Grocery retail: concept, definition, market development and forecasts

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

The word "retail" appeared in the Russian language quite recently, but the food market has existed for a long time, and it has its own specifics, its own technologies, its own history. Let's talk about what the food retail market is, what are its characteristic features and differences, what is its state and development prospects.

The concept of retail

The term "retail" came into Russian from English and means retail trade. Although the word "retail" literally means "retelling". But today it is mainly used in a marketing sense. This concept covers all trade that supplies products to final consumers, i.e. those who buy goods for their own needs and for their household, and not for resale or business. The large retail market includes several segments, including food retail. Retail exists according to its own rules, uses special technologies and tools for promoting goods.

Types of retailers

All typesretailers can be classified according to the products they carry. In this case, food retail and trade in non-food products are distinguished. You can also classify retail by the method of distribution of goods. In this case, allocate:

- Street retail. These are familiar stores located in the lower floors of residential buildings or separate buildings on the streets of the city.

- Online retail. This is a new online trading format.

- Network retail. In this case, the goods are distributed through a network of representatives who themselves organize the trade, promotion, storage and delivery of the goods to the consumer.

- Mobile retail. An emerging market for trading through mobile applications in phones. This market is similar to online trading and often uses the same delivery channels.

Goals and specifics of retail

The food retail market exists to achieve two main goals: to meet the needs of consumers in food and to maximize the profit from the food trade.

The main features of the retail market are:

- Availability. All goods in retail can be purchased by any consumer. The only restriction is the legal requirements for certain products, such as tobacco or alcohol.

- Large regulatory and regulatory framework. This market falls under the laws "On Trade", "On Protection of Consumer Rights", "On Retail Markets".

- Special pricing. Retailprices are formed depending on demand, and they are always higher than wholesale prices, as they include a trade margin for organizing trade and delivering goods to consumers.

- Large assortment. The market is filled with a wide variety of goods.

- Availability of different trading formats. Retail delivers goods to the consumer in various ways, and formats are constantly being improved to better meet the needs of customers.

The concept of "grocery retail"

One of the most ancient types of trade is the retail sale of food products. Today, this market is called food retail. The peculiarity of this market is that the seller offers the consumer products to meet his needs, as well as related services. For example, home delivery of groceries, ordering groceries from a list. The relationship between the consumer and the seller is regulated by the law "On the Rights of Consumers". According to this law, the seller must provide a quality product and sell it in conditions that meet the established requirements. Also in the food market, a trade enterprise is engaged in advertising goods, their promotion. The seller receives the main profit from the difference between the purchase and retail price. He purchases products in bulk and sells to the consumer in any quantity, starting from one unit of goods. The seller studies the needs of consumers, generates demand for certain products, stimulates the consumer to purchase. Thus, groceryretail is a complex field of activity related to the sale of food products to the final consumer.

Evolution of grocery retailing

Food trade is one of the oldest forms of this type of activity. Merchants' shops were the first organized forms of trade in products. Initially, they opened points of mixed trade, but gradually specialization began to form. Along with shop trade, trade in bazaars and markets is very popular. With the advent of industrial production, grocery stores open for the first time. Retail is constantly striving to develop new forms of trade, looking for additional opportunities to increase sales. This leads to the emergence of new formats for selling products. As in all retail markets, grocery retail is constantly looking for new opportunities to increase sales and improve customer satisfaction, as well as business consolidation.

It is in food retail that chain companies become more important. By the end of the 20th century, grocery retail chains capture most of the market. Trade is becoming more and more civilized. The 21st century has brought a lot of new technologies that have become in demand in the food trade. Today you will not surprise anyone with a self-service store, but gradually it is being replaced by stores without sellers and online stores. A feature of this market is that the ancient forms of selling products, undergoing changes, do not go away, but continue to bein demand. So today, some buyers prefer to purchase food products in the markets, although the latest formats find their consumers.

Features of the grocery retail market

Food trading is considered the most stable type of commercial activity. Therefore, many players are rushing to this market. Increasing competition leads to the search for new forms of trade, as well as to a decrease in profits. Grocery retail is a low-margin market, so all players are trying to increase sales volumes. Since only large volumes allow you to get tangible profits. Today, food retail market shares are divided between the following groups:

- large chains;

- small chains;

- markets and bazaars;

- non-chain modern retail of new formats;

- traditional outlets.

There is a big war between competitors in this market. It features international, national, regional and local companies. Also, this market is characterized by the presence of many trading formats.

Main players in the Russian market

Food retail market is characterized by increasing consolidation. Network retailers are occupying more and more shares, squeezing small traders out of the market. Today, the largest grocery retailers in Russia occupy almost 30% of the entire market and continue to make huge efforts to increase this figure. To the largest players in the Russian marketGrocery retailers include:

- X5 Retail Group. The company with Pyaterochka, Karusel and Perekrestok stores confidently holds leadership in this market, its share is estimated at about 9.5%.

- "Magnet". The network is experiencing difficulties in the fight against competitors, but is trying to keep its share. About 16,000 stores operate under the Magnit brand in Russia.

- "Auchan". The French retailer is actively exploring the Russian market by opening stores of various formats. In total, about 300 stores of this network are now operating in Russia.

- "Tape". Domestic network developing hypermarket and supermarket formats. In recent years, the chain has shown significant growth, and today it operates 328 stores across the country.

- "Dixie". The network is represented by stores under the brands "Dixie" and "Victoria". It covers mainly the European part of the country. Today, this seller has 2,700 stores open.

- Metro Cash&Carry. Another foreign network conquering the Russian market. The company's performance last year was not brilliant, but the seller is trying to keep its share by developing the format of a small-scale wholesale and retail hypermarket and Fasol neighborhood store. In total, the network in Russia now has a little less than 100 stores.

Also on this market are such chains as Okay Group, Anix, Monetka, Maria Ra, Globus, which also declare their desire to increase their share. In general, the volume of the grocery retail market is about 25 trillion rubles.

Food market trends

In recent years, the situation in the grocery retail market has become increasingly tense. Experts record a decline in growth, which is no more than 2-3% per year, and the forecast for food retail is far from rosy - growth rates will slow down. There is also a decrease in the amount of the average check, which is also an indicator of a slowdown in market development. The main trends in the development of the food market in Russia can be called:

- Further enlargement of networks. Each network is doing a great job of developing all market segments, while squeezing out small traders.

- Mastering the format of online trading. Large and small players understand that there are great opportunities behind trading via the Internet, so gradually this segment is experiencing a revival and increased competition.

- Retail branding. Today, the consumer is used to the fact that sellers establish constant communications with him, he no longer wants to go to an unknown store with an incomprehensible level of service. The main players pay a lot of attention to brand building, work on the quality of service, store recognition, and their interior design.

- New services. Grocery stores offer more and more opportunities for the buyer. Sale of hot bread, ready meals, takeaway coffee have already become common grocery store services. Also today, the buyer can warm up the purchased food, order delivery or prepare a grocery set.

- Emphasis on he althy food. Segment of natural and he althy foodis growing, and this trend, according to experts, will continue in the coming years.

Market Technology

Grocery retail trends keep pace with the development of technology. Therefore, trade today is undergoing changes, and they will only grow. In the near future, in retail stores, more and more often the consumer will have to communicate with robots. First of all, this will affect cashiers: self-service checkouts are already becoming the norm, and further it will become a widespread practice. The display of goods in stores will be based on an analysis of consumer behavior. Today, experts are talking about the formation of computer vision, and this phenomenon will be used in the presentation of goods to the buyer. Not only cash, but also bank cards will gradually leave retail. Connecting cards and all services to the phone is already a global trend. In the near future, using a phone, it will be possible not only to pay for goods, but also to get advice on them, arrange delivery, and receive special offers from the seller at the entrance to the store. The global trend of the grocery retail market is the growth of an individual approach to each customer, and new technologies contribute to this.

Innovation in the product market

Trade does not ignore the achievement of technological progress. Therefore, innovation in food retail is another major trend. The main innovations in this market include the following trends:

- Development of mobile shopping. As the younger generations who grew up "with a mobile phone in their hands"become more and more solvent, the mobile commerce market is also growing. Young people are not ready to spend time going to the market and choosing meat or potatoes. They will easily order all this from a trusted seller through a mobile application.

- Development of delivery and other related services. The modern buyer wants everything quickly delivered to his home. He doesn't want to spend time shopping, so grocery delivery is one of the fastest growing in the market.

- Individual approach to the buyer. Today, digital technologies make it possible to collect a large amount of information about the buyer and his behavior, this is used in establishing communications with him. Already today, the online store is creating individual offers for customers based on their requests and consumer history, and this trend will only grow.

Product market trading formats

Today, the market retains ancient and modern forms of trade. The most common retail formats are:

- kiosks and pavilions:

- convenience stores;

- supermarkets;

- hypermarkets;

- markets.

Food retail chains are mainly represented by convenience stores, supermarkets and hypermarkets.