Specialty Food Stores
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 19,000 specialty foods stores in the US sell produce, seafood, grocery, meat and poultry, bakery, prepared foods, specialty cheese, coffee and tea, nutritional supplements, vitamins, educational products, floral, and even certain household products. Most specialty food stores offer products deemed to be higher quality and premium-priced than traditional grocery stores.
Dependance On Economic Conditions
Specialty food customers typically are more affluent (household income of $75,000) than the average grocery store shopper.
Perishable Products
Specialty food stores typically carry more perishable products than traditional food retailers, often comprising two-thirds or more of their product offerings.
Industry size & Structure
A typical specialty food retailer operates out of a single location, employs 8-9 workers, and generates about $1.4 million annually.
- The specialty food stores industry consists of 19,000 companies that employ 160,000 workers and generate about $27 billion annually.
- Sales by US specialty foods stores increased by 5.2% in 2022 compared to 2021 and reached $28.4 billion.
- Traditional grocery stores and supermarkets are the largest sellers of specialty foods, with about 70% of sales.
- Sales of specialty foods and beverages across all retail and food services are expected to reach $207 billion in 2023.
- Of organic food sales, 56% are sold through traditional food retailers and 32% are through natural food/health stores.
- Specialty foods represent about 22% of all food sales at retail.
- Most specialty food stores are small, single-unit locations, but some specialty food retailers are relatively large, multi-state operations, such as Whole Foods Markets, Sprouts Farmers Market, and Trader Joe's.
Industry Forecast
Specialty Food Stores Industry Growth
Recent Developments
Nov 13, 2024 - Wages Climb to New High
- Producer prices for specialty food retailers fell 1.6% in September compared to a year ago after rising 10.1% in the previous September-versus-September annual comparison, according to the latest US Bureau of Labor Statistics data. Employment by specialty food stores also declined in September, down 4.8% year over year, while industry wages continued to rise, reaching a new high of $18.94 per hour over the same period, a 4.8% YoY increase, according to the BLS.
- Among the key learnings from the November election is that Americans are exquisitely sensitive to rising prices, especially food prices. A new Statista spotlight report on Consumer Food Price Sensitivity in the US found 75% of adults in the US said price was important when buying food and beverages, with price impacting 82% of women compared to 70% of men making grocery purchase decisions. In 2023, the consumer price index of food was nearly double that of 2000. Over the last two years, the US has had one of the highest inflation rates for food products worldwide, with an inflation rate reaching as high as 9.9% in 2022, before easing to 5.8% in 2023. Food prices are still rising at above historical rates with the average price of a basic food basket totaling $210.15 in January 2024 compared to $156.50 five years ago.
- Growing consumer demand for private label products – greatly accelerated by high food price inflation – is driving grocers to expand their store-brand offerings, according to a new report from FMI – The Food Industry Association. The FMI report found the vast majority (over 90%) of grocers are planning on either moderately or significantly increasing their investment in private-label brands over the next two years, up from 82% a year ago, as more and more shoppers turn to private brands. The report, which surveyed 42 food industry executives, found the sector has become a critical area of growth and investment for both retailers and manufacturers. Sales of private-label products reached record-high market shares in both units and dollars in the first half of 2024, according to data from research firm Circana. New product development and appealing to a broader customer demographic, especially younger shoppers, are key focus areas.
- The growing mainstream appeal of specialty foods is driving robust sales growth, with US sales of $207 billion in 2023 – up 149% over the past decade, according to the Specialty Food Association. Sales are projected to reach $221.5 billion in 2024 and grow at a compound annual rate of 5.4% from 2023 to 2027. Shoppers most likely to purchase specialty foods include households with kids, those with incomes of $150,000-plus, “plant-forward” consumers, and West Coast residents, per the SFA. Purchasers tend to skew younger, with 83% of millennials, 77% of Gen Z, 73% of Gen X, and 53% of baby boomers making specialty food purchases last year, Food Technology Magazine reports. In 2023, 62% of shoppers bought specialty foods in a supermarket, 50% in a mass retailer, 42% in a natural food store, 25% at a farmers’ market, and 21% in a gourmet shop or convenience store.
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