Grocery Stores and Supermarkets Industry Profile

The US retail grocery industry includes about 65,000 supermarkets and other grocery stores with combined annual revenue of about $465 billion. Major companies include Kroger, Safeway, and SUPERVALU as well as Ahold, the US division of Netherlands-based Royal Ahold. The industry is concentrated: the 50 largest companies generate about 70 percent of revenue.

Convenience stores, discount stores, and warehouse clubs and superstores that sell groceries are covered in separate industry profiles.

COMPETITIVE LANDSCAPE

Population growth and consumer tastes drive demand. Because margins are low, the profitability of individual companies depends on high volume sales and efficient operations. Large companies can offer a wide selection of products and have advantages in purchasing, distribution, marketing, and finance. Small companies can compete effectively by offering specialty products, serving a local market, or providing superior customer service.

Discount stores and warehouse clubs have aggressively pursued the retail grocery market, and Wal-Mart is the largest seller of groceries in the US. Other competition includes specialty food stores, convenience stores, drugstores, dollar stores, and, to some degree, restaurants.

PRODUCTS, OPERATIONS & TECHNOLOGY

Major products sold include perishable foods (50 percent of industry sales); nonperishable foods (25 percent); and nonfood items (20 percent). Perishables include meats/poultry/fish, produce, dairy, frozen foods, and deli items. Nonperishable foods (or dry grocery products) include most packaged goods, such as cereals, snacks, and soft drinks. Nonfood items include health and beauty products, general merchandise, and medication (including prescription drugs).

The ...