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Traditional supermarkets lost two percentage points of market share in produce categories during the past three years, falling to 40.6%.

Supermarkets lose market share in fresh, frozen categories

Deli prepared foods, frozen fruit among sales gainers across retail segments in 2023

Traditional supermarkets have lost market share across fresh and frozen categories during the past three years, according to 2023 year-end reports from 210 Analytics and Circana.

Although the rate of inflation slowed in 2023, prices remained up in double digits compared with pre-pandemic levels, the research found, which has driven consumers to curb their spending and spread out more of their grocery shopping across other channels, including club stores, discount grocery stores, mass retailers/supercenters, and online outlets. A year-end Circana survey found that nearly three-in-10 shoppers said they are shopping at more value-focused retailers, 20% said they shop more grocery stores in search of the best deals, and 18% said they have switched stores altogether.

Circana research found that the average price per unit across all foods and beverages in multi-outlet stores — including supermarkets, club, mass, supercenter, drug, and military — increased by 6.1% for the full year. The rate declined throughout 2023, however, and the average price per unit for December was up only 1.7% vs. 11.4% in the first quarter.

Among the few categories that performed well in terms of both unit and dollar sales across all formats in 2023 were deli prepared foods and frozen fruits.

The following are some highlights from each year-end category report, as compiled by 210 Analytics using Circana data.

Fruits stand out in frozen foods

Although dollar sales of frozen foods were up 2.2% across all outlets in 2023, to $74 billion, unit volumes fell 4.1%.

Traditional supermarkets captured 37.3% of sales last year, compared with 40.8% of sales in 2020. Mass retailers/supercenters and online outlets showed the biggest market-share gains for frozen foods in that period, reaching 27% and 3.1% of sales, respectively.

The sales performance of various frozen sub-categories across all retail outlets varied widely. Frozen fruit, however, stood out with 8.9% dollar sales gains for the year, and unit volumes up 3.6%.

Meat sales struggle

Mass retailers/supercenters, club stores, and online outlets all grabbed an increasing share of meat department sales during the past three years, while traditional supermarkets saw their share fall to 39.8% in 2023 vs. 42.8% in 2019.

Across all channels, dollar sales of meat were down 0.8% for the full year. Sales of fresh meat actually increased by 0.3% for the year, but processed meat sales dropped 3.1%.

Seafood sales slide

Traditional supermarkets have lost 3.1 percentage points of dollar market share in refrigerated seafood sales since 2019, falling to 36.8% of total sales across all outlets. Club stores, discount grocery, mass/supercenters, and online outlets all showed market share gains in the single digits in that time frame.

Overall, fresh seafood dollar sales across all outlets were down 3.25% in 2023, compared with a year ago, and frozen seafood dollar sales were down 5.9%.

Supermarket produce share down 2%

Traditional supermarkets lost two percentage points of market share in produce categories during the past three years, falling to 40.6%. Club stores were the biggest gainers in terms of market share, followed by mass retailers/supercenters and online retailers.

Although produce had below-average inflation relative to other fresh departments in 2023, unit sales across all outlets were flat relative to a year ago, and dollar sales rose 1.5%.

Deli prepared foods show gains

Although supermarkets lost share to other formats in both deli and bakery sales during the last three years, the category overall showed some bright spots in 2023, including deli prepared foods.

Deli market share in traditional supermarkets fell to 31.2% in 2023, down from 33.4% in 2019, and bakery share fell to 38.7%, down from 41.1%.

Across all outlets, deli prepared was up 5.6% in dollar sales and 1.2% in unit volume for 2023. That compares with a 3.6% gain in dollar sales for the deli category overall, and a decline in 0.9% in unit volume. Among prepared foods, strong dollar sales gains in prepared meats, sandwiches, and pizza helped offset declines in breakfast and combo meals.

Grab-and-go cheese also saw gains in both dollar sales and unit volumes, up 3.5% and 0.6%, respectively, and several deli entertaining sub-categories also saw gains in both dollars and units, including trays and spreads.

Bakery, meanwhile, notched dollar sales gains of 7.1% for the year across all outlets, and a decline in unit volumes of 1.1%.


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