Low-cost grocery retailers are expected to outperform traditional supermarkets in 2023, a new report finds.
The DBRS Morningstar document indicates that soaring inflation and interest rates are influencing consumer behavior and increasing sales volumes at lower-cost grocery stores. According to DBRS Morningstar, consumer efforts to reduce spending will further encourage cooking at home, which benefits the grocery industry in general as people forgo eating out to cut costs.
The report says low-cost retailers are expected to see the biggest increase in food retail volumes, as shoppers seek promotional discounts, lower-cost brands and more affordable options.
The expected growth of the low-cost format is the opposite of what has happened during the pandemic, when public health and safety concerns, the desire for convenient “one-stop shopping” and online grocery ordering boosted sales in traditional supermarkets.
Sales trends between discount stores and brick-and-mortar stores should gradually return to their usual levels as economic conditions stabilize, the report says, but discount grocery stores could see a ‘structural advantage’ if they succeed. to retain new customers.
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