Retail Trends

ERS provides information on foodstore sales and sales growth, the share of food sales by retail segment, and industry structure.

Sales and Sales Growth

The Nation's 212,000 traditional foodstores sold $571 billion of retail food and nonfood products in 2011. Grocery stores, including supermarkets, accounted for the largest share of foodstore sales (91.0 percent), followed by convenience stores without gasoline (5.5 percent). Specialized foodstores, including meat and seafood markets, produce markets, retail bakeries, and candy and nut stores, accounted for the remaining 3.4 percent of the total (see Glossary for store type definitions).

Grocery store sales increased in 2010 and 2011, following the 2007-09 recession—a period of economic uncertainty in which traditional grocery retailers experienced negative inflation-adjusted growth. During the past decade, there were many years in which grocery store sales growth (in current dollars) exceeded the rate of inflation. Inflation-adjusted sales growth was small, averaging 0.08 percent per year. The slow and negative inflation-adjusted growth in annual sales at traditional grocery stores was likely due in part to increased competition from nontraditional food retailers—such as warehouse clubs, supercenters, drugstores, and other retailers—as more consumers economized on food spending.

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Industry Structure

Sales by the 20 largest food retailers totaled $515.3 billion in 2016, accounting for 66.6 percent of U.S. grocery store sales, up from 42.2 percent in 1996. Market shares held by the largest 4, 8, and 20 supermarket and supercenter retailers decreased slightly after the Great Recession. Since 2012, the longer-term trend of an increasing concentration of sales among the Nation's largest grocery retailers has resumed. This trend held true for the top 4 and top 8 grocery store chains, although the ratio for the top 20 fell slightly in 2016, declining 0.2 percent.

A contributing factor to these increases over the past decade has been the steady growth of Walmart supercenters. Their food and nonfood grocery sales amounted to an estimated $136.2 billion in 2016, making it the largest U.S. retailer of grocery products. In comparison, second-place Kroger—the largest traditional grocery retailer—had sales of $96.9 billion in 2016. Nevertheless, Kroger has been a major player in mergers-and-acquisitions activity, acquiring retailers such as Harris Teeter and Roundy's in the last few years. Meanwhile, aggregate grocery store sales rose 2.2 percent in 2016, a slightly smaller increase than the 2.3-percent rise recorded in 2015. This increase continued the trend of annual gains in grocery store sales after a recession-induced decline in 2009.

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Supermarkets experienced major consolidation and structural change through mergers, acquisitions, divestitures, and internal growth in the mid-to-late 1990s. These factors produced increasing shares of the largest 4, 8, and 20 grocery retailers during this period. This vigorous consolidation activity slowed throughout the following decade but rose again during the last four years. Over 500 food industry mergers and acquisitions were recorded in 2016—the highest in 15 years—but below the record of 813 set in 1999. Some highlights for 2016 include the following: 

  • The top four grocery retailers in 2016 were Walmart Stores, Inc., Kroger, Albertson's, and Ahold Delhaize. Publix was ranked either fourth or fifth for most of the last decade, reflecting the impact of industry mergers and acquisitions—most recently, the merger of Ahold and Delhaize.
  • In 2016, the share of grocery sales by the top 4 and top 8 grocery retailers rose for the fourth consecutive year since 2012.
  • Much of the change in industry structure during the last few years resulted from consolidation, specifically two large mergers—the acquisition of Safeway by Albertson’s and the acquisition of Delhaize by Ahold.
  • Amazon acquired Whole Foods in the summer of 2017. The impact of this acquisition on industry market share will not be reflected in the reported concentration ratios until 2017. Because Amazon has yet to become a major player, the short-term effect on the overall structure of the retail food industry may be minimal. In contrast, the recent merger between Ahold and Delhaize—which were both large food retailers—was the primary reason for the larger market share for the four food retailers in 2016.

Trends and Developments

Nontraditional stores

Since the late 1990s, nontraditional retailers have steadily increased their relative share of food-at-home sales, compared with traditional retailers. Nontraditional stores' share of food-at-home sales increased from 13.7 percent in 2000 to 21.5 percent in 2011 (traditional foodstores and non-store food sales—such as mail order, home delivery, and direct sales by farms, processors, and wholesalers—account for the remaining shares). Most of the growth in food sales is due to supercenters and warehouse club stores, whose sales more than doubled over the period. More recently, dollar stores—such as Dollar General and Family Dollar—and drugstores—such as Rite Aid, CVS, and Walgreens—have increased sales by expanding retail food offerings.

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Traditional foodstores

In response to the sales inroads made by nontraditional retailers, traditional grocers are expanding the number and types of product offerings, designing new store formats, and using innovative instore technologies. Hannaford Supermarkets, a division of Delhaize Group (Belgium), introduced "Guiding Stars," a simplified nutrition label to help consumers make more healthful food choices. According to a recent ERS article, leading supermarket chains are expanding their private labels (store brands) to meet the needs of economizing consumers see "Recession Brings Record Number of New Store-Brand Food Offerings". Many food retailers such as Safeway, Kroger, and Giant Eagle have added gasoline pumps in their parking lots and other locations. In addition, some supermarkets offer promotional tie-ins to grocery purchases, such as gasoline discounts, in an attempt to increase sales.

With many consumers seeking organic and natural foods, traditional supermarkets have responded by adding such products to their shelves. Kroger, Giant Food, and Shaw's all offer corporate-brand organic or natural products (Naturally Preferred, Nature's Promise, and Wild Harvest). Publix has introduced its GreenWise supermarkets featuring organic produce, meats with no added hormones, and more healthful prepared foods, along with conventional grocery items. For more information, see:

Introduction of New Food Products With Voluntary Health- and Nutrition-Related Claims, 1989-2010

Local foods

Rising consumer interest in knowing where food is produced has sparked increases in purchases of locally grown food. Supermarkets have responded by emphasizing local offerings such as fresh fruits and vegetables, baked goods, meat, poultry, and dairy products, depending on the location and time of year. Safeway, Kroger, Food Lion, and H-E-B Grocery Company are some of the largest supermarket chains that promote a variety of locally grown or produced foods. Other sources of local food include farm-direct and farmers' markets. While many local foods are promoted as "organic" or "natural," retailers often claim that local foods support local agriculture and are more environmentally friendly.

Food service

In competing for consumers' food dollars, foodservice operators, including restaurants, fast food outlets, and institutional foodservice operators in schools, hotels, and recreational sites, have increased their share of total food expenditures over the years. By 2011, food-away-from-home spending by households and businesses accounted for 48.7 percent of all food spending, up from 47.1 percent in 2000 and 43.0 percent in 1990. Prior to the current recession, the share of household expenditures for prepared foods and meals had risen due to changes in household composition—such as more single-person households and more households with two working adults—as well as increased household incomes and changes in consumer preferences for convenience foods.

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In response, some supermarkets have expanded the variety of ready-to-eat entrees and meals in their prepared food departments. Many stores have added a seating area to challenge fast food outlets for business. For example, Wegmans Food Markets, a Rochester, NY-based operator of 81 supermarkets, introduced the Market Café, an instore foodservice option containing a wide range of prepared and made-to-order foods. In the mid-2000s, the annual sales of prepared foods sold in supermarkets grew 4 to 4.5 percent annually, compared with 2 to 2.5 percent for other grocery products.