Supermarkets make money on volume rather than high markups, the basic principle of mass merchandising, which the industry embraced in the 1930s. Today, competition is intense – weekly specials, volume discounts, and in-store coupons are all intended to entice customers. But, even with all this profit margins are small, less than 2 cents on every dollar of sales.
The supermarket industry has changed dramatically. In the past, major chains and small independents provided most retail food. Today, food can be bought everywhere from the drugstore to the convenience store to the gas station mini mart. Superstores, warehouse stores and niche stores, like Trader Joe’s and Wholefoods, are crowding out supermarket sales. In 1987 Wal-Mart was not even listed in the top 10 US food retailers. Today, Wal-Mart and the Wal-Mart subsidiary Sam’s Clubs rank number 1. Costco and SUPERVALU, also not a presence 20 years ago, rank fourth and fifth respectively.
Today, grocery shoppers, buy more food, waste more food, and pay less for food than at any time in recent history. Superstores and warehouse stores encourage overbuying by packaging in bulk and offering larger containers. In-store sampling and lower prices encourage shoppers to overbuy or select items they had no intention of purchasing. Most homes don’t need a 6-pack of tuna, 2-pound blocks of cheese or 25 pounds of rice. This often results in waste. It is estimated we discard 1 pound of food per person per day. Not only an incredible waste of valuable resources but food waste and packaging debris puts enormous stress on landfills.
Maybe we aren’t careful because all this food doesn’t cost very much. In 1929, a family spent slightly more than 23% of their disposable income on retail groceries and restaurant meals. In 2010, we spent less than 10% of total income on food. In 1929, only 3% of all food dollars were spent on restaurant meals, today almost 50% of food dollars are spent on meals prepared outside the home. Some of these take-out foods do come from supermarkets, but a good deal come from elsewhere creating another competitor for the traditional grocery dollar.
When the average shopper makes his 1.7 trips to the supermarket each week, what is he buying? Increasingly, the family grocery shopper is the man of the house, which has both advantages and disadvantages. Men are less interested in sales or specials, low prices, and frequent shopper programs, so they are getting less for their food dollar. Women are more likely to make use of these offers and will travel to different stores for advertised specials.
Coupons are on the wane. Just 21% of shoppers use coupons and the number decreases yearly. Even fewer shoppers take advantage of in-store coupons on the shelf or at the checkout. Taste is still the major driver of food acceptance, followed by nutrition, product safety and price. Though 68% of shoppers say they are trying to eat more fruits and vegetables, only 22% are eating less red meat, 23% eat less fat, 18% eat less snack foods, only 3% are eating more fiber, and a paltry 1% is aiming for more balance and variety in their diet. Obviously, good intentions do not have great follow through.
Free-from foods – sugar-free, fat-free, or gluten-free – are the current trendy lifestyle choices regardless of health needs or food allergies. Gluten-free and dairy-free have shown the most growth. Discarding healthy cow’s milk in favor of an almond, soy, or oat beverage has no real advantage unless a person is unable to tolerate milk or is living a vegetarian lifestyle. Yet, all of these alternatives are becoming mainstream and most dairy cases are crowded with milk substitutes.
What can we expect on the supermarket aisles in 2012? Fewer new products will be released and existing packages are shrinking. I challenge you to find a 1-pound package of coffee or a half gallon of ice cream. Standards are now 13-ounces and 1.75 quarts. Whole grains use will continue to grow with more unusual grains like farro and sorghum making headway. Kale is the new spinach and it can now be found in pre-washed, microwave bags. Kale chips are nudging potato and corn chips on the shelf. Most important – all food will cost more.
© NRH Nutrition Consultants, Inc.
Jo-Ann Heslin, MA, RD, CDN is a registered dietitian and the author of the nutrition counter series for Pocket Books with sales of more than 8.5 million books.
The Complete Food Counter, 4th ed., 2012
The Diabetes Counter, 4th Ed., 2011
The Protein Counter, 3rd Ed., 2011
The Calorie Counter, 5th Ed., 2010
The Ultimate Carbohydrate Counter, 3rd Ed., 2010
The Fat Counter, 7th ed., 2009
The Healthy Wholefoods Counter, 2008
The Cholesterol Counter, 7th Ed., 2008
Your Complete Food Counter App: YourCompleteFoodCounterApp
For more information on Jo-Ann and her books, go to: TheNutritionExperts
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