the green trend is impacting the retail grocery market, consult
Going Green: The Future of the Retail Food Industry report on the Agri-Food Trade
Service Web site at http://www.ats.agr.gc.ca/us/4531-eng.htm.
With New England’s status as one of the healthier regions in the U.S., it is not
surprising that retailers in the region are also some of the greenest grocers in the
nation. Supervalu’s latest Star Market store in Massachusetts is expected to be a
cutting-edge supermarket using innovative and sustainable technology, and the first
New England supermarket to use fuel cell electricity, LED lighting, and glycol/carbon
dioxide refrigeration. Stop & Shop has received the John A.S. McGlennon
Environmental Award for Corporate Leadership for the Environmental Business
Council of New England, and was one of ten recipients of Progressive Grocer’s first
“Green Grocer Awards” of 2008. The supermarket was also the first chain and
company in the U.S. to earn LEED certification for a large volume of its existing
buildings (Progressive Grocer, 2008). Westport was the first town in Connecticut to
ban the use of plastic checkout bags in all of its retail stores.
Retailers are also enhancing store layouts and merchandising to make it easier and
more inviting for consumers to shop at their outlets, as well as boost sales.
The American grocery retailer Piggly Wiggly, for example, recently launched its first
new concept store tailored to how consumers intuitively shop. Shoppers can now find
all fresh, frozen and canned fruit and vegetables in one section; bread, cereal, milk,
peanut butter and jam all within one location; and cross-merchandising throughout
the store that offers consumers quick, complete meal solutions (e.g. a display with
sausages, buns, fresh corn and beer). The store also features a convenient meal
assembly centre (i.e. Dream Dinners, a meal preparation outfit that helps consumers
make up to four weeks of freezer- and oven-ready dinners at a time); Starbucks
outlet; a warm, “home-like” feel with its hardwood flooring, soft lighting and open
floor plan; and environmentally-friendly features. Piggly Wiggly is currently not
present in the New England, but the company’s strategy may impact other retailers
present in the region who desire to follow their lead.
Safeway has also been converting its locations into Lifestyle concept stores over the
past several years. Having opened its 1,000th Lifestyle store in November 2007,
Safeway’s new formats represent roughly 60% of the retailer’s store count and offer
an array of high quality prepared food, organic and natural products and expanded
grocery selections tailored to local tastes. Depending on the local market, Lifestyle
stores feature a gelato station, sushi bar, fresh nut counter, wine selection with over
2,000 varieties, and even shopping carts with drink holders for those outlets that
house a Starbucks kiosk.
In the New England region, Massachusetts based Stop & Shop is undergoing a three-
year makeover of its store base. This makeover will include a variety of redesigned
features such as revamped logos, staff uniforms, product selections, and in-store
technologies (Progressive Grocer, 2009).
Smaller-Format Convenience Segment
One of the most recent trends to greatly impact the American retail grocery market
is the development of smaller-format stores that focus on high quality, fresh and
Overview of the New England Retail Grocery Market 20
convenient food. As mass merchandisers and supermarkets are increasingly seen as
impractical for quick shopping trips, a number of retailers are beginning to
experiment with new smaller-format outlets to capitalize on the consumer trend for
healthier and easier meal solutions in a convenient shopping format. Although new to
the American market, this concept has seen great success in the United Kingdom,
where market leader Tesco now operates some 700 of such convenience stores, and
continues to open an additional 50 outlets annually (Business Monitor International,
2008).
Tesco rolled-out its Fresh & Easy Neighborhood Market banner in the U.S. in
November 2007, and has since opened 62 outlets across Arizona, California and
Nevada. The banner offers healthy and convenient products at affordable prices. An
additional 140 store openings are projected from July 2008 to February 2009, for an
estimated 800 outlets by 2012. While the Fresh & Easy Neighborhood Markets have
yet to reach the New England region of the U.S., they will likely have an influence on
the retail grocery market in the future.
Wal-Mart is also launching a convenience store-sized market concept. Industry
experts have suggested that the new Marketside banner is in response to Tesco’s
rollout of Fresh & Easy Neighborhood Markets. Due to Wal-Mart’s economies of scale
and real estate expertise, these new stores will likely have a significant impact on
the competitive landscape of the American grocery industry and the convenience
store segment. Although the first Marketside stores will not be located in New
England, Wal-Mart has a number of other retail store formats present in the region.
Thus, an expansion of Marketside into New England in the future is not unlikely.
Supermarket giant, Safeway, is also testing the convenience market by launching
the Market by Vons banner, a smaller-format grocery store, through its Vons
subsidiary. The first “test” outlet was opened in Long Beach, California, in May 2008;
three other outlets are slated to open over the next year. If successful, Safeway
plans to rollout as many as 50 Market by Vons stores annually in neighbourhoods
that cannot support full-size supermarkets. Safeway does not currently have a
presence in the New England region; however this grocery giant has a strong
influence on trends in the industry.
Although retail grocery giants such as Tesco, Wal-Mart and Safeway see great
potential in developing smaller-format, convenience grocery outlets, some industry
experts caution that the concept may not enjoy the same success as it has in the
United Kingdom. Given that the U.S. has a smaller population concentration than the
United Kingdom, the convenience format may only be as popular in large urban
areas where consumers are more likely to walk to local retailers for their groceries
(Business Monitor International). Furthermore, most Americans drive to retail
grocers, especially mass merchandisers for one-stop shopping; therefore, the appeal
of smaller, limited-assortment grocers may be limited (Business Monitor
International).
However, given the current economic situation in the U.S. (which is projected to last
up to 18 months in many areas of the country), Americans are not driving as far as
they once did to make staple purchases. Therefore, the industry’s return to a certain
level of smaller, local grocery formats may fill a key niche. In fact, large, successful
chain stores, such as Costco and Wal-Mart, may even see some of their price
advantage eaten away by a lack of proximity to consumers, particularly in large
urban areas. Early indicators of consumer behaviour have shown that consumers
Overview of the New England Retail Grocery Market 21
may not be willing to drive “the extra mile” to shop for groceries at lower prices, at
least for the foreseeable future. Regardless of whether a retailer is designed for
walk-in traffic or not, new, fresh-looking retail formats offering high quality products
“in the neighbourhood” could see an increase in business simply based on rising fuel
costs.
Current Economic Conditions
The current economic downturn in the U.S., intensified by higher energy and food
prices, a drop in consumer confidence, and a weakened housing market, is affecting
how shoppers spend their money, particularly on groceries. Industry analysts have
noted that basket sizes are increasing but trips to retail grocers are declining, as
consumers continue to look for bargains and stretch their dollars, a sign that rising
fuel prices are also beginning to take a toll on consumers’ wallets. Current statistics
estimate that consumers will make less than two grocery trips per week in 2008,
down from an average 2.2 outings in 2005.
Americans are making subtle but impactful changes to their shopping patterns, such
as opting for white meat instead of red; swapping a restaurant meal for a frozen,
ready-made meal at home; buying private label products in place of premium goods;
using coupons more often; and purchasing “club-pack” sized products. Warehouse
club retailers, such as Costco, are also reporting increased sales as consumers turn
to more cost-effective shopping formats. The retailer saw US$6.5 billion in net sales
in the five weeks ending April 6, 2008, an 11% increase over the same period in
2007, as well as US$41.3 billion in year-to-date net sales ending April 6, 2008, a
12% increase over 2007 totals.
It is also important to note that there was a noticeable push within the American
consumer segment to prepare and eat more meals at home prior to the current
economic downturn. Although some may have viewed this trend as an early indicator
of the coming economic slowdown, it still holds true that Americans are increasingly
preparing meals and dining at home, supported by the idea of maintaining healthier
diets. The economy’s performance has since increased the attractiveness of cooking
and eating at home, on a number of levels, to a greater number of consumers.
Findings from the Food Marketing Institute’s (FMI) U.S. Grocery Shopper Trends
2008 report greatly reflect these market trends. Roughly 71% of Americans are
dining at restaurants less often in favour of cooking at home, and the average
number of family meals eaten at foodservice establishments has dropped to 1.2
times per week, down from 1.3 outings in 2007 and 1.5 occurrences in 2006 (FMI,
2008). Furthermore, 67% of consumers are purchasing less premium food, while
60% report buying more store brand products; not surprisingly, 58% of Americans
state they are consuming more leftovers (FMI).
The retail grocery segment has quickly responded to the economic downturn with a
number of special programs to encourage consumer spending at their outlets. Major
retailers are offering more promotions and discounts, enhancing store
merchandising, and pushing fresh food sales (due to current demand for healthier
products) to boost sales.
The Kroger Co., for example, recently launched a gift card program to help cash-
strapped shoppers manage rising energy and food costs. Available throughout all of
Overview of the New England Retail Grocery Market 22
the company’s banners, the promotion allows shoppers to transfer the value of their
economic stimulus cheque onto a Kroger gift card that is topped up with an
additional US$30 to US$120, depending on the value of the government-issued tax
rebate. The program, which ran from May through July 2008, was also open to
consumers who did not receive tax rebates with the purchase of a gift card. Wal-Mart
was another retailer who followed suit and experienced a net sales increase in June
2008 of 11.5% to $39.9 billion to the government’s economic stimulus payments.
Having heavily focused on expanding their private label offerings over the past few
years, many retail grocers are now also well-positioned to offer Americans
considerable savings through their high quality store brand products. Almost 99% of
retailers offer private label food, of which roughly 65% sell multiple tiers (i.e. basic
to premium store brand goods) that target various consumer segments (FMI).
Retail grocers have raised the prices of many food products over the past several
months in an effort to combat the higher prices manufacturers are charging; that is
despite efforts to delay the increases. Inflation reached 5% in June 2008, the highest
rate in the U.S. since 1991, and has most affected manufacturers who paid an
additional 14% to 70% for bulk, intermediate and consumer-ready products from
April to June 2008. Manufactures have since passed much of these increases on to
retailers. Industry experts continue to debate exactly when the next wave of product
price increases will be introduced at the retail grocery level. Many grocers are taking
a “wait and see” approach to raising their prices, as they want to be the last retailer
to do so, more price hikes are inevitably on the way.
According to the National Retail Federation’s economic forecast for 2009, retail
industry sales are expected to decline 0.5% from 2008. Customers are expected to
stretch their purchasing power by looking for value and trading down to discount and
off-price retailers. Sales are expected to continue to weaken for the first half of the
year, with slight improvements beginning to appear in the latter half (NRF, 2009).
National Consumption Trends and Opportunities
Healthier Options
As the number of Americans with health problems and/or a general concern for living
a healthy lifestyle grows, dietetic, better-for-you, functional, and high quality
products are projected to see strong growth. Retailers continue to introduce products
with reduced fat, sugar and salt content; added vitamins, herbs or nutraceuticals;
and those that are portion-controlled or cholesterol-, gluten- and lactose-free. With a
number of consumers turning to healthier and more affordable meals at home,
product opportunities will continue to grow for manufacturers. In fact, 91% of
Americans are reporting that they eat healthier at home in comparison to dining out
(FMI). Therefore, combined with burgeoning demand for convenience products, this
trend should create more market opportunities for healthier ready-made meals (e.g.
fresh, better-for-you, functional and premium prepared meals).
The New England region is a particularly promising market for health-related trends
and agri-food products, as all of the region’s states have a very low to moderate
obesity rate relative to other states. In a 2008 U.S. ranking of the healthiest states,
all of the six New England states also ranked within the top 11, with Vermont ranked
as the healthiest state in the U.S.
Overview of the New England Retail Grocery Market 23
Whole Foods Market, based in Austin, Texas, is a retail grocery chain that is
capitalizing on this health trend. Whole Foods Market is the largest retailer of natural
and organic foods worldwide, with over 270 stores in North America and the United
Kingdom, including 30 stores in the New England region. This grocery retailer
specializes in high-quality natural food products, featuring many items that are free
of artificial preservatives, colors, flavours, sweeteners, and hydrogenated fats. Many
stores also offer prepared meals, catering services and cooking classes.
Hannaford Supermarkets, based in Maine, has a “Guiding Stars” nutrition rating
system, which is acclaimed and has grown extensively. The system has since
expanded to other countries as well as outside of the traditional grocery channel,
such as with schools, food manufacturers, etc (Progressive Grocer, 2009).
Larger-Sized Formats
The trend toward healthy eating in the U.S. is significant, but it fails to offset the
traditional perceived value and popularity of products promoted with larger product
packaging and larger product portions. As much as healthy eating is a trend
amongst the average consumer, the effort to eat healthier could easily be described
as casual, with healthy eating choices being incorporated into less than healthy diets.
While dieting consumers are huge targets, this is not a growing segment of the
population and in fact; the percentage of adults on a diet in the U.S. has decreased
significantly since 1990. A wide range of larger-portioned products are available in
the American retail grocery market, and include product lines such as Hungry-Man’s
pre-packaged high-calorie dinners, that are marketed to individuals with larger
appetites. Many snack foods, such as potato chips and cookies, are also commonly
offered in larger-sized formats.
Increasing obesity rates within the U.S. may indicate that demand for super-sized
products is growing. The national obesity rate increased to 26.3% in 2007 from
16.5% in 1997.
Ready-Made Meals
The American ready-made meal market (i.e. including frozen, chilled, dried and
canned meals) has seen considerable growth over the past few years, as consumers
increasingly lead busier lifestyles. According to FMI, nearly 95% of all retail grocers
now offer ready-made meals for time-constrained shoppers. Fuelled by demand for
quick meal solutions, the segment increased roughly 16% from 2002 to total more
than US$23.1 billion in 2007 (Euromonitor International, Jan. 2008). Further
development of healthy, portable, premium, organic and ethnic options will continue
to drive segment growth. In fact, manufacturers are expected to continue to roll-out
more restaurant-quality ready-made meals and frozen pizzas to offer consumers
quick, high quality meal solutions. The ready-made meal category is projected to
reach over $24.9 billion by 2012, close to a 4% increase over 2007 totals
(Euromonitor International, Jan. 2008). Stop & Shop, the largest grocery group in
the Northeast U.S., has been undergoing a redesign with a number of new initiatives,
which involves significantly increasing their range of prepared foods.
Ethnic Food
Due to increased ethnic diversity and global travel in recent years, the burgeoning
North American ethnic food sector has moved out of the specialty food category and
into the mainstream food industry. In fact, 75% of ethnic food consumption in the
U.S. is now supported by the mainstream population, fuelling a US$75 billion annual
Overview of the New England Retail Grocery Market 24
industry that accounts for US$1 out of every US$7 spent on groceries (Euromonitor
International, 2006). Research has also shown that the majority of ethnic food and
beverages are consumed by Caucasian consumers in the U.S., and that such
products are largely purchased by mainstream shoppers and those of other minority
groups (Datamonitor, 2005).
Ethnic food products currently comprise more than 12% of all retail food sales and
are seeing 5% annual growth. Recent trends have resulted in an increasing
consumer base for Caribbean, Mediterranean, Indian, halal and kosher food. While
consumer demand for healthier food and exotic flavours is driving interest in these
areas, rising immigration levels are also playing a key role. The U.S. is expected to
see a visible minority population of 123.1 million (i.e. roughly one in three
Americans) by 2020, a 30% increase over the country’s 2006 population of 94.4
million. The majority of this increase (i.e. roughly 59%) is expected to be driven by
Hispanics, followed by African Americans (i.e. 23%) and Asian Americans (i.e. 18%).
Specialty Food
Bolstered by the popularity of food television networks, celebrity chef cooking shows,
exotic cooking classes, and the introduction of upscale retail grocers (e.g. Whole
Foods Market) that sell a variety of premium products, Americans are becoming
more knowledgeable about food preparation and are “trading up”, using high quality
ingredients when cooking. Retailers are increasingly expanding their gourmet food
offerings with artisan cheese, bread, dips, oils, spreads, condiments and
confectionary; freshly-prepared meals and desserts; greater ethnic and international
food assortments; premium tea and coffee; and larger wine selections to cater to
such consumer demand.
According to Specialty Food Magazine’s The State of the Specialty Food Industry
2007 report, the American specialty food market was estimated at US$38.5 billion in
2006, and accounted for 10% of all retail grocery sales (2007). Specialty food sales
have increased 103% since 2001 and are currently outpacing general food sales by
17%; general food sales increased nearly 5% in 2006, while that of specialty food
rose 22% (Specialty Food Magazine). As of 2006, the largest specialty food
categories were condiments; cheese; coffee and cocoa; chips, pretzels and snacks;
and carbonated, functional and ready-to-drink (RTD) tea and coffee beverages
(Specialty Food Magazine). The magazine also identified energy bars and gels as the
fastest-growing specialty food category, having seen 269% growth between 2004
and 2006, followed by shelf-stable juices and functional drinks (107%), shelf-stable
meat, poultry and seafood (105%), water (90%), and RTD tea and coffee beverages
(58%).
Organics
Fuelled largely by consumer demand for more natural, minimally-processed and
pesticide-free food in North America, the American organic sector has seen dramatic
growth in recent years and is now one of fast-growing segments of American
agriculture. Consumer awareness and demand for organic food and beverages has
also greatly increased since the USDA Organic standards logo and certification
program was introduced in 2002. Grocery retailers have responded by expanding
their organic product offerings, especially by developing store brand organic food
lines. In fact, 82% of retail grocers now offer natural or organic options and 62% of
which sell private label organic products (FMI). According to the Organic Trade
Association’s 2007 Manufacturer Survey, organic food sales totalled US$16.9 billion
Overview of the New England Retail Grocery Market 25
in 2006, a 22% increase over 2005 values. Organic food accounted for roughly 3%
of national retail grocery sales in 2006, up from 2.5% in 2005, and 1.9% in 2003.
The success of Whole Foods Market, which specializes in natural and organic
products, is one indicator of the importance of the organics trend regionally, as well
as nationally. Whole Foods Market has expanded from 1 store in 1980 to over 270
locations across North America and the United Kingdom in 2008. Hannaford
Supermarkets is an organic leader in New England, and is the largest certified
organic supermarket in the Northeast. The grocery retail chain offers over 100
produce items and 150 dairy items in their stores, sourced from vendors that are
certified organic (Hannaford Bros. Co).
Local Food
Local food is growing in popularity among consumers nationally. “Local” refers to
the geographic location where it was produced, indicating to consumers that a
product is from nearby and therefore fresh. As freshness is an important
characteristic to consumers when selecting foods, the association between “local”
and freshness makes this label extremely powerful. According to Progressive Grocer,
the demand for “local” foods is less about reducing a carbon footprint and more
about fresh and healthy food. “Local” also has a symbolic meaning to consumers,
indicating a unique, distinct and authentic product. For example, “local” is often
used to suggest a product has a unique quality and taste associated with a particular
geographic area, or that it was produced by small producers. Grocery retailers are
capitalizing on this trend by offering more local food products, as well as including
more local ingredients (ingredients that are grown in select regions known for quality
or taste). This trend has also become prominent in the New England region, with
regional stores such as Big Y Foods Inc. and Hannaford Supermarkets increasingly
buying locally. Several motivations are behind New England consumers’ growing
interest in local products, such as taste, nutrition, preserving open space,
sustainability, eco-development, and personalization of food sources.
Key Target Markets
Ethnic Consumers
The world’s largest ethnic food market is expected to see its consumer base continue
to grow. Ethnic consumers are forecast to account for 52% of the American
population by 2050 or 219.7 million consumers, an impressive 78% increase over
the country’s estimated 2020 population. These trends are, in turn, creating new and
increasingly attractive opportunities for Canadian agri-food producers and exporters.
Distinct retail grocery and foodservice trends exist in each region of the U.S. Age,
race and income demographics vary from state to state and impact regional flavour
profiles. The following table outlines the New England region’s ethnic consumer
markets’ respective importance to Canadian food exporters.
Overview of the New England Retail Grocery Market 26
New England Ethnic Populations, 2007
Ethnic
African Asian
Hispanic Ethnic Population as
State/Region American American
Population Population* % of Nation’s
Population Population
Population
Connecticut 0.393 million 0.357 million 0.119 million 0.869 million 0.29%
Maine 0.013 million 0.011 million 0.012 million 0.036 million 0.01%
Massachusetts 0.509 million 0.444 million 0.315 million 1.268 million 0.42%
New Hampshire 0.030 million 0.014 million 0.025 million 0.070 million 0.02%
Rhode Island 0.117 million 0.067 million 0.029 million 0.214 million 0.07%
Vermont 0.007 million 0.004 million 0.007 million 0.018 million 0.01%
New England 1.069 million 0.898 million 0.507 million 2.474 million 0.83%
U.S. 44.3 million 38.3 million 13.2 million 95.8 million 32%
Source: U.S. Census Bureau, 2007
*The total ethnic population is an estimate based on the total Hispanic, African American and Asian
American populations. Some overlap may exist between the populations in each of these groups. This
total does not include ethnic consumers from other groups.
A brief overview of major ethnic consumer markets in the U.S. is provided below. For
more in-depth information, please consult the United States Ethnic Food Market
report on the Agri-Food Trade Service Web Site at
http://www.ats.agr.gc.ca/us/4489_e.htm.
Hispanic Consumers
The Hispanic consumer segment is the largest ethnic group in the U.S., making up
nearly 15% of the population or 45.5 million consumers in 2007. By 2030, it is
projected that this segment will account for one out of every five Americans, with an
estimated 73 million Hispanics living in the U.S. Furthermore, apart from the
country’s close proximity to Mexico, a recent influx of Hispanic consumers in non-
traditional Hispanic markets has been aided greatly by friendly municipal and state
governments seeking key consumer groups to boost local populations and
economies. Hispanic buying power is expected to reach US$1 trillion in 2008, nearly
doubling from US$581 billion in 2002, to achieve the highest level among ethnic
groups in the U.S. Roughly US$55 billion of this total is allocated to food annually.
The Hispanic and Latino population accounts for approximately 7.8% of New
England’s total population, more than either the Black and African American or Asian
populations. It is estimated that in 2007, 1.1 million or 0.4% of the nation’s Hispanic
and Latino population lived in the New England region of the U.S., with a particular
concentration in Connecticut and Rhode Island. While the Hispanic and Latino
population only represents a small percentage of the nation’s total, it is estimated
that the Hispanic and Latino population grew 25.9% in Connecticut from 2000 to
2007 and 31% in Rhode Island. Several other New England states have also
experienced above average growth rates. From 2000 to 2007, it is estimated that
the Hispanic and Latino population experienced growth of 67.3% in Maine, 60.7% in
New Hampshire, and 48.4% in Vermont. This is significantly higher than the
estimated national Hispanic and Latino growth rate of 28.9% for that time period,
indicating potential future opportunities for this fast growing market.
Hispanics make more shopping trips, spend more on groceries, and eat more at
home than their mainstream American counterparts. The segment has a preference
for using fresh ingredients when cooking, and therefore accounts for much of the
produce sales in the retail grocery market. Hispanics average 26 shopping trips per
month or twice as many outings as mainstream shoppers, and spend an average
US$133 per week on groceries compared to non-Hispanic shoppers’ typical US$93
Overview of the New England Retail Grocery Market 27
weekly purchases. This is also due in part to Hispanic families being larger than the
national household average; Hispanic households have an average 3.34 residents,
while that of the general American population is 2.57 persons. Furthermore, more
than 43% of Hispanic homes have four or more people residing in them, versus 22%
of non-Hispanic households.
It is therefore not surprising that 61% of Hispanics state that they most frequently
shop at mass merchandisers such as Wal-Mart and Target. In fact, a 2005 study
found that roughly 36% of Hispanics identified Wal-Mart as their favourite store. The
retail giant recently announced a partnership with Pollo Campero, the largest Latin
American chicken restaurant chain, to attract more Hispanic consumers to Wal-Mart
stores. Roughly 500 Pollo Campero restaurants are forecast to open in the U.S. by
2012, some of which will be located within Wal-Mart outlets. Wal-Mart is also
revamping a number of supercenters in Texas to meet Hispanic shopping needs by
adding specialty bakery items and meat, more ethnic brands and more services and
printed store information in Spanish. In May 2008, Wal-Mart opened its first
American store designed specifically to meet the needs of Hispanic shoppers. The
store is located in Garland, Texas and offers a number of specialty products including
fresh corn and flour tortillas, fresh-baked bolillo (a type of salty bread) and pandulce
(Mexican sweet bread), and an expanded selection of bananas, plantains, chillies and
spices.
Staples of the Mexican diet include corn, maize, and beans, and dishes flavoured
with tomato sauces and rich chilli pastes are common. Mexicans consume more
seafood, poultry, and pork than traditionally eaten in the U.S. Mexican cuisine also
uses different cuts of meat than commonly used in the U.S., for instance beef and
pork intestines and bones, and thin meat cuts are popular because of recipe
requirements. Grilled fish and ceviches are popular among Mexicans from coastal
regions of Mexico, such as Veracruz, while Mexicans from Oaxaca and Puebla,
commonly eat stews, moles, and braised meats and poultry. Herbs and spices like
cinnamon, clove, cumin, cilantro, thyme, marjoram, and epazote are regularly used
in Mexican cuisine.
Brand names with high recognition and popularity among the Hispanic community
include Badia, Bimbo, Bustelo, Cacique, Coca-Cola, Doña María, Faraón, Gamesa,
Ganzito, Goya, Guerrero, Herdez, Iberia, Jarritos, Juanitas, Jumex, Knorr, La Cena,
La Costeña, Maggi, Maseca, Nestlé, Pilon, Productos Maya,Tampico and Vitarroz.
African American Consumers
Apart from the growing Hispanic market, the country’s African American population
is also an attractive consumer segment. Estimated at US$847 billion, the African
American consumer market’s level of purchasing power is the second-highest among
ethnic groups in the U.S. This value has seen a compound annual growth rate
(CAGR) of almost 6% since its 2002 value of US$645 billion. African Americans
comprised almost 13% of the American population or 38.7 million consumers in
2007, an 8% increase over the 2000 population of 35.8 million. By 2030, it is
projected that this segment will account for 14% of Americans, with an estimated
50.4 million African Americans living in the U.S.
In 2007, an estimated 0.9 million or 0.3% of the nation’s African American
consumers lived in the New England region of the U.S., comprising 6.4% of New
England’s total population. Massachusetts and Connecticut have by far the largest
Black and African American population in the region; both at approximately 0.4
Overview of the New England Retail Grocery Market 28
million. While accounting for quite a small percentage of the nation’s Black and
African American population, this group experienced considerable growth from 2000
to 2007, well above the national Black and African American growth rate of 11.8%.
The most considerable estimated growth rates for this period were Maine 90.2%,
New Hampshire 73.8%, Vermont 68.2%, and Rhode Island 42.9%.
The African American consumer market is generally made up of native born African
Americans and immigrants from a variety of Caribbean and African countries. This
naturally influences African American cuisine, which incorporates a blend of cooking
flavours and traditions from these regions. Bold flavoured options, such as Jamaican
jerk chicken, fried plantains, rice and bean dishes, and stews (e.g. Brazilian feijoada)
are popular. Authentic cooking ingredients are also important to African Americans,
who generally spend 27% more on such items than the average American shopper.
African Americans are highly brand loyal consumers and hot food promotional
tastings at retail grocery outlets have proven effective in targeting new products to
this segment.
Brand names with high recognition and popularity among the African American
community include Allens, Bull Dog, Bush’s Best, Colonial, Country Post, Far West
Meats, Franco American, Glory Foods, Grace, Hoffy, Homepride, Jiffy, La Fe,
Louisiana, Luck’s, Old Bay, Success, Sunbeam, Sylvia’s Soul Food, Taystee, Texas
Pete, Tropical, Uncle Ben’s, Uncle Lou’s and White Lily.
Asian American Consumers
In addition to the country’s largest ethnic consumer groups, there is strong emphasis
on addressing the needs of the expanding Asian American population. Currently
estimated at 13.3 million consumers or nearly 4.5% of the population, this consumer
segment is projected to become the fastest-growing ethnic group in the U.S. from
2010 to 2050, and see a 135% population increase over the period. Asian Americans
are also the most affluent market segment in the U.S. with an average household
income of US$51,908 in 1999, over 14% higher than that of Caucasians, 54% larger
than that of Hispanic consumers, and 76% greater than that of African Americans.
While unofficial, recent 2008 reports have stated that Asian Americans now hold the
highest per capita income of all consumer segments in the U.S.
While the proportion of Asian Americans in the New England region (3.6%) is smaller
than that of other ethnic groups, the Asian community in New England has also
experienced considerable growth rates from 2000 to 2007. The New England states
with the most substantial growth rates, above the estimated national Asian
population growth rate of 30.5%, were New Hampshire (56.3%), Connecticut
(45.3%), and Vermont (37.6%). Massachusetts and Connecticut possess the largest
Asian populations within New England. Overall, the Asian population in New England
comprises merely 0.2% of the total U.S. population.
Major grocery retailers are responding to the growing Asian population by carrying
more Asian products. Kam Man Foods is a small Chinese supermarket chain that first
began in New York City’s Chinatown, but has since expanded to other states
including Massachusetts. This was the first Chinese supermarket on the U.S. east
coast and is New England’s biggest Asian supermarket.
According to AC Nielsen, Asian food sales at retail grocery outlets (excluding those at
Wal-Mart) increased 4.5% over 2005 levels to total US$1.1 billion in 2006. Asian
Americans generally prefer fresh food over processed or packaged goods, and
Overview of the New England Retail Grocery Market 29
typically shop for groceries four to five times a week. Staples in almost all Asian
American diets include rice, noodles and vegetables.
Asian cuisine, particularly Chinese, Japanese and Thai food, has long been enjoyed
by mainstream American consumers, while other varieties, such as Vietnamese and
Korean, are becoming increasingly popular. Traditional Asian dishes are also
influencing the flavour profiles of many mainstream products; Asian-inspired sauces
and seasonings to snacks, appetizers and ready-made meals are now widespread in
the American marketplace. In fact, sales of two-food frozen entrées (i.e. ready-made
meals that contain two separately packaged types of food to be consumed together,
such as chow mein and rice) saw the most growth in the Asian food category,
increasing 26% from 2002 to reach US$85.5 million in 2006. However, the largest
portion of the Asian food market remains the one-food frozen entrée segment, which
totalled US$379 million in 2006.
Brand names with high recognition and popularity among the Asian American
community include Ajinomoto, Bin Bin, FOCO, Food Island, God of Fortune, Golden
Phoenix, Hinoichi, Homal, House Foods, Huy Fong Foods, Indo Mie, Kewpie, Kian
Guan, Kikkoman, Kirin Ichiban, Meiji, Mitsukan, Nestlé, Nong Shim, S&B Curry, UCC,
Vitamalt and Yamamotoyama.
Halal and Kosher Food Markets
The large and growing Muslim and Jewish consumer populations in the U.S. also
present considerable opportunity for Canadian food manufacturers looking to enter
new markets. With its population of 8 to 11 million Muslim consumers, the U.S.
offers a lucrative halal market estimated at US$12 billion. The kosher food industry,
while not new to North America, also continues to grow with its 5.2 million Jewish
consumer base in addition to a number of non-Jewish consumers that are
increasingly buying kosher products for a variety of reasons.
Significant Jewish populations reside in several areas of the New England region. The
state of Massachusetts has the 5th largest Jewish population of all states, with Boston
ranking as the 6th largest metropolitan centre. Connecticut also has one of the
largest Jewish populations in the U.S., ranking 7th of all states.
The American kosher food industry was estimated at over US$7 billion in 2006, and
has seen roughly 102,000 food and beverage products enter the marketplace over
the past 20 years; approximately 2,500 products were certified kosher alone in
2007. Some industry experts have even suggested that nearly 50% of all packaged
food produced in the U.S. is kosher, and that most major brands are certified kosher
as well.
With such growth in the kosher food industry, many grocery retailers are now
devoting entire sections of their stores to kosher food. Kosher bakeries, delis, meat
departments, frozen food sections and general merchandise aisles can be found in
many grocery locations, such as Shop Rite, while mass merchandisers Wal-Mart and
Kmart continue to expand their kosher food product offerings. The number of grocers
offering kosher food sections is likely to expand as retailers continue to place more
importance on ethnic food merchandising.
Furthermore, as consumers continue to become more health conscious, especially in
the wake of recent worldwide food scares and the burgeoning green movement, they
are increasingly purchasing halal and kosher food (i.e. meat and other food products
Overview of the New England Retail Grocery Market 30
slaughtered or processed according to Islamic and Jewish law). Such food is
appealing to a growing number of consumers outside of the Muslim and Jewish
communities, whether it be due to humane animal treatment concerns, demand for
vegetarian or lactose-free products (i.e. kosher food only), or a perception that such
products are healthier or safer.
Mediterranean Food Market
Mediterranean food (i.e. particularly Greek, southern Italian and
Spanish), cited as a major emerging ethnic cuisine in the North
American marketplace, gained huge popularity in 2007. The
consumer trend toward wholesome, boldly-flavoured ethnic food
has grown considerably in recent years, largely due to
Mediterranean cuisine having been marketed as a healthy diet
option in the U.S. since 1993. A Mediterranean diet symbol for
packaged food was released in the U.S. in April 2007 and has
helped further drive the popularity of this cuisine.
Market Access
The U.S. remains a destination of constant trade and investment interest for foreign
investors, and holds strong potential for Canadian companies wanting to enter the
export market. To facilitate successful market entry, Canadian exporters are
encouraged to develop market entry strategies that include working with local
brokers, importers and distributors to develop a presence, gain valuable market
advice, and best position products to meet local tastes, laws and pricing.
Distributors/wholesalers operating in the New England region include SYSCO, C&S
Wholesale Grocers, Wakefern Food Corporation and McLane Co. Inc. C&S provides
distribution services to grocery chains and independent stores, and supplies products
to ten retailers listed in Supermarket News’ top 75 North American food retailers in
2008. Of retailers operating in New England, C&S supplies A&P, Ahold USA, BJ’s
Wholesale Club, DeMoulas/Market Basket, and Supervalu’s Shaw’s/Star Market.
Wakefern Food Corporation also operates the Shop Rite and Price Rite banners
present in New England.
Canadian exporters should contact the Canadian Consulate General offices in the
New England region to obtain market information, identify new markets, find
qualified trade contacts, and obtain assistance in successfully exporting abroad.
Detailed information on customs procedures, documentation, tariffs and labelling
requirements can also be found on the Trade Commissioner Service Web site at
http://www.infoexport.gc.ca/ie-en/USMissions.jsp.
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Overview of the New England Retail Grocery Market 31
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Overview of the New England Retail Grocery Market 32
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Overview of the New England Retail Grocery Market 33
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Overview of the New England Retail Grocery Market 34
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Overview of the New England Retail Grocery Market 35
