Grocery Stores

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 39,900 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 retail grocery trade is fierce and intense.

Industry size & Structure

The average grocery store employs 64-65 workers and generates over $18 million in annual revenue.

    • The retail grocery business is a highly competitive, diversified industry with about 39,900 firms employing 2.5 million workers, and annual sales of $741 billion.
    • There are about 65,200 grocery stores in the US. The average store is 42,415 square feet, but large supercenters can exceed 100,000 square feet.
    • The grocery store industry is concentrated, as the largest 50 firms operate over 17,600 stores and account for 73% of industry sales.
    • On average, a grocery store carries about 40,000 items, or Stock Keeping Units (SKU's).
    • The median store sales are about $555,000 per week (about $28.8 million per year).
    • Customers typically make 1-2 trips to a grocery store each week. The average US household spends $120 per week on groceries ($106 for households without children; $160 for households with children).
                                  Industry Forecast
                                  Grocery Stores Industry Growth

                                  Coronavirus Update

                                  Nov 1, 2021 - Large Chain Warns Of Shortages
                                  • Supermarket chain Aldi warned that the impact of global supply-chain bottlenecks will soon hit its US grocery stores. “When you shop our aisles in the coming weeks and months, you may notice certain items arriving later than intended or after our advertised on-sale dates,” the German discounter said on its website. “We ask for your patience as we navigate supply chain delays.”
                                  • Many grocers are offering incentives to encourage reluctant front-line workers to get vaccinated against COVID-19. Kroger employees get $100 bonuses with proof of vaccination, and vaccinated Publix employees get $125 gift cards. Walmart doubled its cash incentive from $75 to $150. Experts say that, in some cases, efforts to encourage workers to get vaccinated — and recent vaccination mandates — have caused rifts and pushback among workers, leading some companies to stop short of requiring vaccinations for front-line staffers.
                                  • The Aldi grocery chain is providing hourly workers with two hours of pay for each of the two necessary vaccine shots. Aldi, which has 2,000 stores in the US, also said it would help employees pay for the shots. Trader Joe’s and Dollar General are also offering financial incentives while the Instacart grocery delivery service is offering grocery deliverers a $25 stipend, according to National Public Radio.
                                  • Retail sales in the grocery store industry increased 2.1% in value month over month on an adjusted basis and 5.3% in value year over year on an unadjusted basis in August.
                                  • Kroger, the largest supermarket chain in the US, said that it expects sales at stores open for at least one year (comparable sales) to decline by 3% to 5% year over year in 2021. Sales increased 14.1% year over year in 2020. Kroger cited the end of consumer stockpiling and the availability of coronavirus vaccines, which makes it possible for consumers to shift back to eating more meals at restaurants and outside of their homes, as a key cause of expected lower sales growth.
                                  • Other grocers have also forecast year-over-year sales decreases. Sales at Sprouts Farmers Market increased 6.9% year over year in 2020, but the chain said that sales growth will decline to low-to-mid-single digits this year. Walmart projects comparable sales to grow by low single-digits in 2021 after 8.6% growth last year.
                                  • The response to laws passed in some jurisdictions requiring the provision of hazard pay to frontline essential workers has not been uniform. Trader Joe’s has boosted pandemic pay for its hourly and non-management employees by $2 an hour at stores nationwide. Two grocery industry trade groups – Northwest Grocery Association and the Washington Food Industry Association – filed a lawsuit against the city of Seattle over a new law that mandates $4 an hour pay raises for grocery store workers. Kroger announced it will close two grocery stores, a Ralphs and a Food 4 Less, both in Long Beach, CA, in response to a local ordinance requiring extra pay for certain grocery employees working during the pandemic.
                                  • Employment at grocery stores decreased 1.3% year over year in August.
                                  • Food prices are expected to rise 2% to 3% in 2021, according to the US Department of Agriculture The expected increase is slightly higher than the 1.9% increase in 2019 but in line with the 20-year historical average of 2.3%.
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