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
Sep 14, 2024 - Rising Payrolls
- Employment by grocery stores grew 0.8% in July compared to a year ago, while average industry wages increased 3.2% over the same period to $17.61 per hour, according to the latest US Bureau of Labor Statistics data. Rising sales and consumer expenditures are helping to support the industry’s rising payrolls. 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.
- Spending on private-label grocery items has grown to 20% of the total market and is projected to reach 24% in the next few years, according to a new report. The report from professional services firm Alvarez & Marshal examines how private-label sales continue to accelerate even during a period of slow grocery market growth. Besides helping consumers save money, private-label products are a “strategic imperative for grocers, allowing them to build stronger loyalty and advocacy with their customers while delivering strong returns for shareholders,” per the report. It notes that C-level executives at the most successful private brand grocers are committed to growing their own brands and driving differentiation through them. Amid high inflation, grocery chains have been pushing their private-label brands to keep prices low for consumers. Kroger, Amazon, and Walgreens are among those retailers launching new private-label brands and products, Supermarket News reports.
- 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.
- The chair of the US Federal Trade Commission (FTC), Lina Khan, announced in August that the agency and the Justice Department would launch an inquiry into high grocery prices, Supermarket News reports. While Kahn acknowledged that the prices on many items consumers purchase at grocery stores have declined since last year, she said consumers still feel pinched, adding, “It still isn’t clear that Americans are fully getting the competitive, affordable prices that they deserve.” Khan announced the inquiry at the first meeting of the multiagency Strike Force on Unfair and Illegal Pricing, launched by President Biden in March to probe the tactics big grocery chains use to hike prices and extract outsized profits. Key among the task force’s priorities is having the USDA make investments to increase competition in the food supply chain.
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