Conventional supermarkets no longer have a profitable future in most major markets, a US expert on retailing, Mr Christian Haub, told Bord Bia's Marketplace Ireland conference in Dublin yesterday.
The event, which has brought 225 international buyers to Ireland to introduce them to 50 Irish food and drink companies, also features a series of speakers from the world of food and drink marketing.
Mr Haub, who is chairman of the US food retailer A&P, said that in future, food retailers would have to follow the discount route, move upmarket or be driven out of business.
A&P has 627 stores across North America and Canada with annual sales of $11 billion
"In the US the old one-fits-all food retailers are being driven out of business by low-cost operators such as Wal-Mart, while in Europe discounters such as Aldi and Lidl are performing a similar role," he said.
"At the same time, the mass-market retailers are also being challenged by speciality chains offering a wider range of fresh and prepared foods," he said.
"Over the past few years, the numbers tell a disturbing tale. The American supermarket industry is struggling to grow sales, its share of total food dollars is declining and the percentage of shoppers using supermarkets as their primary food store continues to fall," he said.
Predicting that the survival of the fittest and the finest was on the menu for the next decade, Mr Haub said that if the supermarkets were to survive, the existing mass-market food retailers would have to adopt a dual strategy.
In certain locations, he said, they would have to offer a stand-alone discount presence offering food and perhaps other items.
However, he said, a more complex challenge facing retailers was what to do with their existing mainstream stores and he believed their only course was to move upmarket. They could no longer rely on "low-margin, lookalike products".
"We can't afford to be anything but the best, across the entire expanse of what is today our perimeter, offering fresh fruit and vegetables, meat, poultry and seafood, deli and bakery and of course, the difficult but essential business of full and partially prepared heated and chilled entrées," said Mr Haub.
The event continues at Croke Park today.
