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 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
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Mar 14, 2023 - Growing Trend Toward Private Label
                                  • A majority of consumers say they plan to continue purchasing private label products when the economy improves, Retail Dive reports. A survey of 2,000 US residents conducted in January by consumer research firm Attest shows cost savings at the grocery store have become vitally important to shoppers. Recent rampant food inflation coupled with improved quality and selection of private-label goods led 73% of those surveyed to say they’ve acquired a taste for private label brands and plan to keep buying them even as inflation and supply chain disruptions ease. Just 9% of those surveyed said they will not stick with private label options. Features such as non-GMO certifications, premium packaging and functional ingredients are attracting consumers to private-label products. Different levels of premiumization – from basic store-branded products to more upscale ones – also offer private label consumers a choice, according to Retail Dive.
                                  • Whole Foods Market is asking its suppliers to lower prices as inflation moderates, The Wall Street Journal reports. The Amazon-owned grocery chain told suppliers at a recent virtual summit that it wants to bring down retail prices in its stores as companies’ own costs start to decline, according to a recording of the meeting viewed by WSJ. Food manufacturers have raised wholesale prices, citing higher transport, labor and production costs, and grocery chains have passed those increases along to customers. While higher food prices have helped grocery-store operators and their suppliers generate higher sales and profits, inflation-battered consumers are cutting back on purchases, trading down to less expensive store brands, and are doing more shopping at dollar stores to save money. While overall inflation has begun to slow, grocery prices have continued to climb, although less steeply in recent months.
                                  • Shoppers rated supermarkets as providing the worst in-store experience of any format, according to a recent survey from retail technology provider Theatro. The survey found that 38% of respondents said they were likely to have an unenjoyable experience in a supermarket, followed by department stores (34%) and convenience stores (30%). The Theatro report found that consumers overall enjoy shopping at retail stores less than they did before the pandemic, with 41% of respondents saying their in-store shopping experiences are less enjoyable than they were in 2019. Long checkout lines, high prices and frustrating interactions with employees were among shoppers’ complaints, according to Supermarket News. The survey results indicate that consumer expectations for speed, convenience and getting answers to their questions quickly have increased as a result of their increased use of ecommerce sites during the pandemic, according to the report.
                                  • Dollar stores are poised to increase their share of total US grocery sales, according to a new report from Coresight Research. The report, “Dollar Stores: Flexing Muscle in US Grocery,” finds that since the beginning of October 2022 more than 20% of consumers consistently report visiting dollar stores to purchase groceries, according to Coresight’s weekly US Consumer Tracker. Both Dollar General and Dollar Tree/Family Dollar also rank in the top five retailers where consumers buy grocery products, often beating out Kroger-owned banners on a weekly basis. While dollar stores only captured an estimated 3.3% of total grocery sales in 2022, they’ve seen double-digit gains in customer visits during the past three years, according to Coresight. “We believe supermarket chains with significant store overlap with dollar stores could be at risk of serious margin pressure in the coming years,” the report concludes.
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