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

                                  Nov 10, 2022 - Merger Would Reshape Grocery Industry
                                  • The merger of Kroger and Albertsons – two of the US’s largest grocery chains – would reshape the grocery landscape by creating a supermarket giant with nearly 5,000 stores, 66 distribution centers, and annual revenue of about $200 billion. As such, it’s expected to draw heavy scrutiny from the federal regulators and lawmakers. In a preemptive strike designed to smooth approval of the mega-deal, Kroger in October proposed spinning off as many as 375 stores under a new Albertsons subsidiary called SpinCo, Bloomberg Law reported. The companies say their merger would put them on better competitive footing against Walmart and Amazon. The US Senate plans to hold a hearing in November to examine competitive and consumer concerns arising from the $24.6-billion deal.
                                  • More shoppers are turning to grocery store food service for meal planning amid an ongoing trend toward food-at-home, Supermarket News reported in November. Sales of deli prepared foods totaled $31.3 billion for the 52 weeks ended August 27, up 9.3% year over year and 19.2% from the pre-pandemic 2019 period, according to NielsenIQ data cited in the FMI Power of Foodservice at Retail 2022 report. On a unit sales basis, deli prepared foods edged up 2.4% year over year and 7.2% from calendar year 2019. Pizza, in particular, turned in strong results, with dollar sales up 16.7% over the 52-week period, according to Supermarket News. Overall deli sales climbed 12.3% to $47.9 billion in dollars and 3.7% in units for the 52 weeks, up 20.9% in dollars and 8.3% in units from 2019.
                                  • The Food and Drug Administration is updating the marketing term "healthy" to better reflect what makes a wholesome diet. The proposed FDA rule would align the definition of the "healthy" claim more closely with current nutrition science and change labels of supermarket shelves. Under the proposed rule a highly sweetened yogurt content could no longer make the “healthy” claim on its label, while fatty-salmon, which under the existing rule can’t make the healthy claim, could. The FDA said the new definition is intended to both empower consumers to eat better and, potentially, foster a healthier food supply by prompting manufacturers to add more good foods like vegetables or whole grains to their product lines. The agency also is researching a symbol that manufacturers could display on the front of packaging to show their product meets the new "healthy" definition.
                                  • As their costs surge higher, food producers and distributors expect the prices they charge to keep rising, according to The Wall Street Journal. Amid higher costs for labor, transportation, ingredients, and packaging, food companies including Kraft Heinz, Campbell Soup, Tyson Foods, and Mondelez have raised their prices, and many food producers have warned retailers that more price hikes are in store for later in the year. The war in Ukraine has tightened global supplies of grains, edible oils, and fuel, pushing prices higher. Bad weather in some major crop-producing countries, including India, Australia, and parts of South America, have also contributed to higher food costs.
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