First Research US Industry Profile

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Specialty Food Stores
SIC Codes: 5421, 5431, 5441, 5461, 5499
NAICS Codes: 4452
Last Quarterly Update: 5/13/2019
Companies in this industry sell products such as meat, fish, fruits and vegetables, baked goods, candy, and gourmet foods from physical retail locations, often specializing in a single product category. No major companies dominate the industry.
Sales of specialty foods have been increasing worldwide as demand for ethnic foods has continued to grow. In part, the increase comes from immigrant consumers seeking out foods from their own cultures. In the US, Hispanic consumers command about $1.4 trillion in buying power, a figure that's expected to reach $1.8 trillion by 2021, according to Nielsen. Moreover, Hispanics spend more than other groups on groceries, according to the Selig Center for Economic Growth. Asian-American buying power in the US is about $986 billion and is expected to increase to $1.3 trillion by 2022. As consumers worldwide see higher wages and travel increases, interest in other ethnic cuisines such as Filipino, Pakistani, and Peruvian is expected to rise.
The US specialty food store industry includes about 23,500 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $22 billion. Retail specialty food sales grew nearly 13% from 2015 to 2017 (compared with 1.4% for all food sales), driven by product innovations and wider availability of specialty foods through mass-market outlets, according to the State of the Specialty Food Industry 2018 report from the Specialty Food Association, Mintel and SPINS/IRI, which tracks US sales of specialty foods through supermarkets, natural food stores, and specialty food retailers. By channel, specialty food stores account for nearly 11% of all specialty food sales in the US. Overall, sales of specialty food account for nearly 15% of all US retail food sales.
The industry includes meat markets, seafood markets, fruit and vegetable markets, baked goods stores (but not retail bakeries), candy and nut stores, and gourmet food stores. Grocery stores and supermarkets, along with superstores and warehouse clubs that sell food, are covered in separate industry profiles.
Competitive Landscape
Consumer spending and tastes drive demand. The profitability of individual companies depends on effective merchandising and the ability to generate store traffic. Large companies can offer a wide selection of products and have advantages in purchasing, distribution, and marketing. Small companies can compete effectively by offering locally sourced and specialty products, providing superior service, or serving a local market. The US industry is highly fragmented: the 50 largest companies account for less than 20% of sales.
Competition includes traditional grocery and natural food stores, mass merchandisers, warehouse clubs, and online retailers. Mainstream retailers such as Kroger, Costco, and Target account for more than 80% of specialty food retail sales and are expanding their presence in specialty foods significantly. Sales of specialty food by mainstream retailers increased nearly 17% between 2014 and 2016, outpacing growth at natural food stores (up 14%) and specialty stores (12%). The rise in specialty food sales by mainstream stores is credited to convenience-minded millennial consumers, who prefer to purchase specialty food wherever they shop, according to the State of the Specialty Food Industry 2018 report from the Specialty Food Association, Mintel and SPINS/IRI. Specialty food stores also compete with restaurants and other venues serving high-quality prepared food.
Specialty food stores also compete with their own suppliers, who increasingly are embracing e-commerce as a way to sell directly to consumers. E-commerce sales represent 36% of manufacturers' sales, according to the State of the Specialty Food Industry report, with coffee ranking as the specialty product most often purchased online. As in other retail categories, online purchasing of specialty foods is growing and resulting in slower year-over-year growth for retail and food service channels, according to Mintel. Online sales are also among the fastest-growing channels for importers.
Products, Operations & Technology
Major products sold by specialty food stores include meat, fish, and poultry (about 40% of sales); produce (about 15%); and baked goods and candy (about ... plus:
Sales & Marketing
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Finance & Regulation
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Regional & International Issues
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Human Resources
Also includes the following chapters:
Quarterly Industry Update
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Industry Indicators
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Business Challenges
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Trends and Opportunities
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Call Preparation Questions
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Financial Information
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Industry Forecast
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Industry Websites
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Glossary of Acronyms

Historical Profiles (PDF format)

02/11/2019
11/05/2018
07/30/2018
04/30/2018
01/29/2018
10/23/2017
07/24/2017
04/24/2017
01/23/2017
10/17/2016
07/18/2016
04/18/2016
01/18/2016
10/12/2015
07/13/2015
04/13/2015
01/19/2015
10/13/2014
07/21/2014
04/21/2014
01/27/2014
10/21/2013
07/29/2013
05/06/2013
02/11/2013
11/05/2012
08/13/2012
05/28/2012
03/05/2012
11/14/2011
08/15/2011
05/02/2011
01/31/2011
10/18/2010
07/26/2010
04/19/2010
01/25/2010