The 2002 Food & Drug Store Market Research Handbook By: Terri C. Walker CONTENTS PART I: EXECUTIVE SUMMARY 1 MARKET SUMMARY: UNITED STATES 1.1 Market Assessment 1.2 Market Leaders: Groceries 1.3 Market Leaders: Drug Stores 1.4 Market Leaders: Convenience Stores 1.5 Grocery Industry Market Distribution 1.6 Market Share Distribution 1.7 Mass Market Retailing Distribution 1.8 Supermarket Sales by Product Category and Channel Distribution 1.9 Consumer and Market Trends 1.10 The Changing Retail Business 1.11 Competitive Challenges 1.12 Outlook to 2004 2 MARKET SUMMARY: CANADA 2.1 Market Leaders: Food Stores 2.2 Market Leaders: Drug Stores 2.3 Market Leaders: Convenience Stores 2.4 Market Trends 2.5 Demographics 3 MARKET SUMMARY: MEXICO 3.1 Market Assessment 3.2 Market Leaders 3.3 Cash Transfers from the United States PART II: SECTOR MARKET ANALYSIS 4 MARKET ANALYSIS AND TRENDS: FOOD STORES 4.1 Market Assessment and Forecast 4.2 Food Store Industry Composite Statistics 4.3 Marketshare by Online Grocers 4.4 Distribution of Consumer Expenditures 4.5 Regional Sales Distribution 4.6 Surviving the Challenges of the 1990s 4.7 Y2K Hysteria: Impact on Grocery Sales 4.8 Market Outlook: 2000 4.9 Market Outlook: 2005 4.10 Home Meal Replacement 4.11 The Competitive Environment 4.12 New Supermarket Openings 4.13 Large Chains Dominate the Food Store Business 4.14 Consolidation 4.15 Acquisitions: 1999 4.16 Consumer Trends 4.17 Front-End Checkout Trends 4.18 New Product Introductions 4.19 Unsaleable Products 4.20 Shrink Levels 4.21 Independent Supermarket Retailers 4.22 Small Supermarkets 4.23 Natural Foods Grocery Chains 4.24 Airport Supermarkets 4.25 Merchandise Return Centers 4.26 Large Chains 4.27 Privately-Owned Companies 5 MARKET ANALYSIS AND TRENDS: DRUGSTORES 5.1 Market Assessment 5.2 Distribution of Sales by Product Category 5.3 Channel Analysis of Drugstore Categories 5.4 Market Leaders: 1990-1999 5.5 Growth and Consolidation 5.6 Market Changes During the 1990s 5.7 New Drug Store Openings 5.8 Market Outlook: 2000-2003 5.9 Challenges of Market Growth 5.10 Large Chains Dominate the Drug Store Business 5.11 Linear Shopping 6 MARKET ANALYSIS AND TRENDS: SUPERCENTERS 6.1 Market Assessment 6.2 Market Trends 6.3 Supercenter Marketshare Leaders 6.4 Wal-Mart Supercenters 6.5 SuperTarget 7 MARKET ANALYSIS AND TRENDS: MASS MERCHANDISE CHAINS 7.1 Grocery Sales by Mass Merchandise Chains 7.2 Pharmacy by Mass Merchandise Chains 8 MARKET ANALYSIS AND TRENDS: CONVENIENCE STORES 8.1 Market Assessment 8.2 Convenience Store Sales by Product Category 8.3 Number of Stores 8.4 Merchandise and Foodservice Sales at Convenience Stores 8.5 Market Drivers 8.6 Analysis of Market Competition 8.7 Current Market Activities 9 MARKET ANALYSIS AND TRENDS: FOOD DISTRIBUTORS 9.1 Market Infrastructure 9.2 Food Distribution Methods 9.3 Competition 9.4 Market Trends: Food Distributors 9.5 Market Trends: Food Brokers 10 MARKET ANALYSIS AND TRENDS: WAREHOUSE CLUBS 10.1 Market Assessment 10.2 Market Leaders 10.3 Market Trends 10.4 Regional Demographics 10.5 Customer Demographics 10.6 Small Business Customers 10.7 Expanded Focus for Market Growth 10.8 Profiles of Key Players 10.8.1 BJ=s Wholesale Club 10.8.2 Costco 10.8.3 Cost-U-Less 10.8.4 Sam=s Club PART III: PRODUCT MARKET ANALYSIS 11 MARKET ANALYSIS: PRIVATE LABEL 11.1 Market Assessment 11.2 Market Distribution by Product Category 11.3 Market Trends 12 MARKET ANALYSIS: FOOD PRODUCTS 12.1 Market Assessment 12.2 Beverages 12.3 Cereal 12.4 Chicken 12.5 Candy Sales 12.5.1 Seasonal Candy 12.5.2 Interactive Candy 12.6 Fiery Foods 12.7 Fortified Foods 12.8 Frozen Foods 12.9 Ice Cream 12.10 Gourmet and Specialty Products 12.11 Meat Departments 12.12 Nutrition Bars 12.13 Oils and Vinegars 12.14 Organic Products 12.15 Produce 12.16 Soups 12.17 Spices and Seasonings 13 MARKET ANALYSIS: NON-FOOD PRODUCTS 13.1 Market Assessment 13.2 Increasing Competition 13.3 Top 20 Chains by Percentage of Non-Foods Sales 13.4 Top 20 Chains by Non-Foods Dollar Sales 13.5 Air Fresheners 13.6 As Seen on TV Products 13.7 Bathroom Tissue 13.8 Batteries 13.9 Blank Audio/Video Cassettes 13.10 Books 13.11 Diapers/Training Pants 13.12 Dish Detergent 13.13 Disposable Plates 13.14 Fabric Conditioners 13.15 Facial Tissue 13.16 Foil 13.17 Greeting Card/Social Expression 13.18 Housewares 13.19 Laundry Detergent 13.20 Light Bulbs 13.21 Magazines 13.22 Office/School Supplies 13.23 Paper Towels 13.24 Personal Soaps/Bars 13.25 Prepaid Phone Cards 13.26 Pet Care 13.27 Photo 13.28 Pre-Paid Phone Cards 13.29 Sunglasses 13.30 Tobacco Products 13.31 Toys 13.32 Video Rentals and Sales 14 MARKET ANALYSIS: HEALTH, BEAUTY AND COSMETICS PRODUCTS 14.1 Market Assessment 14.2 Market Trends 14.3 Market Strategies 14.4 New Opportunities for Food and Drug Retailers 14.5 Market Trends 14.6 Consumer Trends 14.7 Appealing to the Female Customer 14.8 New Product Introductions 14.9 Current Market Activities 14.10 Adult Incontinence 14.11 Analgesics 14.12 Baby Products 14.13 Bath Products 14.14 Breath Fresheners 14.15 Cold/Allergy/Sinus Liquids/Powders 14.16 Cold/Allergy/Sinus Tablets/Packets 14.17 Contraceptives 14.18 Cosmetics 14.19 Cough/Cold/Allergy 14.20 Deodorants 14.21 Dietary Supplements 14.22 Diet Tablets/Candy 14.23 Digestive Remedies 14.24 Disposable Razors 14.25 Ethnic Health and Beauty Care Market 14.26 Eye Care 14.27 Facial Moisturizers 14.28 Feminine Hygiene 14.29 First Aid B Ointments/Antiseptics 14.30 First Aid B Tape/Bandages/Gauze/Cotton 14.31 Foot Care Devices 14.32 Fragrances 14.33 Hair Care 14.34 Hair Colorings 14.35 Hair Conditioners/Cream Rinses 14.36 Hand & Body Lotions 14.37 Internal Analgesic Liquids 14.38 Internal Analgesic Tablets 14.39 Lip Cosmetics 14.40 Mouthwashes/Dental Rinses 14.41 Nutritionals 14.42 Oral Care 14.43 Razors 14.44 Refill Razor Blades 14.45 Shampoos 14.46 Shaving 14.47 Skin Care 14.48 Smoking Cessation 14.49 Sun Care 14.50 Toothpastes 14.51 Vitamins 14.52 Weight Control 14.53 Other Subsectors 15 MARKET ANALYSIS: PHARMACEUTICALS 15.1 Market Assessment 15.2 Market Trends and Analysis 15.3 Market Forecast 15.4 Impact of Upcoming Drug Patent Expirations 15.5 Consumer Trends PART IV: TREND ANALYSIS 16 ISSUES FACING THE INDUSTRY 16.1 Top Priority Issues Through 2005 16.2 Labor Shortages 16.3 Labor Unions 16.4 Customer-Data Collection Practices 16.5 Slotting Allowances 16.6 Technological Advancements 17 CONSUMER TRENDS 17.1 Shopping Trends 17.2 Consumer Choice in Shopping Venues 17.3 Reasons Shoppers Select a Supermarket 17.4 Shopping Days and Age Demographics 17.5 Shopper Concerns 17.6 Diminished Leisure Time 17.7 Food and Holiday Celebrations 18 RETAIL TRENDS 18.1 Trends in Shopping 18.2 Increased Shopping at Neighborhood Stores 18.3 Shoppertainment 18.4 Cross Merchandising 18.5 Weather-Related Disasters and Shopping Trends 18.6 Challenges Ahead 19 EATING PATTERNS IN AMERICA 19.1 Eating Meals at Home 19.2 Per Capita Consumption Trends 19.3 Eating Patterns in America 19.4 Healthy Dining 19.5 Appropriate Products and Ingredients 19.6 America's Changing Palate 20 HOME-MEAL REPLACEMENTS 20.1 Market Assessment 20.2 Market Distribution 20.3 Market Trends 20.4 Key Players 20.5 Making Profit with HMR 20.6 Take-Home Meals from the Office 20.7 Dining Leftovers 20.8 Market Outlook 21 CONSUMER E-COMMERCE TRENDS 21.1 The Impact of Electronic Retailing 21.2 E-Mail Marketing as a Promotional Tool 21.3 Market Assessment and Forecast 21.4 Online Grocery Shopper Profile 21.5 Online Consumer Demographics 21.6 Online Shopping Characteristics 21.7 Market Barriers 21.8 Making Online Shopping Fun 21.9 Shopping Bots 21.10 Delivery Services for E-tail Markets 21.11 Distribution and Warehouse Facilities 21.12 Leading Retail Companies Develop Internet Strategies 21.13 Alliances of the Internet Giants and Retail Leaders 22 CONSUMER DEMOGRAPHICS 22.1 Shopper Age Demographics 22.2 Grocery Shopper Demographics 22.3 Population Diversity 22.4 African-American Markets 22.5 Hispanic Markets 22.6 Children's Markets 22.7 Tweeners 22.8 Teenager Markets 22.9 Generation X 22.10 Generation Y 22.11 Baby-Boomer Markets 22.12 Senior Markets 22.13 The Low-Income Consumer 23 REGIONAL DEMOGRAPHICS 23.1 Demographic Factors in Market Analysis 23.2 The Top 50 Markets 23.2.1 The Largest Supermarket Markets 23.2.2 The Largest Drug Store Markets 23.3 The Top 75 Metropolitan Statistical Areas (MSAs) 23.4 New York-Northern New Jersey-Long Island 23.5 Los Angeles-Riverside-Orange County 23.6 Chicago-Gary-Kenosha 23.7 Washington-Baltimore 23.8 San Francisco-Oakland-San Jose 23.9 Philadelphia-Wilmington-Atlantic City 23.10 Boston-Worcester-Lawrence-Lowell-Brockton 23.11 Detroit-Ann Arbor-Flint 23.12 Dallas-Fort Worth 23.13 Houston-Galveston-Brazoria 23.14 Atlanta 23.15 Miami-Fort Lauderdale 23.16 Seattle-Tacoma-Bremerton 23.17 Cleveland-Akron 23.18 Phoenix-Mesa 23.19 Minneapolis-St. Paul 23.20 San Diego 23.21 St. Louis 23.22 Pittsburgh 23.23 Denver-Boulder-Greeley 23.24 Tampa-St. Petersburg-Clearwater 23.25 Portland-Salem 23.26 Cincinnati-Hamilton 23.27 Kansas City 23.28 Sacramento-Yolo 23.29 Milwaukee-Racine 23.30 Norfolk-Virginia Beach-Newport News 23.31 San Antonio 23.32 Indianapolis 23.33 Orlando 23.34 Columbus 23.35 Charlotte-Gastonia-Rock Hill 23.36 New Orleans 23.37 Las Vegas 23.38 Salt Lake City-Ogden 23.39 Buffalo-Niagra Falls 23.40 Greensboro-Winston-Salem-High Point 23.41 Nashville 23.42 Hartford 23.43 Rochester 23.44 Memphis 23.45 Austin-San Marcos 23.46 Raleigh-Durham-Chapel Hill 23.47 Jacksonville 23.48 Oklahoma City 23.49 Grand Rapids-Muskegon-Holland 23.50 West Palm Beach-Boca Raton 23.51 Louisville 23.52 Dayton-Springfield 23.53 Richmond-Petersburg 23.54 Providence-Warwick-Pawtucket 23.55 Greenville-Spartanburg-Anderson 23.56 Birmingham 23.57 Albany-Schenectady-Troy 23.58 Honolulu 23.59 Fresno 23.60 Tucson 23.61 Tulsa 23.62 Syracuse 23.63 El Paso 23.64 Omaha 23.65 Albuquerque 23.66 Knoxville 23.67 Bakersfield 23.68 Scranton-Wilkes Barre-Hazleton 23.69 Harrisburg-Lebanon-Carlisle 23.70 Allentown-Bethlehem-Easton 23.71 Toledo 23.72 Youngstown-Warren 23.73 Springfield, Mass. 23.74 Baton Rouge 23.75 Little Rock-North Little Rock 23.76 Stockton-Lodi 23.77 Sarasota-Bradenton 23.78 Wichita 23.79 State-by-State Markets PART V: STRATEGIC PERSPECTIVES 24 SUPPLIERS 24.1 Food Industry Suppliers 24.2 Drug Wholesalers 25 FOOD INDUSTRY TRANSPORT 25.1 Market Assessment 25.2 The Lifeline Between the Manufacturer, Distributor and Retailer 25.3 Creating Growth for the Grocery Supply Chain 25.4 Shipment of Perishable Goods 26 ENGINEERING AND CONSTRUCTION 26.1 Market Trends 26.2 Construction Costs 27 EMERGING TECHNOLOGIES 27.1 Information Technology in the Food and Drug Industry 27.2 Kiosks 27.3 Self-Checkout 27.4 Halographic Shopping Carts 27.5 Frequent Shopper Programs 28 REAL ESTATE 28.1 Real Estate Issues for Food and Drug Chains 28.2 Impact of Supercenters 28.3 Downsizing Locations 28.4 Freestanding versus Strip Mall Locations for Drugstores 28.5 Environmental Considerations 29 ADVERTISING 29.1 Newspaper Advertising 29.2 Coupons 29.3 E-Based Coupons 29.4 In-Store Marketing 29.5 Customer Retention 29.6 Case Study PART VI: ANCILLARY SERVICES 30 ANCILLARY SERVICES 30.1 Overview 30.2 A Perspective on Ancillary Services 30.3 Bakeries 30.4 Banks 30.5 Culinary Education 30.6 Deli's 30.7 Floral Departments 30.8 Case Study 31 FOOD AND DRUG COMBOS 31.1 Food and Drug Combos 31.2 Prescription Sales by Grocery Chains 31.3 Supermarket Pharmacies and Health Care Services 32 GROCERY STORE AND GAS STATION COMBOS 32.1 Concept Development in Europe 32.2 Gasoline Sales by Grocers in the United States 32.3 Case Studies PART VII: E-COMMERCE 33 ONLINE GROCERS 33.1 Market Assessment 33.2 Market Trends 33.3 Market Leaders 33.4 Online Grocery Shopper Demographics 33.5 Operating Models 33.6 Market Survey Results 33.7 Delayed Priority 33.8 Online Grocers in Europe 33.9 Online Grocers in Canada 33.10 Consolidation 33.11 Profiles of Key Players 33.11.1 Albertsons.com 33.11.2 GroceryWorks.com 33.11.3 HomeGrocer 33.11.4 HomeRuns.com 33.11.5 IGA 33.11.6 NetGrocer.com 33.11.7 Peapod 33.11.8 Priceline.com 33.11.9 Schnuck Markets 33.11.10 ShopLink.com 33.11.11 Streamline.com 33.11.12 Webvan Group 33.12 Other Current Market Activities 34 ONLINE PHARMACIES 34.1 Market Assessment 34.2 Emerging E-Commerce Activities 34.3 Analysis 35 ONLINE HEALTH AND BEAUTY PRODUCTS 35.1 Market Assessment 35.2 Emerging E-Commerce Activities PART VIII: PROFILES OF KEY PLAYERS 36 COMPANY PROFILES 36.1 Ahold USA 36.2 Albertson=s 36.3 Aldi 36.4 BJ's Wholesale Club 36.5 Costco 36.6 CVS 36.7 Delhaize America 36.8 Eckerd 36.9 Fleming Companies 36.10 The Great Atlantic & Pacific Tea Company 36.11 Giant Eagle 36.12 Grand Union 36.13 H-E-B Grocery Co. 36.14 Hy-Vee 36.15 IGA 36.16 Ingles Markets 36.17 Jitney-Jungle 36.18 Kroger 36.19 Loblaw Companies 36.20 Longs Drug Stores 36.21 Marsh Supermarkets 36.22 Meijer 36.23 Nash Finch 36.24 Penn Traffic Co. 36.25 Publix Super Markets 36.26 Rite Aid 36.27 Safeway 36.28 Shaw=s Supermarkets 36.29 Smart & Final 36.30 SuperValu Retail 36.31 Sysco 36.32 Walgreen Company 36.33 Wal-Mart 36.34 Wegmans Food Markets 36.35 Weis Markets 36.36 Winn-Dixie 36.37 7-Eleven 36.38 Other Key Players APPENDIX A: MARKET RESOURCES