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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 — 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 and Wal-Mart and the addition of more consumables by dollar stores.

Read more: Moody's Downgrades Supervalu Ratings

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

Extreme-value discount supermarkets such as Aldi, 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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