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 41,000 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 $21 million in annual revenue.
- The retail grocery business is a highly competitive, diversified industry with about 41,000 firms employing 2.6 million workers and annual sales of $810 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 $164 per week on groceries with households with children spending considerably more.
Industry Forecast
Grocery Stores Industry Growth
Recent Developments
Apr 14, 2024 - Wages Hit New High January
- While employment by grocery stores declined in early 2024, it remained up 1% in February compared to a year ago, according to preliminary data from the US Bureau of Labor Statistics. Wages, which helped drive up grocery store payrolls last year, continued to climb. The average wage at grocery stores was $17.45 in January, a new high and a 5% increase compared to the year earlier, per the BLS. Prices at grocery stores rose by 1.2% between January 2023 and January 2024 as producer prices for food manufacturers climbed. A Wall Street Journal analysis of NielsenIQ data reflecting a selection of commonly purchased items finds that consumers are spending more to buy less, with a grocery list that cost $100.30 in 2019 costing $136.89 today.
- In April, the Special Supplemental Nutrition Program for Women, Infants, and Children (aka WIC) received its first update in roughly a decade, AP News reports. The newly updated federal program for low-income mothers incentivizes fruit and vegetable purchases while expanding access to culturally diverse offerings. Under the new rules, fruits and vegetable vouchers in 2024 will provide $26 per month for kids ages 1 through 4, $47 per month for pregnant and postpartum women, and $52 for breastfeeding women. “It places a heavy emphasis on fruits and vegetables, which we think is an important component of a healthy diet,” said Agriculture Secretary Tom Vilsack. The updates also expand access to global whole grains like quinoa, wild rice, and millet and to foods such as teff and whole wheat naan and remove or reduce monthly allowances for juice and cut back on allowances for milk, according to the USDA.
- The Federal Trade Commission has sued to block the Kroger-Albertsons merger, casting uncertainty over the fate of the largest supermarket deal in history, The Wall Street Journal reported in February. Nine state attorneys general joined the FTC in opposing the proposed $25-billion deal on the grounds that it would “eliminate competition and raise grocery prices for millions of Americans while harming tens of thousands of workers,” according to an agency press release. The FTC’s administrative complaint alleges that the proposed divestiture by Kroger and Albertsons of several hundred stores and other assets to C&S Wholesale Grocers made to secure antitrust approval for their merger is inadequate. A federal judge in Oregon will decide whether to grant the FTC’s request for a preliminary injunction that would prevent the deal from closing. The United Food and Commercial Workers International Union has also opposed the deal.
- Grocery chains are coming under increasing pressure from the Biden administration to lower their prices, The New York Times reports, citing an analysis by the White House Council of Economic Advisers. The analysis of census data shows that grocers have maintained the higher profit margins they began generating following the onset of the pandemic, while other types of retailers have reported lower margins. It indicates that the food and beverage sector is generating profit margins that are approximately 2% above where they were in early 2020, bringing them to a 20-year high, according to NYT. “There are still too many corporations in America ripping people off: price gouging, junk fees, greedflation, shrinkflation,” the president remarked in late January. After hitting a 40-year high of 13.5% in September 2022, grocery inflation has steadily eased to a 1.3% annual rate in December 2023.
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