Ethnic Supermarkets Industry: Growing Hispanic and Asian Markets Have Kept Performance Strong

 

The Ethnic Supermarkets industry is forecast to continue enjoying growth over the five years to 2016,according to IBISWorld, publisher of industry research. A rebounding economy and expanding Hispanic and Asian populations will be the most significant drivers for this industry during the next five years. IBISWorld anticipates industry revenue to grow at an average annual rate of 3.7% during the period, totaling $31.2 billion in 2016. For this reason, industry research firm IBISWorld has added a report on the Ethnic Supermarkets industry to its growing Food & Beverage Stores report collection.

The Ethnic Supermarkets industry is comprised of retailers that sell culturally diverse food for consumption at home. Demand for the industry’s products is driven by the growing Hispanic and Asian populations in the United States; together these markets represent 98.3% of industry sales. According to data from the US Census, each population has grown more than 40.0% over the past 10 years. This growth has created an environment in which ethnocentric food retailers have thrived. Over the five years to 2011, industry revenue has grown at an average annual rate of 2.1% to $26.0 billion.

Despite the industry’s growing market base, ethnic groceries were still negatively affected by the recession. In 2008, when consumer sentiment crashed by 25.5%, industry revenue increased an anemic 1.0%. In 2009, when per capita disposable income fell for the first time since 1991, industry revenue declined 2.8%. Profit also suffered during the recession, dipping to 1.4% of revenue in 2009 from 2.6% in 2006. The economy has been slow to recover, but an uptick in per capita disposable income is expected to help industry revenue grow 3.5% in 2011. As incomes increase, consumers are more likely to spend money on non-discretionary goods like food. Profit is also expected to receive a boost, growing to 2.8% of revenue in 2011.

According to IBISWorld analyst, Nikoleta Panteva, fortunately for the Ethnic Groceries Industry, conditions are only expected to get better for the industry over the five years to 2016. Supermarkets in this industry retail food to specific ethnic groups. This includes Asian, Hispanic and other ethnic grocery stores that carry mainly specialty products not found in mainstream supermarkets. “As the Asian and Hispanic populations continue to grow domestically, demand for cultural foods will increase further,” says Panteva. This trend, coupled with per capita disposable income growth of 1.5% per year, will push industry revenue up at an average annual rate of 3.7% to $31.2 billion. Profitability is also forecast to grow, accounting for 3.3% of revenue by 2016. The mounting demand and opportunities for ethnic supermarkets will bring new operators into the industry. The number of store locations is expected to grow from 21,393 in 2011 to 25,012 in 2016. At the same time, the expanding ethnic population is pushing nonindustry supermarkets to increase their product offerings, which has intensified competition for the industry’s operators.

 

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