Supermarket Share Loss to Slow: Report

NEW YORK — The rate at which traditional supermarkets in the U.S. lose share to alternative formats will slow as the leading grocers roll out sales-building strategies, according to a research note from Moody’s Investors Service here.

"We expect supermarkets to reduce prices, reward loyal customers and expand offerings of organic products and private-label items to woo customers and boost sales," said Mickey Chadha, a Moody's vice president and senior analyst. "That said, the performance gap between efficient operators who evolve with the changing competitive landscape — such as Kroger [3] — and those that don't will widen."

The report estimates that supermarkets’ share of food eaten at home has fallen to 64.5% in 2010, vs. 72.1% in 2000, amid the expansion of big-box stores like Costco [4] and Wal-Mart [5] and the addition of more consumables by dollar stores.

Read more: Moody's Downgrades Supervalu Ratings [6]

Moody’s said supermarkets that employ an EDLP strategy, are innovative and “embrace secular changes in the industry,” like Kroger Co., Safeway [7], Stater Bros. Markets [8] and Wegmans Food Markets [9], and niche players like Whole Foods Market [10], The Fresh Market, Sprouts Farmers Market [11], Smart & Final [12] and Trader Joe's [13], among others, will see revenue and operating profit growth.

Extreme-value discount supermarkets such as Aldi [14], Bottom Dollar Food and Save-A-Lot “will also continue to grow as cost-conscious consumers seek to stretch their dollars,” the report stated.

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