BOSTON—U.S. discount and convenience stores are projected to grow faster than all other offline retail channels over the next five years, reflecting consumers' increased focus on price and speed, even if it means a more limited assortment, according to a new study by consulting firm Edge by Ascential.
Edge by Ascential projects annual growth rates of 5%-plus for non-food discount, food discount and convenience stores. C-stores are projected to see the highest growth at 5.4%, with discount and non-food discount stores projected at 5.3% and 5%, respectively. All other offline retailers, aside from membership club stores, are projected to see annual growth rates of 3% or less.
The forecast reflects broader economic trends. Despite unemployment continuing at historic lows, wages remain stagnant for many workers, placing increased sensitivity on overall value.
"What we're seeing offline is similar to what we're seeing online," said David Gordon, research director at Edge by Ascential. "There's an increasing emphasis on low cost and convenience. You can see it through the lens of Amazon, and it will continue to play out online in similar ways."
U.S. projections largely reflect what's expected on a global scale where convenience stores (6.6%), non-food discount stores (5.2%) and discount stores (4.9%) join membership club stores in experiencing the fastest growth. This growth can be seen in the chains that were planning to add U.S. stores in 2019, such as German-owned discounter Aldi, which planned to open 100 new locations.
More than 900 Dollar General stores were expected to open this year, with hundreds of locations adding produce and fresh foods to their offerings. A net increase of 160 Dollar Tree and Family Dollar stores is also anticipated. (For more on dollar store growth, see “The Buck Stops Where?” in the October NACS Magazine.) Food discount stores are projected to continue gaining overall share, increasing to 9.7% of food sales in 2024, from 8.8% today and 7.4% in 2014.
Convenience stores will continue to thrive due to urbanization, declining household sizes and preferences for small, quick, shopping missions. C-stores also are proving relatively resistant to share loss from online retailers, with only a 0.2% loss in share from 2013-18.
The study’s findings are drawn from Edge by Ascential's Retail Market Monitor, which analyzes current and future performance for individual sectors.