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 Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 18,300 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.

Perishable Products

Specialty food stores typically carry more perishable products than traditional food retailers, often two-thirds or more of their product offerings.

Demand Dependent On Economic Conditions

The typical specialty food customer is more affluent (household income over $50,000) than the typical traditional grocery store customer.

Industry size & Structure

A typical specialty food retailer operates out of a single location, employs 11 workers, and generates about $1.3 million annually.

    • The specialty food stores industry consists of 18,300 companies that employ over 203,700 workers, and generates about $24 billion annually.
    • Total US sales of specialty foods grew 13% in 2020 compared to 2018 and reached $170.4 billion.
    • Traditional grocery stores and supermarkets remain the largest sellers of specialty foods, with about 60% of sales.
    • Natural food stores' sales rose 9.8% in 2020.
    • Of organic product sales, 45% are through traditional food retailers and 37% are through natural food stores.
    • Specialty foods represent about 21.5% 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, The Fresh Market, and Trader Joe's.
                                  Industry Forecast
                                  Specialty Food Stores Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Coronavirus Update

                                  Apr 22, 2022 - Consumers May Switch to Cheaper Brands Amid Skyrocketing Inflation
                                  • As food prices have gone up, grocery chains have benefitted from consumers absorbing higher prices. However, as year-over-year at-home food prices rose 10% in March, some industry watchers suggest consumers may have reached an inflection point and will begin looking for bargains and spending less. In the early days of the pandemic, high demand and supply chain problems kept promotional deals to a minimum, but some industry insiders feel consumers will increasingly shift their spending to bargain brands and low-cost retailers if high prices persist, according to The Wall Street Journal. Consumers have typically opted for less expensive brands during periods of inflation, but brand switching has also grown due to stock-outs caused by supply chain disruptions during the pandemic.
                                  • In February 2022, 4.9% of retail workers quit or left their jobs, the second-highest percentage of any US industry sector after leisure and hospitality with 5.6%. In speaking about the overall level of quits in February, Daniel Zhao, senior economist at the career site Glassdoor, said, “These quits are still extremely high, and that shows the Great Resignation is still in full swing.”
                                  • About 92% of families plan to continue eating together at home at least as often as or more often than they do now, according to sales and marketing firm Acosta. Some 30% of those surveyed by Acosta expressed misgivings about dining at a restaurant again, including 14% saying that it will be over six months before they do so, 16% saying that they’re not sure, and 3% saying that they’ll never go back to restaurants.
                                  • Analysts at Carl Marks Advisors see more consolidation and bankruptcies in the grocery industry. However, firms that become large enough to compete with Walmart and Amazon or distinguish themselves by filling a specific niche will thrive. Stores that boost their ethnic-food selections or that offer specialty cheese shops or extensive meat markets, for example, may do well.
                                  • Online grocery purchases will account for about 21.5% of total US grocery sales by 2025, according to a study from grocery e-commerce platform Mercatus USA and research firm Incisiv. The study cites the coronavirus pandemic as a key driver of rising e-commerce grocery purchases. A 2019 projection from Incisiv and Winsight Grocery Business predicted that online sales would reach 13.5% of total grocery sales by 2025.
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