The grocery store is one of the few places that almost everyone visits at least once per week. Food is needed for survival and often the best venue to find a variety of foods is the local grocery store. The grocery industry might be consolidating, with the parent company of Albertson’s purchasing the Safeway brand recently, but that doesn’t mean there aren’t large revenues coming in.
Grocery Industry Facts
The grocery industry saw $522 billion in revenues come in during the last year alone.
The issue with the grocery industry is that many of the profit margins are extremely small. Sometimes it is as low as 3%! Despite these low margins, there is a requirement for fresh produce, timely service, and sanitary conditions. Get one of these things wrong and your local grocery affiliate will immediately find fewer customers coming through the doors.
Additional Facts About the Grocery Industry
1. The grocery industry employed over 2.2 million people in the last year, including part-time, full-time, temporary, and per diem positions.
2. Revenues within this industry fell 0.4% from the previous year.
3. In 2012, the net profit that the average grocery store saw was just 1.5%.
Takeaway: Grocery stores are essentially a neutral profit organization that take a lot of criticism when they do have higher prices on some items or need to increase prices. In many cases, a sale price means that the store is going to lose money on that specific item in the hopes that a customer will purchase other items that have higher profitability margins on them. It is an industry that has good paying jobs, but overall not much in terms of actual profits overall.
Additional Facts to Consider
1. In 2012, the average household spent 5.7% of their disposable income on groceries.
2. The average sale per customer transaction was just over $35.
3. Most people average about 2 trips to the grocery store per week, meaning the average person spends $70 per week on groceries. For a family of 4, that means $280 per week.
4. A grocery store saw $153 of revenue for every hour of labor than an employee produced for their employer.
5. The average grocery store carries over 42,000 unique products.
6. Stores that offer a full line of grocery products generally have more sales and prospects for growth than niche grocery stores that only offer specific items.
7. The average grocery store had over $300,000 in revenues every week.
8. Since 2012, nearly one-third of the employment force within this industry has been contracted, meaning it has lost over 1 million total FTEs.
Takeaway: The grocery industry might be getting smaller overall and employing fewer people, but that’s because more people seem to be working full-time instead of part-time. Though this means more in a per-employee cost ratio, staffing costs will be lower in the long term because there will be fewer training and scheduling expenses. The hope is that this will lead to a greater profitability percentage this year and in the future.
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