In 2004, there were 85,000 grocery stores in the United States, according to the U.S. Department of Labor.
Grocery stores: trends and tips
By Pauline Oo
From eNews, May 5, 2006
Some people are loyal, visiting one grocery store or supermarket for most of their household needs. Others go to a variety of places for their groceries--a supermarket Cub one day, a co-op the next.
In the Twin Cities, consumers have never had it so good. There are supermarket chains (for example, Lunds, Kowalski's, Cub, and Rainbow), organic stores like Whole Foods Market, super centers such as SuperTarget and Wal-Mart (that sell meat, shower curtains, and car tires under the same roof), warehouse stores like Costco and Sam's Club, neighborhood convenience stores, and local co-ops. In 2004, there were 85,000 grocery stores in the United States, according to the U.S. Department of Labor, and grocery stores ranked among the largest industries, providing 2.4 million wage-and-salary jobs.
Recently, Robert King, applied economics professor at the University of Minnesota, led a three-year study by the U's Food Industry Center to look at how supermarkets in the Twin Cities operate and learn what they do to keep competitors at bay. King says local grocers are having to pay more attention to factors such as location, product offerings, and customer service to ensure success.
Dale Riley, owner of Fresh Seasons Market in Minnetonka, Minnesota, agrees. He says that to draw customers, more and more stores are sprucing up their stores or offering more services--for example, installing self-checkout machines and better lighting, playing with paint colors, extending hours, and having self-service salad bars or complete meals and in-store partners, such as LeeAnn Chin (Chinese takeout), Jamba Juice, or Starbucks. At Riley's store, his partners include a florist, a gift-store owner, a pharmacist, and a sushi chef. All are given retail space for a percentage of sales. "These partnerships make sure we don't stretch ourselves," says Riley. "They have expertise in areas we don't."
Produce is a critical part of a grocery store, and according to longtime grocer Dale Riley, it's a key factor for traditional grocery stores to draw customers. Here he offers some tips on buying produce:
* For most fruit and vegetables, "you should be able to pick something out blindfolded and know it's good."
* "Dole has created a demand for [prepackaged or bagged and mixed salads], and people want them. They're known as value-added products because they offer the consumer convenience-we add value to it, you pay for it. Value-added products are more profitable for everybody along the supply chain.
* Is packaged lettuce better than fresh lettuce? "There's certainly more potential for lettuce to be contaminated if in bulk than packaged."
* "The three [typical cuts of beef are] Prime, Choice, and Select. Someone visually chooses [what the cuts are] in a packing facility."
* Unlike its packaged foods, a grocery store doesn't offer the nutritional value for the foods sold at its deli because "people want them to taste good, they really don't want to know [the nutritional value]."
* "Foods with 'sell by' dates are still edible after the date, but [for how long] depends on the food and how quickly you get the food home."
According to the Bureau of Labor Statistics, U.S. households spend 13.1 percent of pretax income on food, and 58.6 percent of that goes toward food consumed at home. In 2004, U.S. sales for food consumed at home were estimated at $808 billion.
What are people buying? In addition to milk and cereal--longtime products in the grocery store--consumers are filing their carts with organic produce, natural foods, and locally produced products.
"Sales of organic products are growing rapidly--there was an 18 percent growth in 2004 for U.S. sales of $10.9 billion," says King. And "sales for natural foods or health and wellness products were $68 billion in 2004, up 8.5 percent from 2003," adds Riley.
While Riley's store carries both organic and locally produced items, he says that in reality most people have trouble distinguishing between what's organic and what's not.
"People are becoming more aware of [the availability of] organic meat, for example, and there is definitely more awareness of how an animal is grown or treated, but most people can't tell if the animal is corn fed or grass fed," says Riley.
According to the Bureau of Labor Statistics, the grocery industry, unlike many other industries, "is not highly sensitive to changes in economic conditions. Even during periods of recession, demand for food is likely to remain relatively stable." The bureau has also reported that women--both employed and not employed--spend more time, on average, than men on grocery shopping and meal preparation and cleanup. About 18 percent of women grocery shop on a given day for an average of 45 minutes, compared with 11 percent of men who averaged 39 minutes.