According to a 2012 Gallup poll, the average American spends $151 a week on food, while those in higher income brackets spend as much as $200-$300. With these numbers at hand, it’s no shock that the nation’s modern grocery retailers make up one of the most profitable markets in the world, with an overall net worth of US$814.3 billion.
So what exactly is included in this this almost trillion-dollar market? As you can see from the diagram below, almost all of the places that the majority of consumers buy their groceries. In the past few years, the idea of market places and traditional grocery shops has become a thing of the past with modern retail giants saturating the food and beverage industry.
Of these retail formats, supermarkets are leading the Modern Grocery Retailing market in the US, in terms of market share, closely followed by hypermarkets.
Unsurprisingly, Wal-Mart is the leading vendor in the Modern Grocery Retailing market in the US, accounting for a whopping 25.2 percent of the market share in 2012, with Kroger trailing in the second spot at just 8.1 percent. If you didn’t already do the math in your own head, these two mega-corporations alone comprise a third of the market, which is indicative of the competitive landscape faced by the other vendors in this market.
Considering the enormous revenue potential of this market, many new vendors are jumping aboard the modern grocery retail train in hopes of grabbing a slice of the profits, only later realizing that it’s all-but-impossible to compete against their giant competitors.
The fact is, smaller vendors are unable to price their products at the same low costs as huge grocery corporations. Nor do they have the branding, marketing, customer loyalty, to tap into the shares of the “big boys” like Wal-Mart, Kroger, Supervalu, and Publix.
Of course, we should clarify—none of this is to say that any company without an already established modern grocery empire is doomed. After all, even a marginal share of the market’s current $814.3 billion worth could amount to millions of dollars. It just means that the dozens upon dozens of smaller competitors fighting for the market’s leftover shares will need to seriously step up their innovation-game in terms of products, branding, customer service, and marketing in order to stay relevant—and frankly? We love to see a little bit of fighting when the end result will be a more advanced, and hopefully even more profitable market.
For more information, view our 2012-2016 report on the Modern Grocery Retailing Market in the US.
