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Q4 Retail Index - Grocery

by 
Ethan Chernofsky
 on 
February 13, 2020
Q4 Retail Index - Grocery

Between the build-up to Christmas and the annual supermarket holiday that is Turkey Wednesday, grocers and general merchandise retailers have much to be excited about when Q4 rolls around.

So how did Q4 performance look for some of the top players in the space? We dug into the data to find out.

Big Grocery Returns 

All but one of the twelve companies analyzed for the index saw significant growth in Q4 2019 compared to the previous quarter. Overall, the group saw an average foot traffic increase of 6% during this period, further indicating its strength. Target led the way with a 15.2% increase fueled by its annual Black Friday bump, with Costco seeing a 12.7% increase followed by Meijer and Walmart with increases of 9.6% and 8.9% respectively.

Yet, the shortened holiday season also impacted the sector, with a growth number that was up only 1.0% year-over-year for the quarter for the group. Trader Joe’s and Costco saw the biggest jumps of the group in this category with increases of 7% and 6% respectively year-over-year for the quarter.

Grocery’s Successful Outliers - Costco and Trader Joe’s

Yet, year-over-year improvement wasn’t the only thing that united Costco and Trader Joe’s. The two brands are all the more interesting considering they sit on the edges of the sector providing very specific products with equally unique benefits. Looking at Customer Loyalty - the average number of visits per visitor over the course of the quarter - shows a group average of 3.9 visits per visitor. Both Costco and Trader Joe’s fall below this line with 3.2 and 2.3 visits per visitor respectively, all the more interesting considering their overall year-over-year growth.

At the same time, Costco finishes first among the group with a 45-minute average visit duration, while Trader Joe’s had the second-lowest with just a 34 minutes average duration. The growth success alongside the tremendous variance in visit frequency and visit duration emphasize a critical point about retail success - it is not a one-size-fits-all market. Many brands with unique offerings that lead to more unique forms of customer engagement can help fill a growing Grocery and General Merchandise pie. 

The Leaders Remain Ahead

While the quarterly factors may impact short term growth, the king of the Grocery & General Merchandise category remains Walmart. The supercenter brought in just over 50% of all visits to the category in Q4, with Target the next closest at 14.3%. Costco rounds out the top three with 6.5% while Kroger and Publix follow behind at 5.8% and 4.3% respectively. This gap delineates one of the key factors still underpinning the grocery sector, intense regionalization, which limits the rise of any single threat to Walmart’s dominance.

Takeaways

Even in a shortened holiday season, the General Merchandise & Grocery sector brought in strong visits. Though more interesting than growth were two lessons that could help shape the wider space. Firstly, niche players like Costco and Trader Joe’s are driving success proving the viability of grocery models that don’t replicate the classic supermarket model. Secondly, the massive gap between the top two players and the rest of the field shows the powerful strength of each of these brands, especially within their specific core geographies.

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