Though price deflation impacted top line sales in 2016 and 2017, grocery stores still generated more than $641 billion in sales in 2017 according to the latest data from the Census Bureau. Mergers and acquisitions are changing the competitive landscape as regional players combine forces to compete with large chains like Kroger and consolidation also continues within the convenience store sector. Even European giants Aldi and Lidl are continuing to compete for their share of Americans’ paychecks. Aldi, which currently has 1,600 stores in the U.S., plans to have 2,000 by the end of 2018. Lidl entered the U.S. market in June 2017 with 10 stores and plans to open approximately 100 by mid-2018. But the most notable acquisition was that of upscale brand Whole Foods by e-commerce giant, Amazon, meaning, further disruption in this fast-changing industry cannot be far off as retailers race to grow their e-commerce capabilities and provide greater convenience in the form of meal kits.
Beyond perishables such as produce, meat, seafood, bakery and dairy, typical inventory usually includes non-perishables in the form of health/beauty supplies, consumables/paper goods, and frozen food. In addition, many retailers offer in-store pharmacies to fill prescriptions. Machinery and equipment (M&E) assets range from freezers, refrigerators and store fixtures, to warehouse racks and forklifts. Industry-wide, the outlook for grocery and convenience stores is affected by food price inflation and deflation, gas prices, merger and acquisition activity, and the growth of e-commerce.