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Grocery Stores and Supermarkets Industry Profile Excerpt
| SIC Codes: 5411 NAICS Codes: 44511 Page Length: 10-12 Last Quarterly Update: 6/30/2008 View Sample Industry Profile |
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The $400 billion US retail grocery industry includes about 40,000 companies that operate 70,000 grocery stores (excluding convenience stores). Large companies include Kroger, Supervalu, Safeway and Ahold. The industry is concentrated: the 50 largest companies hold about 70 percent of the market.
Although not traditional grocers, mass merchants like Wal-Mart and Costco have rapidly expanded their sales of groceries. Wal-Mart is now the largest seller of groceries in the country, with annual grocery sales of about $60 billion.
COMPETITIVE LANDSCAPE
Demand for food products is limited by the 1 percent annual growth of the US population. Profitability of individual companies depends on having the right product mix and on efficient operations. There are large economies of scale in operations and purchasing. Small grocers can compete effectively only by offering specialty products or better produce or special services such as take-out food.
The average supermarket of large chains has $14 million in annual revenue, and revenue per employee of $150,000. Companies with fewer than five stores have annual revenue per store of $6 million and revenue per employee of $130,000.
PRODUCTS, OPERATIONS & TECHNOLOGY
Grocery stores sell three major types of products: perishable foods (50 percent of revenue); non-perishable foods (30 percent); and non-food items (20 percent). Within the perishables category, the largest sellers are meats and poultry, produce, dairy, and frozen foods.
The operations of retail grocers involve wholesale buying of foods and other products, coordinating delivery to stores, handling ...
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