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
Nov 14, 2024 - New High For Wages
- 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.
- Among the lessons learned from the November election is that Americans are exquisitely sensitive to rising prices, especially food prices. A new Statista Spotlight report on Consumer Food Price Sensitivity in the US found 75% of adults said price was important when buying food and beverages, with price impacting 82% of women compared to 70% of men making grocery purchase decisions. In 2023, the consumer price index of food was nearly double that of 2000. Moreover, food prices are still rising at above historical rates with the average price of a basic food basket at $210.15 in January 2024 compared to $156.50 five years ago. The Statista report found consumers are more sensitive to rising food versus nonfood prices, with 78% purchasing fewer grocery items due to price hikes versus personal care (70%), household items (67%), pet (33%), and baby (25%).
- 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.
- Walmart captured more than a third (37%) of grocery ecommerce spending in the second quarter of 2024, a new high for the company, Grocery Dive reports. Meanwhile, grocers continued to lose online sales share, finishing Q2 with just over 27% and losing their lead to mass retailers in the delivery segment, according to Brick Meets Click and Mercatus’ latest quarterly report. Grocers have been losing share to mass retailers, specifically Walmart, since early 2022 when inflation was hitting record highs, according to the report. Supermarkets, especially, are losing the delivery battle to Walmart. Despite easing food price inflation, the report warns that grocers shouldn’t expect relief from the pressures brought on by consumers choosing to shop for groceries at mass retailers. In Q2, the share of supermarket customers who also shopped at mass retailers rose to over 32%, with around one in five shopping at Walmart.
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