Grocery Stores
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 38,200 grocery store firms in the US sell non-perishable dry foods and an extensive array of perishable products; including meat, produce, dairy, bakery, frozen, and several specialty food related products or services. Grocery retail is a low margin, high volume business. The industry is concentrated, as the largest 50 firms account for 73% of industry sales.
Reliance On Information Systems
Grocery retailers depend on large, complex information technology systems to manage their business operations.
Stores Face Intense Competition
Competition in the crowded retail grocery trade is intense.
Industry size & Structure
The average grocery store employs 68 workers and generates over $21.9 million in annual revenue.
- The retail grocery business is a highly competitive, diversified industry with about 38,200 firms employing 2.6 million workers and annual sales of $835 billion.
- The grocery store industry is concentrated, as the largest 50 firms operate over 17,650 stores and account for 73% of industry sales.
- The average store is 48,000 square feet, but large supercenters can exceed 180,000 square feet.
- On average, a grocery store carries about 31,530 items, or Stock Keeping Units (SKUs).
- The median store sales are about $596,000 per week (about $29.1 million per year).
- Customers typically make 1-2 trips to a grocery store each week. The average US household spends about $1,080 on groceries a month, according to the Bureau of Labor Statistics.
Industry Forecast
Grocery Stores Industry Growth
Recent Developments
Dec 14, 2024 - Tariffs on Imports
- Import taxes are set to spike if President-elect Donald Trump makes good on his threat to impose a 25% tariff on goods from Mexico, resulting in higher prices for food and fresh fruit and vegetables. According to the USDA, Mexico made up 69% of US vegetable imports and 51% percent of US fresh fruit imports in 2022, Specifically, data from the University of California, Davis finds that Mexico is the leading foreign supplier of tomatoes, avocados, raspberries, bell peppers, and strawberries to the US. If Trump follows through on his tariff threats, importers would bear those costs and likely pass them on to US consumers, resulting in higher prices and reduced selections in produce aisles. Moreover, Trump’s promise of mass deportations of undocumented workers – many of whom work in agriculture – would result in labor shortages and ultimately higher food prices, economists told The Atlantic.
- According to the Federal Trade Commission, the collapse of the Kroger-Albertson's megamerger is “a victory for the American people,” who it says would have faced higher grocery prices if the deal had been allowed to proceed. But is the merger's demise a good for the US grocery industry and consumers? James Hyland, formerly of Roundy’s Supermarkets (acquired by Kroger in 2015), writes in Supermarket News that the grocery industry and consumers were never threatened by the proposed $20 billion merger. Hyland notes Kroger’s significant investments in Roundy’s stores, merchandising, marketing, and people strengthened the Roundy’s brand and the customer’s shopping experience and adds that the markets Roundy’s operates in remain competitive. For Kroger and Albertson’s, however, the FTC’s decision represented a major blow to a deal that executives said was critical for competing against bigger retail powers like Walmart and Amazon in today’s evolving retail grocery landscape.
- Growing consumer demand for private label products – greatly accelerated by recent food price inflation – is driving grocers to expand their store-brand offerings, according to a new report from FMI – The Food Industry Association. The FMI report found the vast majority (over 90%) of grocers are planning on either moderately or significantly increasing their investment in private-label brands over the next two years, up from 82% a year ago, as more and more shoppers turn to private brands. The report, which surveyed 42 food industry executives, found the sector has become a critical area of growth and investment for both retailers and manufacturers. Sales of private-label products reached record-high market shares in both units and dollars in the first half of 2024, according to data from research firm Circana. New product development and appealing to a broader customer demographic, especially younger shoppers, are key focus areas.
- Employment by grocery stores grew 1.2% in September compared to a year ago, while average industry wages increased by 2.9% over the same period to a new high of $17.80 per hour, according to the latest US Bureau of Labor Statistics data. While job growth at grocery stores appears to be moderating tracking the overall job US market, wage growth is more robust. Growing payrolls at grocery retailers are supported by rising sales and consumer spending. Sales for supermarkets and other grocery stores rose 2.2% year over year in June, while consumer expenditures increased 2.6%, according to the Bureau of Economic Analysis.
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