1 A Service US GROCERY, 2017 Future forces and top trends November 2012 SANDY SKROVAN Research Director - US

2 1.Future Forces  Sizing the market  Landscape shifts  Shopper shifts  Technology and process 2.Top Trends  Polarization  Fragmentation  Localization  Urbanization  Globalization  Personalization  Digitalization 3.Implications Contents

3 This is the result of ongoing changes in a number of interrelated factors: competitive landscape, shopper demographics, technological advancements and business processes. The resulting retail landscape will look vastly different five years from now than it does today. Leading US grocery retailers and their manufacturer partners will not only need to react, but be proactive in realigning strategies that will best position them to take advantage of the new retail realities. This report investigates some driving forces and trends reshaping the US grocery landscape and highlights what retailers and suppliers must do to succeed going forward. A retail paradigm shift is underway in the US.

1. Future Forces

5 The pace of sales growth through US grocery channels will see a modest uptick to a 3.9% average annual rate over the next five years, compared with an average rate of 3.0% annually the previous five years. * Note: Grocery retail channels include supermarkets, mass merchandisers, warehouse clubs, drugstores, convenience stores (instore merchandise only) and the value channel; f – forecast. Source: US Department of Commerce; National Association of Convenience Stores ; Planet Retail f CAGR 3.0% 2012f-2017f CAGR 3.9%