Investing.com - Analysts at Stifel have shed light on the shifting dynamics of the US grocery market in a reserach note on Monday.
The report reveals that retail giants, namely Amazon.com Inc (NASDAQ:AMZN), Costco Wholesale Corp (NASDAQ:COST), and Walmart Inc (NYSE:WMT), have made significant strides in capturing larger shares of grocery sales since 2019.
According to the study, Amazon and Costco have been responsible for 11% and 12% of US grocery category dollar growth from 2019-2023, respectively.
Walmart, combined with Sam's Club, has been a powerhouse, accounting for 40% of category growth from 2020-2023. These gains are attributed to a potent combination of value propositions, convenience, loyalty programs, and digital offerings.
The growth of these retailers, however, has implications for consumer staples companies. Analysts suggest that these companies optimize their exposure to these rapidly growing retailers to maximize sales and volume growth.
However, the increasing scale of these retailers could lead to more pressure on staples companies for better economics, including price, promotions, and product exclusives.
The report also highlights the continued development of private label offerings by these major retailers. This trend has contributed to their share gains and could potentially put additional pressure on staples companies as consumer preferences evolve.
Furthermore, the report includes a case study on energy drinks, showing how shifting sales trends have impacted this product category.
The study revealed that mass channels, such as Costco and Amazon, have seen an average growth of 25% since 2019 compared to a 10% growth in convenience stores.
This trend appears to reflect a shift towards more economical case purchases of energy drinks as opposed to single-serve packages.
The Stifel analysis also found a significant shift in gas purchases, with Costco gaining approximately 2% of US gasoline volume share since fiscal 2019. This shift is primarily attributed to Costco's gas prices being lower than local averages, indicating a strategy to offset lower per-gallon profitability with increased volumes.