Q3 Retail Index – General Merchandise & Grocery

Each quarter we take a look at the overall progress of specific sectors in order to better understand the wider space’s trends, potential, seasonality and beyond.

To kick off our Q3 Retail Index series, we dove into the General Merchandise & Grocery sector.

Growth Abounds

In our Q2 analysis, we measured 10 brands and saw only one that saw declining traffic compared to Q1. For Q3, the picture was even rosier with all of the twelve brands measured seeing significant growth over Q2. Target led the way with a 13.5% boost, but Walmart Supercenters, H-E-B, Meijer and Trader Joe’s all saw bumps of over 5%. With an average growth percentage of 4.5% the quarter has been friendly to overall visits.

Visit Duration – Strategic Effects

But there are key differences. Seven of the brands measured had average visit durations that were just above or below 40 minutes. This is a significant amount of time that emphasizes the powerful position these brands hold as anchor tenants in shopping centers around the country. But not all enjoy the same advantage, and this has strategic ramifications. Trader Joe’s and Aldi had average visit durations of 33 and 32 minutes respectively, by no means numbers that suggest weakness. However, when compared with the rest of the field, this speaks to the differences between the key players in the sector. 

Trader Joe’s has evolved into a top-flight niche grocery brand that not only serves as a powerful draw but can also play nicely with other grocery tenants. This presents unique opportunities for locations to benefit from the presence of other top grocers. This is similar to Costco or Sam’s Club, who have models that drive large numbers of visits but are less dependent on visit frequency because of the nature of their wholesale model. The interplay between these brands can provide huge indications of how they will and should expand and the potential impact on the wider landscape over time.

Dominance at the Top

Yet, once again the dominant player in the sector remains Walmart. The company owns just under 42% of all the visits these twelve brands saw in Q3. Target comes in a distant second with 15.6% while Costco, Kroger and Publix battle for third. The result speaks to overwhelming strength Walmart has created by serving as a catch-all for so many items with such amazing effect. Target’s recent decision to move more deeply into grocery may cut into this lead over time, but the current situation positions Walmart at the top of the industry landscape.

Conclusions

Can Target close the gap with new partnerships and product innovations? Can Publix rise in the wake of Kroger’s recent issues? Will Costco augment its model to improve visit frequency?

Find the answers to all these questions and more at Placer.ai

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