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Economics Assignment | Food Retail Industry

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Added on  2019-10-18

Economics Assignment | Food Retail Industry

   Added on 2019-10-18

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Food retail industryFood retail industry in Canada and USA play a major role in countries GDP. Food retail industry in Canada is at saturation stage and is expected at increase 1% annually from 2018 -2023 in USA and Canada (IBIS, 2018). The industry faces tough competition and competes on prices. It has witnessed decreasing profit margins in past few years.Key stats about Food retail industryRevenue - $90.7 B (Canada) & 654.6 B (USA)Profits – $ 3.4 B (Canada) & $10.5 B (USA)The profit margin as a percentage of revenue in Canada is 3.7% and in USA is 1.6%, which shows that thecompetition in US market is stiffer as compared to competition in Canadian market. Supply – Retail food industry in USA and Canada offers huge range of products – fresh produce such as fruits and vegetables (both full products and prepared cut portions), cereals, snacks, non-alcoholic beverages, fish, seafood and meat products, frozen food, prepared food etc. Key players in American Market: Walmart, Kroger, Costco, Ahold, Target, Publix, Whole Foods, HEB,Albertsons, Southeast Grocers.Key players in Canadian Market: Walmart, No frills, Loblows, Fresh Co.Key success parameters: Price competitiveness, product differentiation, economies of scale andinternational trade, health and environmentally conscious efforts.Global market key things to consider: Trade barriers, food safety standards, perceived quality ofCanadian foods, outbreak of any disease in Canada or target market, exchange rateValue Chain of Food retailersA typical value chain of a food retailer starts with farmers which provide fresh fruits, vegetablesand other farm products directly to the retailer. They also source processed foods frommanufacturers, which in turn provide orders to the suppliers. End customers come at the laststep of the value chain who buy from metro for its wide variety of brands and products of freshproduce and customer service.
Economics Assignment | Food Retail Industry_1
Online grocery – Online grocery market is rapidly increasing. A report by NPT, states that 10% of US consumers stated that they regularly shop groceries online. The US online grocery market has grown more than 100% in last 2 years (from $12 B in 2016 to $26 B in 2018 )1. Online grocery market is expected to grow to $ 117 B till 2023. This shows a huge potential for online grocers, which need strategies to entice and attract online grocery shoppers. Major online groceries and their assessment is shown in appendix 1.Consumers of Online groceries – Both Millennials and Gen X are consumers of online groceries in North American market6 who see value in online shopping. People are use both mobile apps and website to order online grocery.
Economics Assignment | Food Retail Industry_2

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